International Investment Law (original) (raw)
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The Right of States to Regulate in International Investment Law
2017
This dissertation, written as part of the “LLM in Transnational and European Commercial Law, Mediation, Arbitration and Energy Law” at International Hellenic University, addresses the right of states to regulate in the international investment law regime. The thesis focuses on the foreign investors' and host states' conflicting interests. Foreign investors have a strong interest in the stability of the favorable legal and political framework of the host state where they chose to invest. On the other hand, host states want to reserve a degree of flexibility in order to protect their vital domestic interests and adapt their policies to changing circumstances. Achieving an appropriate balance between these two conflicting interests constitutes the principal challenge for modern international investment law. Until recently IIAs, particularly BITs, were characterized by a strong asymmetry focusing almost entirely on foreign investment promotion and protection while remaining sile...
This paper analyzes the international regime of investment protection. It examines how international investment treaties and the enforcement of the rights conferred on private investors impact the states’ ability to regulate in public interest towards a sustainable future. Using data collected by UNCTAD, this article depicts the foundations, dynamics and trends of the international investment regime. It explains the reasons for the replacement of customary international law by treaties and the enforcement mechanism. This shows the basic rationale of the system, which is the protection of private business interests, but not a balance between them and public interest. It also demonstrates a shift in role allocation: while formerly developed countries used investment treaties to safeguard their nationals’ outbound FDI, recently they conclude treaties among themselves. Facing exposure to investment arbitration, developed countries’ governments seek to protect public interests especially regarding the adoption and implementation of environmental policies. A scrutiny of model treaties of the 21st century shows that investment treaties generally contain the same protection standards, but states differ significantly in how they express them. The analysis reveals that some states are more cautious than others and do not bank on arbitrators to interpret investment treaties in a regulation-friendly manner. Instead, some states follow the recent trend to incorporate wording aimed at preserving regulatory space. The paper also deals with the criticism of investment arbitration. By reviewing arbitral jurisprudence, I come to the conclusion that tribunals adopt different approaches to reconcile regulatory and private interest but do consider states’ right to regulate by majority. I argue that in the end investment arbitrators are not the right ones to blame for restrictions on regulatory freedom. Instead, investment treaties have been invented for the purpose to restrict regulatory freedom. The experience that the reciprocity of investment agreements can backlash on developed states has changed policymakers approach to negotiating treaties. Governments, not arbitrators are the ones in charge of striking the balance between investment protection and public interest. They have the prerogative power of both negotiating and interpreting treaties. Governments should thus use this power for integrating some scope for the pursuit of sustainability concerns into the international investment regime. While withdrawing from the international system of investment protection would mean throwing the baby out with the bathwater, governments should take clear and specific treaty wording as to regulatory needs for sustainability as a precondition for the conclusion of new treaties. Additionally, they should make an effort to achieve broad international consensus on the interpretation of typical standards of protection.
Right of States to Regulate in Light of Investment Treaty Practice and Investor-State Arbitration
2020
In this study, the historical development of states' right to regulate in international investment law is analyzed. For this purpose, the measures taken by developed states, especially European states, to protect their investors abroad, and how the arbitration practices developed within the scope of international investment agreements affect the right to regulate states. In addition, the restrictions imposed by states on regulation by concepts such as FET standards, the concept of legitimate expectations and indirect expropriation will be discussed. Finally, how arbitration practices interpret the above concepts within the scope of international law will be analyzed with sample case laws.
Perils of Success? The Case of International Investment Protection
European Business Organization Law Review (EBOR), 2008
Foreign direct investment forms an ever more important part of globalised market structures, and international investment law has become one of the most successful and judicialised areas of public international law. In order to attract investment, States commit themselves to treaties that restrict their regulatory sovereignty in ways that are sometimes unpredictable, owing to vague terms in the treaties and the broad use by investment tribunals of their delegated discretion. This article uses economic contract theory in order to understand whether the commitment problem ex ante and the flexibility problem ex post are optimally solved. It is hypothesised that the participation constraints on States may be overlooked by investment tribunals, thereby leading to an undesired weakening of protection of investors in the long run due to reactions by States. First, States may opt out of the system, for example by exiting treaties or by non-compliance. Second, they may also water down the substantive or procedural protections. Third, whereas investment treaties were seen in the beginning as a restraint on developing countries, investment increasingly flows to equally highly regulated developed countries. As legal protection is reciprocal but the capital flows used
The Future of International Investment Regulation: Towards a World Investment Organisation?
Netherlands International Law Review
With growth in foreign investment and in the number of companies investing in foreign countries, the application of general principles of public international law has not been deemed adequate to regulate foreign investment and there is, as yet, no comprehensive international treaty on the regulation of foreign investment. Consequently, states have resorted to bilateral investment treaties (BITs), regional trade and international investment agreements (IIAs) and free trade agreements to supplement and complement the regime of protection for foreign investors. In the absence of an international investment court, states hosting foreign investment or investor states have opted for investor-state dispute settlement mechanism (ISDS). This mechanism has brought about its own challenges to the international law of foreign investment due to inconsistency in the application and interpretation of the key principles of international investment law by such arbitration tribunals, and further, there is no appellate mechanism to bring about some cohesion and consistency in jurisprudence. Therefore, there are various proposals mooted by scholars to address these challenges and they range from tweaks to BITs and IIAs, the creation of an appellate mechanism and the negotiation of a multilateral treaty to proposals for reform of ISDS only. After assessing the merits and demerits of such proposals, this study goes further, arguing for the creation of a World Investment Organisation with a standing mechanism for settlement of investment disputes in order to ensure legal certainty, predictability and the promotion of the flow of foreign investment in a sustainable and responsible manner.
The international investor rights regime
2009
This dissertation examines the relationship between international investment-related legal commitments, embodied in bilateral investment treaties (BITs), and national regulatory regimes governing foreign direct investment (FDI). I argue that the relationship between international commitments and national regimes is complementary, as evidenced by the timing and sequencing of domestic reforms and international commitments, and by the pattern of investorstate arbitral disputes. Governments seeking to promote FDI tend to undertake liberal reforms domestically before making international commitments. These domestic policy changes are subsequently or simultaneously locked-in through BITs, thereby enhancing the credibility of such reforms by tying the hands of future governments. In addition, the timing of commitments suggests that countries which possess weak institutions for the protection and enforcement of property rights tend to avoid entering into BITs because of concerns about compliance. As a result, the types of countries that are most likely to enter into BITs are precisely those whose domestic policies and institutions are most favorable to FDI, and for whom the costs of complying with BITs are much lower, suggesting that the decision to commit is endogenous to expectations about a state's capacity to comply with such commitments. An analysis of BIT signings provides evidence in support of my argument, suggesting that a state's likelihood of entering into a BIT increases as its domestic regime becomes more favorable to FDI. An analysis of the determinants of investor-state arbitral disputes suggests that countries with greater institutional capacity for protecting and enforcing property rights experience fewer disputes than countries with relatively low institutional capacity, suggesting that the quality and strength of a country's domestic institutions significantly affects its ability to comply with its BIT-related obligations. These findings support the proposition that international commitments are largely a function of state preferences and expectations about the capacity for compliance. They also highlight the importance of a country's institutional capacity as a determinate of BIT-related compliance costs, revealing an unappreciated paradox. While BITs are putatively intended to substitute for weak domestic institutions, it is precisely those countries with weak institutions for I dedicate this dissertation to my parents, Harry and Helen, whose ceaseless love, support, and encouragement have helped to sustain me in all my endeavors. Words cannot express the love and appreciation I have for them. They are the two most important individuals in my life. v ACKNOWLEDGEMENTS I would first like to thank the members of my committee-Chris Allen, Jeff Berejikian, Maurits van der Veen, and especially Doug Stinnett, my committee chair-for the patience they have shown me during the course of this endeavor and for the critical feedback which they provided me with during the entire process. Second, I would like to thank Regina Baker, John Doces, Christopher Joyner, and Dale Smith, each of whom offered useful feedback on various parts of this project which I presented at various conferences. Thanks also go to Zachary Elkins, Eric Neumayer, and Mark Souva for sharing data and answering my questions. Finally, I would like to thank Howard Wiarda and the School of Public and International Affairs at the University of Georgia for their generous financial support. The input, advice, and support of each of these individuals and institutions have been indispensable to the success of this enterprise. Any remaining faults with the final product are my sole responsibility. vi
Foreign investment and regulatory governance: A critical approach to investment facilitation debate
Latin America and international investment law; a mosaic of resistance, 2022
For the past three decades we have witnessed the signing of multiple bilateral investment treaties (BIT) and free trade agreements (FTA) with investment provisions all over the world. The result of the signing of these treaties has been the development of what Jagdish Bhagwati called a “spaghetti bowl of treaties” that has created a phenomenon of lack of governance of global investment protection rules and a flourishing of ISDS cases against developed and non-developed states all over the world. This chapter focuses on the debate that arose in 2012, which is on investment facilitation rules. The investment facilitation debate came to light in the multilateral forums, especially in the World Trade Organization (WTO) and G20. Also, UNCTAD and the Organization for Economic Cooperation and Development (OECD) have been working on different aspects of this new topic. However, first of all, it should be said that investment facilitation does not focus on protection rights for foreign investments but it sticks to facilitation rules. This difference has been presented by some of the proposing countries (like China) as a point that overcomes many of the investment protection system problems. This proposal is rather new, and thus, it still is very much unknown to the public, policymakers, and also to academia. The changes to the system are moving fast, and the analysis capacity is not yet keeping up with these variations.
Central European Journal of International and Security Studies
The debate over the prevalence of nation states as the main actors in the international arena has been going on for the past 40 years. This article focuses on a single aspect of the debate, namely the national sovereignty of states within the neoliberal investment regimes. The argument I make in this article is that while investment treaty-making in the past contributed to limiting the sovereign powers of governments in the domain of investment regulation, recent trends suggest that the states are actively seeking to increase their regulatory space. In order to demonstrate this, I develop a theoretical framework bases on the competing concepts of “right to regulate” and “investment protection”. This framework is subsequently used to compare investment treaties signed in the 1990s with some of the most significant recently signed investment agreements. The analysis shows the way in which the more recent investment treaties increase the regulatory space of the states, which strengthen...
Concerns about the restrictions imposed by Bilateral Investment Treaties (BITs) on states ability to regulate for public interest have given way to moderate reform. Now some BITs recognize the right to regulate, specifically in the areas of environment, health and safety. However, these changes don’t address the main interests of developing countries, including core values concerning economic justice or industrial policy objectives. The cases of South Africa and Brazil suggest there are alternative paths. South Africa enthusiastically embraced BITs as a way to attract investment but soon realized the constraints they imposed on the state’s ability to further economic justice according to its post-apartheid Constitution. It decided to terminate its BITs, adopt a new investment protection act limiting the protection of foreign investors, and decided to use domestic courts to solve disputes. Brazil decided not to enter BITs and instead pursued Agreements on Investment Cooperation and Facilitation (ACFIs) that delimited the rights of foreign investors. These examples show that developing countries have options outside the BITs. Conversely, they suggest that to truly accommodate the interests of developing countries, the right to regulate under BITs has to be expanded considerably to include distributive justice concerns and industrial policy goals. Otherwise, the investment regime will reinforce global inequalities and likely force countries to exit the system.
Rights, responsibilities and regulation of international business
Columbia Journal of Transnational Law, 2003
This essay discusses the paradox of the emergence of corporate codes of conduct in the 1990s, following pressures from consumer and labor activism, in a period of more general liberalization of international investment leading to deregulation. It suggests that the advantages of flexibility and adaptability to specific circumstances offered by such codes are counterbalanced by their self-selected content and inadequate enforcement. Rejecting the assumption that there is a sharp distinction between voluntary standards and binding law, the essay analyzes various ways of grounding codes in legal obligations. It proposes that a safer and more dependable environment for international investment could be provided by a framework agreement, which would link binding standards for corporate social responsibility in key areas, such as combating bribery and cooperation in tax enforcement, with traditional investor rights based on investor protection and liberalization rules.