Commentary to the Austrian Model Investment Treaty

This 2011 commentary evaluates the 2008 Austrian Model Investment Treaty, noting its efforts to modernize by including sustainable development goals and carve-outs for public welfare regulations. However, it warns that the treaty remains overly broad in its investor protections, lacks transparency in dispute settlement, and fails to impose enforceable obligations on investors or home states.

• The Austrian Model BIT introduces several innovations to protect regulatory space, including a preamble that frames investment as a tool for "sustainable economic development" and a carve-out in Article 7 that prevents non-discriminatory measures for "legitimate public welfare objectives, such as the health, safety and the environment" from being classified as indirect expropriation.
• The Model BIT includes specific articles on the environment (Article 4) and labour (Article 5) that discourage the weakening of domestic laws to attract investment. However, the commentary notes these are problematic because they only address "laws" or "statutes or regulations," ignoring the relaxation of standards through weak enforcement or administrative policy decisions.
• Despite its innovations, the Austrian Model BIT retains several traditional and potentially risky features, such as a vague Fair and Equitable Treatment (FET) clause, a broad most favoured nation (MFN) clause, and an "umbrella clause" that may broaden host state obligations beyond those in previous Austrian treaties.
• The treaty's approach to Investor-State Dispute Settlement (ISDS) is criticized for lacking modern safeguards. It does not include provisions for transparency, mechanisms to prevent arbitrator conflicts of interest, or an appellate process to ensure consistency in decisions.
• The Model BIT's procedural requirements for disputes are viewed as lenient. It requires a 60-day negotiation period before arbitration, which the commentary describes as potentially insufficient for resolution, and a five-year limitations period for filing claims, which is more generous than the three-year periods found in some other agreements.
• The Model BIT is largely silent on the obligations of the home state and the investor. While the preamble references international standards like the OECD Guidelines for Multinational Enterprises and the UN Global Compact, these do not impose enforceable legal duties, and the treaty lacks explicit requirements for investors to respect human rights or environmental protections.
• The commentary highlights a trend where developed nations, specifically the United States and Canada, have revised their treaties to safeguard policy space after being sued by foreign investors. In contrast, European states have been slower to adapt, though Austria's 2008 Model BIT represents a move toward a more balanced approach.

APA

Bernasconi-Osterwalder, N., & Johnson, L. (2011). Commentary to the Austrian Model Investment Treaty. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/austrian_model_treaty.pdf

Chicago

Bernasconi-Osterwalder, Nathalie, and Lise Johnson. Commentary to the Austrian Model Investment Treaty. International Institute for Sustainable Development, 2011. https://www.iisd.org/system/files/publications/austrian_model_treaty.pdf.

Wikipedia

{{cite report |last1=Bernasconi-Osterwalder |first1=Nathalie |last2=Johnson |first2=Lise |title=Commentary to the Austrian Model Investment Treaty |publisher=International Institute for Sustainable Development |date=September 2011 |url=https://www.iisd.org/system/files/publications/austrian_model_treaty.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bernasconiosterwalder2011commentary, author = {Bernasconi-Osterwalder, Nathalie and Johnson, Lise}, title = {{Commentary to the Austrian Model Investment Treaty}}, institution = {International Institute for Sustainable Development}, year = {2011}, month = sep, url = {https://www.iisd.org/system/files/publications/austrian_model_treaty.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }