Preferential Trade and Investment Agreements

Abstract

To assert the dynamic nature of international investment law may have become almost a commonplace. Case law is the obvious motor of development: during the last two decades in particular, awards by arbitral tribunals have redrawn the map of investment law and at times pushed its boundaries, at times prompting criticism of ‘arbitral activism’. However, arbitral practice interpreting and applying the existing law is not the only source of dynamism. Equally dynamic are processes of law-making, and notably the complex manner in which States define and redefine the law governing investments abroad. One notable development in this context is the increasingly frequent conclusion of Preferential Trade and Investment Agreements (PTIAs) that complement traditional bilateral investment treaties (BITs) and combine investment and trade rules. It is this source of dynamism that the contributions to the present book evaluate. For a long time, investment and trade were addressed in separate legal regimes. While the regulation of international trade was organized multilaterally (first in the General Agreement on Tariffs and Trade, then in the World Trade Organization (WTO)), substantive rules on investment protection were typically enshrined in bilateral treaties. For a considerable period of time, investment treaties followed the model of the ‘mother of all BITs’, the Draft Convention on Investments Abroad presented by Herman Joseph Abs, then Chairman of Deutsche Bank, and Lord Hartley Shawcross, a former British Attorney-General and then Director of Shell Petroleum Company. From the first-ever BIT concluded between Germany and Pakistan in 1959, fairly succinct provisions would limit the right of States to take foreign property and enshrine a number of general standards of protection. From the late 1960s onwards, these substantive provisions would be complemented by procedures for direct recourse to international arbi-