Trade (Investor-State Dispute Mechanism) Bill

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BILL

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Repeal the Investor-State Dispute Mechanism Prohibition Act and strengthen trade information laws, and for connected purposes.

BE IT ENACTED by the King’s Most Excellent Majesty, by and with the advice and consent of the Lords Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows —

Part 1: Investor-State Dispute Mechanisms

Section 1: Definitions

(1) Investor–state dispute Mechanisms — relating to Foreign Direct Investment (FDI) are a procedural mechanism that allows an investor from one country to bring arbitral proceedings directly against the country in which it has invested, should contractual terms of usually trade agreements be breached by States.

Section 2: Repeal of the Investor-State Dispute Mechanims (Prohibition) Act

(1) The Following Act is hereby repealed —

(a) Investor-State Dispute Mechanism (Prohibition) Act 2022

Part 2: Trade Information

Section 2: Collection of exporter information by HMRC

(1) Her Majesty’s Revenue and Customs may request any person to provide information for the purpose of assisting the Secretary of State to establish the number and identity of persons exporting goods and services from the United Kingdom in the course of a trade, business or profession.

(2) For the purposes of paragraph (1) goods or services are exported from the United Kingdom if they are supplied to a person who is outside the United Kingdom.

(3) The Treasury may by regulations made by statutory instrument make provision about—

(a) the types of information that may be requested under subsection (1), and

(b) how the request is to be made.

(4) Regulations under paragraph (3) may, among other things, modify an Act of Parliament.

(5) A statutory instrument containing (whether alone or with other provision) regulations under subsection (3) that amend or repeal an Act of Parliament may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.

(6) Any other statutory instrument containing regulations under subsection (3) is subject to annulment in pursuance of a resolution of either House of Parliament.

Section 3: Disclosure of information by HMRC

(1) Her Majesty’s Revenue and Customs (or anyone acting on their behalf) may disclose information for the purpose of—

(a) facilitating the exercise by a Minister of the Crown of the Minister’s functions relating to trade,

(b) facilitating the exercise by a devolved authority of the authority’s functions relating to trade, or

(c) facilitating the exercise by an international organisation or authority, or by any other body, of its public functions relating to trade.

(2) Those functions include, among other things, functions relating to—

(a) the analysis of the flow of traffic, goods and services into and out of the United Kingdom;

(b) the analysis of the impact, or likely impact, of measures or practices relating to imports, exports, border security and transport on such flow;

(c) the design, implementation and operation of such measures or practices.

(3) A person who receives information as a result of this section may not—

(a) use the information for a purpose other than one mentioned in subsection (1), or

(b) further disclose the information,

except with the consent of the Commissioners for Her Majesty’s Revenue and Customs (which may be general or specific).

(4) If a person discloses information in contravention of paragraph (3)(b) which relates to a person whose identity—

(a) is specified in the disclosure, or

(b) can be deduced from it,

section 19 of the Commissioners for Revenue and Customs Act 2005 (offence of wrongful disclosure) applies in relation to that disclosure as it applies in relation to a disclosure of information in contravention of section 20(9) of that Act.

(5) This section does not limit the circumstances in which information may be disclosed under section 18(2) of the Commissioners for Revenue and Customs Act 2005 or under any other enactment or rule of law.

(6) Nothing in this section authorises the making of a disclosure which—

(a) contravenes the data protection legislation (save that the powers conferred by this section are to be taken into account in determining whether a disclosure contravenes that legislation)

(7) His Majesty’s Revenue and Customs shall, when it receives information that a party registered in the UK was subject to a retorsion or reprisal under any international trade agreement, shall disclose anonymised information related to such fact in order to facilitate the public interest;

(a) no such disclosure should include information identifiable to either party

(b) no such information shall be provided relating to an ongoing dispute or settlement

Section 4: Disclosure of information by other authorities

(1) A public authority specified in paragraph (3) may disclose information for the purpose of facilitating the exercise by a Secretary of State’s functions relating to trade.

(2) Those functions include, among other things, functions relating to—

(a) the analysis of the flow of traffic, goods and services into and out of the United Kingdom;

(b) the analysis of the impact, or likely impact, of measures or practices relating to imports, exports, border security and transport on such flow;

(c) the design, implementation and operation of such measures or practices.

(3) The specified public authorities are—

(a) the Secretary of State;

(b) the UK Export Finance agency constituted under the Export Finance and Project Investment Act 2023;

(c) a port health authority constituted under section 2 of the Public Health (Control of Disease) Act 1984.

(4) A person who receives information as a result of this section may only use the information for the purpose of facilitating the exercise by a public authority of the authority’s functions relating to trade (which include, among other things — functions of a kind referred to in paragraph (2)).

(5) A person who receives information as a result of this section may further disclose the information, but only with the consent of the public authority that disclosed the information under paragraph (1) (which may be general or specific).

(6) This section does not limit the circumstances in which the information may be disclosed under any other enactment or rule of law.

(7) A disclosure under this section does not breach—

(a) any obligation of confidence owed by the person disclosing the information, or

(b) any other restriction on the disclosure of information (however imposed).

(8) But nothing in this section authorises the making of a disclosure which—

(a) contravenes any data protection legislation (save that the powers conferred by this section are to be taken into account in determining whether a disclosure contravenes that legislation), or

(9) The Secretary of State may by regulations made by statutory instrument amend this section for the purpose of specifying a public authority in, or removing a public authority from, paragraph (3).

(10) A statutory instrument containing regulations under paragraph (9) — whether alone or with other provision — may not be made unless a draft of the instrument has been laid before, and approved by positive procedure of, each House of Parliament.

Section 5: Offence relating to disclosure under Section 5

(1) If a person discloses information in contravention of Section 5 which relates to a person whose identity—

(a) is specified in the disclosure, or

(b) can be deduced from it,

the person who disclosed the information commits an offence.

(2) It is a defence for a person charged with an offence under this section to prove that the person reasonably believed—

(a) that the disclosure was lawful, or

(b) that the information had already lawfully been made available to the public.

(3) A prosecution for an offence under this section—

(a) may be brought in England only with the consent of the relevant Director of Public Prosecutions;

(b) may be brought in Northern Ireland only with the consent of the relevant Director of Public Prosecutions for Northern Ireland.

(c) may be brought in Wales only with the consent of the relevant Director of Public Prosecutions for Wales.

(d) may be brought in Scotland only with the consent of the Director of Public Prosecutions for Scotland.

(4) A person guilty of an offence under this section is liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years, to a fine or to both, or

(b) on summary conviction—

(i) in England, to imprisonment for a term not exceeding 12 months, to a fine or to both;

in the devolved nations, pursuant to paragraph (3) at the discretion of the relevant Director of Public Prosecutions.

Section 6: Extent, Commencement and Short Title

(1) This Act extends to the entirety of the United Kingdom

(2) The provisions of this Act shall come into force the day following Royal Assent.

(3) This Act may be cited as the Trade (Investor-State Dispute Mechanism) Act.

This Bill was submitted by The Rt Hon. Dame u/BlueEarlGrey DCMG DBE PC, Lady Waterloo, Secretary of State for Foreign Affairs, and His Grace Sir u/Rea-wakey KCT KT KD KCMG KBE MVO FRS, Duke of Dorset, Secretary of State for the Home Department and Economic Secretary to the Treasury, on behalf of HM 33rd Government, and is sponsored by the Liberal Democrats, with contributions from The Rt Hon u/Hobnob88 Lord Inverness.

Referenced and Inspired Legislation:

Public Health (Control of Diseases) Act 1984

Commissioners for Revenue and Customs Act 2005

Trade Act 2021

Export Finance and Project Investment Act 2023

Opening Speech

Deputy Speaker,

Investor-State Dispute Mechanisms are tools used to ensure trust and confidence by businesses operating and working with Governments. This is important to ensure nations do not breach contractual obligations and erode the rights and protections of businesses operating freely and fairly.

Firstly, the repealed Act itself does not come into force until 2024. For any Governments until then to try and conduct crucial trading relations would see entire treaties and agreements the United Kingdom is currently part of as a signatory suddenly withdrawn unilaterally, should its wording be taken retroactively. But nonetheless, there are greater concerns with the premise of such a law regardless.

Let it be clear, we understand the criticisms of Investor-state dispute mechanisms, and they are very much legitimate criticisms dependent on certain point of views. However the UK handicapping itself from conducting and engaging with trade agreements is no wiser for truly engaging and addressing the criticisms of ISDMs. In fact, according to the International Bar Association (IBA), states have won a higher percentage of ISDS cases than investors, and that around one-third of all cases end in settlement. So the argument that they do cripple states ultimately is exaggerated.

Many developed economies use and require Investor state dispute mechanisms for conducting international agreements with them. This is a fact. With this current law, it blocks the United Kingdom from engaging in effective free trade agreements and other economic partnerships built on trust in Governments and their principles.

The United States is the big example of a nation we could not develop strong trading relations with, due to their longstanding bulwark in favor of Investor state dispute mechanisms. The White House itself notes that investment protections are an integral component of more than 3,000 trade agreements. The United States is party to at least 50 such agreements, only facing 13 ISDMs cases and never lost an ISDS case. So it is clear, ISDMs are currently a crucial part in global commerce and trading relations, something that many developed nations and our very own economic partners are not giving up anytime soon. Whilst discussion on reforms to ISDMs have recently just begun in the international community, it is still unwise to lock out the UK economy and its economic relations in prohibiting these crucial international partnerships. Frankly, this protectionist measure of ISDMs is not one that adheres to the values of free trade, something that we as a modern liberal democracy very much embrace with our allies too.

It makes very little sense to limit our own capabilities and potential, when the rest of the world is yet to make such similar decisions. We should not be closing the United Kingdom off to business, and deterring investment. The protectionism measures are not something that at all works in this globalized world or at all sustainable for driving economic growth.

This division will end on the 28th August at 10pm BST.