Signed on March 15, 2019 and approved by the National Congress on May 18 of this year, the Agreement on Cooperation and Facilitation of Investments (ACFI) between Brazil and the United Arab Emirates (UAE) is part of the effort to improve relations between Brazil and partner countries through ACFIs. Similar agreements were also signed with Mozambique, Angola, Malawi, Mexico, Colombia, Chile, Ecuador, Ethiopia, Guyana, India, Morocco, Mozambique, Suriname, and Peru.

According to the rapporteur for the Draft Legislative Decree, Senator Esperidião Amin, “the agreement comes at a good time”, in a scenario in which President Lula has just visited the UAE and signed new agreements on clean energy. All political parties unanimously supported the Agreement’s terms at the Senate vote.

The new ACFIs will play an important role in cooperation efforts in the areas of infrastructure, sustainability, energy, and food security, fostering the investment potential between the two countries. Brazil demands improvements in infrastructure and the UAE provide the largest investment funds in the world, estimated at approximately 3 (three) trillion dollars.

Unlike the typical bilateral investment treaties once signed (“BITs”), which emphasized investment protection, the ACFIs aim to improve the business environment through the tripod: governance, risk mitigation and dispute prevention, aiming to pragmatically understand the investors’ needs and offer legal guarantees and greater predictability to investments. To understand the other differences between the new model of agreement and the old BITs, the article Arbitragem no Novo Modelo Brasileiro de Acordos de Investimento, written by partners Rabih A. Nasser and Salem H. Nasser[1] is a recommended reading.

In general terms, the purpose of this ACFI will be to facilitate and promote mutual investments. Article 2 establishes that the ACFI shall be applicable to all investments made before or after its entry into force, but unlike the ACFIs already signed, in the case of the United Arab Emirates, investments in natural resources will not be covered by this agreement. Everything indicates that this is a strategic political measure to protect the oil industry in both countries, considering that both are relevant producers.

In art. 3, aligned with other ACFIs, there is a concern to propose a leaner and more assertive definition of the term “investment”, bringing greater security to the interests of countries and to investment recipients. In the old BITs, the definition was excessively broad, denoting a lack of criteria regarding the type of investment that one wanted to promote or protect.

Similar to the BITs, arts. 4 to 7 establish certain guarantees for investors, such as equal treatment in relation to other domestic or foreign investors and the obligation of compensation in the case of land or assets expropriation.

However, even sharing similarities with the BITs, the ACFI innovates in some important points, such as determining the corporate social responsibility of companies, for which it imposes the promotion of sustainability and respect for the principles established by the OECD, with emphasis on the protection of the environment, respect for labor laws and health standards, and combating corruption. Emphasis is also placed on transparency by providing for the wide disclosure of regulations and administrative decisions for investors to be aware of. Article 20 establishes, except for confidential business information related to the investment, the exchange of information between the parties that will be carried out through the Joint Committee and the focal points. In addition, the investment agencies of the countries will have continuous interaction (art. 23), respecting the rules of protected information (art. 21). Finally, the partner countries will interact with the private sector, informing them and encouraging their companies to invest through the agreement (art. 22).

The ACFI also provides for the creation of the Joint Committee (art. 18), which aims to coordinate the interested parties based on a mutual agenda, with the purpose of strategically sharing opportunities for expansion and mutual investments. The agenda is specifically dealt with in art. 26 of the agreement and will be elaborated at the first meeting of the Committee.

Another innovation is the institutionalization of national focal points or the figure of the ombudsman, who would be an authority whose main competence is to support investors from the other party in their territory, a function that in Brazil is within the competence of the Direct Investments Ombudsman (DIO), linked to the Executive Secretariat of the Foreign Trade Chamber (CAMEX); in the United Arab Emirates, the role is within the competence of the Ministry of Finance (MoF).

Finally, composing the aforementioned tripod, arts. 24 and 25 deal with dispute prevention procedures, establishing that – if any – first, disputes must be resolved by the Joint Committee and, if the dispute is not resolved, they shall be resolved by the Ad hoc Arbitration Court.

Therefore, the ACFI tends to be an useful instrument, since it includes provisions and mechanisms that are useful for bringing the two countries closer together, for the purpose of attracting investments and exploiting the immense potential for economic cooperation between them.