Co-Existence, Complementarity or Conflict? Interaction between Preferential Trade and Investment Agreements and Bilateral Investment Treaties

Abstract

The most remarkable evolution in the field of international investment law is undoubtedly the massive proliferation of Bilateral Investment Treaties (BITs) and Preferential Trade Agreements (PTAs), either in the form of Free Trade Agreements (FTAs) of Custom Unions (CUs). PTAs increasingly, as will be pointed out, contain provisions on the liberalization and/or protection of foreign investment, and may then be referred to as Preferential Trade and Investment Agreements (PTIAs). PTAs differ substantially in terms of the extent to which they cover investment. Agreements in the area of trade and investment either contain explicit provisions on the protection, and possibly the liberalization of foreign investment, or are aimed essentially at the regulation of trade in services and/or goods, in which case the provisions on investment are usually less extensive than in the former or even completely absent. BITs and modern PTAs which include investment protection (and liberalization) provisions, which may then be categorized as PTIAs, follow the first approach, and thus contain extensive provisions on both the liberalization and the protection of foreign investment (PTIAs), while the majority of the traditional PTAs follow the second approach, containing only a framework or framework provisions committing to further liberalization, protection and promotion of investment. This contribution aims to analyze the interrelationship between the network of bilateral investment treaties and PTIAs with respect to the protection of foreign investment. In doing so, this contribution will examine the differences in the content and rationale of PTIAs as compared to BITs, and in particular how substantive investment protection and investment dispute settlement are dealt with in PTIAs and BITs. Finally, this contribution will address whether conflicts between PTIAs and BITs are possible, and if so, how these conflicts may be addressed.