Report No. 260
D. Article 10. Disclosures
(i) Analysis and comment:
4.4.1 Disclosure requirements imposed on investors are routine in BITs.75 Prior to establishing an investment in a State, certain disclosures may be sought to enable the potential Host State to make appropriate decisions regarding the investment, or for statistical purposes.76 Once an investment has been established in a Host State, disclosures must usually follow standard and accepted principles of corporate governance, as prevalent in the Host State.
75 Art 11(D), IISD Model, Commentary, p 22.
76 Art 11(D), IISD Model, and Art 12, SADC Model.
4.4.2 Article 10.6 requires certain disclosures to be made by the investor or investment on demand by the Host State. Investors and Investments have been specifically mandated to develop and follow policies for timely disclosure of material information "even where not required to do so by law of the Host State."
These requirements appear to be vague in nature and impose unreasonable obligation to maintain records or make disclosures that are not clearly known to the investor in advance. Provisions such as these can send negative signals to prospective investors, and it is suggested that open-ended requirements of this nature be avoided entirely.
If a BIT requires disclosures over and above those required under the laws of the Host State, this list of disclosures should either be clearly delineated in the BIT itself or there should be a definitive provision stating that any such requirement will be applicable only if it has been clearly communicated in advance by the Host State. Any disclosure requirement, or in fact, any obligations imposed under a BIT, upon investors, must take into consideration the National Treatment obligations that are provided for through the same treaty.
4.4.3 It is suggested that disclosure obligations should also be accompanied by the manner in which the Host State will use the information (e.g., will the information thus provided be disclosed to the public), and the assurance that disclosures will protect confidential business information, and will not compromise the business interests or the competitive position of the investor or the investment.77
For example, the Canada-Colombia FTA allows the Host State to require an investor or its investment to provide routine information concerning the investment "solely for informational or statistical purposes". It then requires that the party collecting such information should "protect any confidential information from any disclosure that would prejudice the competitive position of the investor or the covered investment". It also clarifies that the Host State is not prevented from obtaining or disclosing information in connection with the equitable and good faith application of its laws.78
77 Art 12, SADC Model.
78 Article 813, Chapter 8 of the Canada-Columbia FTA,