Investment Protection Treaties

Abstract

States have the practice of protecting foreign investments through investment treaties, designated variously as bilateral investment treaty (BIT); foreign investment protection and promotion agreement; multilateral agreement of investment (MAI), in English; Traité bilatéral d’investissement, in French; and Tratado Bilateral de Inversión, Acuerdo para Promoción y Protección Recíproca de Inversiones, in Spanish. Currently, BITs are an important source of investment protection. A BIT is an agreement executed between two states whose purpose is to promote and protect investments in the territory of one contracting state (the “host state”) made by investors from the other contracting state while furthering the development of both states. Although not all BITs have the same content, most of them contain—inter alia—provisions concerning the definition of investments and investors under the protection of the treaty and the standards of treatment and mechanisms for the settlement of disputes between states or between foreign investors and states. The first BIT was signed between Germany and Pakistan in 1959. At present, there are more than 2,700 BITs in force, concluded not only between developed and developing states, as was their original intent, but also between developing states or between developed states. Some states have a Model BIT, which is used as a basis in investment treaty negotiations. For example, in the last decade the following examples can be mentioned: India 2003 Model BIT, Canada 2004 Model BIT, France 2006 Model BIT, Colombia 2007 Model BIT, Norway 2007 Draft Model BIT, Germany 2008 Model BIT, and United States 2012 Model BIT. Apart from BITs, there are some regional treaties, treaties of commerce, or free trade agreements, that contain a chapter referred to as the protection of foreign investment. For the time being, there is no general multilateral agreement for the protection (and promotion) of foreign investment, despite the attempts to adopt a MAI within the Organisation for Economic Co-operation and Development.