The Settlement of Disputes Regarding Foreign Investments: the Role of the World Bank, With Particular Reference To Icsid and Miga

Abstract

The World Bank (the Bank) is often regarded as being simply an international institution which provides loans for producave purposes in its member countries. However, the Bank's mandate is not liniited making loans. Indeed, the founders of the Bank thought that direct lending would be a secondary funciion of the institution.l Early plans for the Bank show that it was expected that the principal function of the Bank would be to encourage international investment by private investors.2 The Ariicles of Agreement of the Bank3 reflect this expectaiion. Ariicle I Of the Ariicles of Agreement emphasises the role of the Bank in facilitating the invescment of capital for produciive purposes4 and describes the promotion of private foreign investment as one of the chief objectives of the Bank.s In the 40 years since its inception, the Bank has pursued this objective in a variety of ways. In acting as a financial intermediary between its borrowers and foreign capital markets, and as a provider of funds which mainly finance imports from foreign suppliers, the Bank can be seen as carrying out its mandate encourage international investment. Through co-financing and the exercise of its guarantee power, the Bank also stimulates increased international investment by courmercial banks in particular.6 The provision of advice and other technical assistance, either in conjunction with its financing operations or separately, is a further means by which the Bank has been able help its members attract foreign investment.7 One of the most visible and interesting actions of the Bank has been its sporlsorship of the establishment of three