Part IV The Impact of International Investment Law, 16 The Control of Investment Risks through International Investment Agreements

Abstract

This chapter explores the control of host state investment risks through investor/investment protection standards under International Investment Agreements (IIAs). The United Nations Conference on Trade and Development (UNCTAD) divides IIAs into two types: bilateral investment treaties (BITs) and treaties with investment provisions (TIPs). Investor/investment protection standards in IIAs create issues of ‘regulatory space’, which, in international economic law, describes the regulatory freedom that states possess in the absence of international legal constraints. IIA protection standards affect the host state’s ‘right to regulate’ by placing certain legally binding requirements on domestic regulation so as to reduce investment risks arising from the potential disadvantages faced by foreign investors in the host state. The chapter then traces the development of international standards for the protection of foreign investors/investments and the development of ‘first-generation’ IIAs. It also describes the main instances of expansive arbitral interpretation that have led to recent calls for the reform of IIAs towards ‘new-generation’ agreements.