Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Could U.S. Investors Bring Investor-to-State Claim for Morocco Internet Shutdown?

The United States and Morocco entered into a free trade agreement that entered into force on January 1, 2006. The U.S-Morocco free trade agreement includes chapters on investment, services and electronic commerce (in addition to dispute settlement and many other chapters).

Chapter 14 of the United States-Morocco free trade agreement addresses the topic of e-commerce. Please go to the following link for a copy of Chapter 14 - http://www.ustr.gov/sites/default/files/uploads/agreements/fta/morocco/asset_upload_file194_3848.pdf

Article 14.1 provides:

The Parties recognize the economic growth and opportunity that electronic commerce provides, the importance of avoiding barriers to its use and development, and the applicability of the WTO Agreement to measures affecting electronic commerce.

Article 14.2 provides:

The Parties affirm that measures affecting the supply of a service using electronic means are subject to the obligations contained in the relevant provisions of Chapters Ten (Investment), Eleven (Cross-Border Trade in Services), and Twelve (Financial Services), subject to any exceptions or non-conforming measures set out in this Agreement that are applicable to such obligations.

Article 14.2 of the U.S.-Morocco FTA expressly refers to the Investment Chapter, which contains an investor-to-State dispute settlement mechanism. What this may mean is that U.S. investors who have investments in the territory of Morocco may have a claim if the Government of Morocco shuts down the Internet.

The United States - Morocco free trade agreement chapter on e-commerce creates rights and obligations due to the fact that the Internet is critical to the conduct of international trade (trade in goods, trade in services, trade in financial services, etc.). A government shutdown of the Internet negatively affects trade. A government shut down of the Internet (in Bahrain, Morocco, Oman or Jordan) negatively affects investors of the other Party who have made investments in those countries. The e-commerce chapter in a free trade agreement is intended to prevent the Internet shutdowns that we are seeing. The countries who have entered into free trade agreements with the United States may not have the same flexibility to shut down the Internet as those ho have not made free trade agreement commitments.

It is important to note that the United States - Bahrain free trade agreement also contains an e-commerce chapter (chapter 13) - but Article 14.2 does not refer to the investment chapter. For a copy of the United States - Bahrain free trade agreement, please go to the following link - http://www.ustr.gov/sites/default/files/uploads/agreements/fta/bahrain/asset_upload_file79_6292.pdf

The United States - Jordan free trade agreement contains an e-commerce article (Article 7) (not an entire chapter) - but does not refer to the investment chapter. For a copy of the United States - Jordan free trade agreement, please go to the following link - http://www.ustr.gov/webfm_send/1041

The United States - Oman free trade agreement also contains an e-commerce chapter (Chapter 14) - which also refers to the investment chapter http://www.ustr.gov/sites/default/files/uploads/agreements/fta/oman/asset_upload_file650_8842.pdf

For more information, please contact Cyndee Todgham Cherniak. Cyndee is a trade lawyer in Canada. She is also an adjunct law professor at Case Western Reserve University School of Law in Cleveland Ohio. In 2007, Cyndee reviewed over 150 free trade agreements and regional trade agreements for the Asian Development Bank.

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