Due Diligence in International Investment Law

Abstract

Abstract This chapter analyses the prominent role of due diligence in international investment law. It points out that due diligence was relevant in this field as an element of customary law norms requiring compliance with an international minimum standard for the treatment of aliens and prohibiting denial of justice, before modern day investment treaties were concluded. The chapter’s analysis reveals that due diligence underlies host states’ obligation to provide full protection and security and fair and equitable treatment. It underlines that also investors carry a responsibility of due diligence throughout the whole period of their investment and that an investor’s negligence can lead to loss of protection under investment treaties. The chapter argues that due diligence has emerged as a balancing paradigm between protection of foreign investors and regulatory freedom of host states.