Bilateral Investment Agreements Research Articles

The (Political) Economics of Bilateral Investment Treaties—The Unique Trajectory of Brazil

Brazil, after signing several traditional Bilateral Investment Treaties without ratifying them, recently shifted towards a different type of bilateral investment agreement, i.e., Investment Cooperation and Facilitation Agreements. Two claims have been made in the literature regarding the transition from traditional Bilateral Investment Treaties to Investment Cooperation and Facilitation Agreements—Claim #1: The non-ratification of the traditional BITs has not harmed Foreign Direct Investment into Brazil, a claim which puts into question the purpose of Bilateral Investment Treaties. Claim #2: While Investment Cooperation and Facilitation Agreements avoid some of the problems of traditional Bilateral Investment Treaties, on balance they are less effective than traditional Bilateral Investment Treaties would have been. We examine the two claims from an empirical economic point of view. We build on the literature about Brazil’s position vis-à-vis Bilateral Investment Treaties, which must be viewed by an amalgamation of (i) a historical legacy; (ii) domestic initiatives, and (iii) a particular U-turn in the political debate. Using empirical evidence on Foreign Direct Investment effects of Bilateral Investment Treaties, the following conclusions emerge: With regard to claim #1, empirical evidence in general as well as specific to Brazil suggests that Brazil has forgone Foreign Direct Investment by not ratifying traditional Bilateral Investment Treaties. Concerning claim #2, while Investment Cooperation and Facilitation Agreements include alternative dispute settlement mechanisms, which aim at a better compliance of states with the Investment Cooperation and Facilitation Agreements’ rules, rather than the compensation of foreign investors, the lower stringency of the State–State dispute settlement mechanism compared to Investor–State dispute settlement mechanism makes Investment Cooperation and Facilitation Agreements less effective. Yet, this weakening effect must be weighed against the effects on Foreign Direct Investment from innovative clauses in Investment Cooperation and Facilitation Agreements, which are absent in many traditional Bilateral Investment Treaties.

Moral Damages in International Investment Law

This article discusses the notion of moral damages in international investment arbitration. Although there are currently more than 2500 bilateral investment agreements (hereinafter — BIT) in force, none of them regulates moral damages. The analysis focuses on the historical background of moral damages, which shows that international law has not been overly concerned with their assessment within the last hundred years. As such, despite their almost universal acceptance by international courts and tribunals, there is still no guidance for tribunals on how to approach moral damages, making their assessment a topical issue of modern international law. The article highlights the reasons tribunals give for either completely disregarding such claims, or granting merely symbolic sums, such as non-tangible nature of moral damages, lack of any concrete evidence, or an extremely high threshold. The author concludes that international law still lacks a strict and uniform test, when it comes to moral damages, which are bound to face rather broad and subjective decisions rendered by the tribunals. The author further discusses the problem of assessing moral damages, which also lacks established methodology, and often refers to national law of domestic legal systems instead of a unified standard. In some cases, tribunals do not provide any reasoning or legal basis for their assessment. The author concludes that in the absence of a strict test, investment tribunals may turn to human rights instruments to make the assessment of moral damages clearer and more consistent.

Pengaruh Klausula Fair And Equitable Treatment Pada Perjanjian Investasi Bilateral Sebagai Upaya Perlindungan Investasi Bagi Penanam Modal Asing

To protect and encourage foreign investment, bilateral investment treaties (BITs) are often an important tool. The focus of this research is the Fair and Equitable Treatment (FET) clause, which is one of the most debated and controversial BIT clauses. This study investigates how these clauses function as protective mechanisms for foreign investors in bilateral investment agreements. This study shows that the FET clause protects investors in many ways, such as regulatory stability, legal certainty and non-discriminatory treatment. However, the way these clauses are used and interpreted varies widely, and often leaves considerable latitude for arbitrators to judge, which can sometimes impact the host country's freedom of public policy. According to this research, the text should be further clarified and FET clauses should be implemented to balance the need for investor protection with the public interest.

Criteria for Determining the Affiliation of a Foreign Investor to a Particular State in an Investment Arbitration Dispute

Implementing effective means of dispute resolution between a state and an investor represents significant achievement of the International Investment Law. Considering the abovementioned, In the Investment Law it is of crucial importance to determine which investor is eligible and has access to the international dispute resolution means. For the investor to gain access to the international dispute resolution means and to be the subject of the regulations of the ICSID convention or other bilateral or multilateral investment agreements, it is essential for the investor to meet the criteria of being foreign investor. Otherwise, in case of a dispute with a state, the investor will have to use internal dispute resolution means and national courts.
 
 In this article the following is discussed: International standards of determining nationality of physical person investors, international standards of determining nationality of legal persons by place of registration, location of headquarters, nationality of governing persons and location of real economic activities. In the article method of determining investors’ nationalities during partnerships is also discussed. Research of the aforementioned issues is significant both to ensure protection of investor’s rights and to introduce dispute prevention mechanisms.

ПРАВОВЫЕ ИНСТРУМЕНТЫ ЗАЩИТЫ ИНОСТРАННЫХ ИНВЕСТИЦИЙ В СООТВЕТСТВИИ С ПОЛОЖЕНИЯМИ ДВУХСТОРОННЕГО ИНВЕСТИЦИОННОГО ДОГОВОРА: ОПЫТ РЕСПУБЛИКИ УЗБЕКИСТАН

The author of the article analyzes the current state of bilateral investment agreements on mutual protection and promotion of investments to which the Republic of Uzbekistan is a signatory (previously adopted provisions, innovations, and analytical and scientific works are also mentioned). In particular, the author focused the Legislator’s attention on investment activities, ensuring proper protection of investments, the importance of investments in modern realities, the role of state bodies in regulating investment activities aimed at economic growth, and creating additional opportunities for foreign investors. At the same time, the author indicates that at a time when the procedure for implementing standard investment agreements has already been developed in many countries, such practice in Uzbekistan has not yet acquired so much importance, which is also determined by the lack of a legal and scientific basis, which in turn leads to gaps, ambiguities, and misunderstandings of the importance of legal regulation. Also, the paper reflects the main catalytic aspects of the application of the principles of international investment law and various mechanisms for the protection of foreign investments in order to prevent the further course of a foreign investor in arbitration. The article takes into account the role of international investment agreements, especially bilateral ones, which consist of guaranteeing the stability of the regime for foreign investors, providing them with appropriate incentives, and the common interests of both foreign investors in capital and the countries where investments are made. In order to further develop the direction of developing and implementing modern mechanisms for the protection of foreign investors and the state, the researcher studied foreign experience, scientific papers, and precedents and made appropriate proposals and recommendations on drafting or amending bilateral investment agreements to which the Republic of Uzbekistan is a party.

The Impact of Bilateral Investment Agreements on Attracting Foreign Direct Investments

Abstract Foreign investors' fear of expropriation led to the emergence of the idea of new ways of protection and adequate treatment of foreign investments on the international level. Primarily, the home countries wanted to protect their interests and became the main proponents of the creation of bilateral investment agreements. Developing countries that aspire to become and remain part of international economic flows, had to provide additional protection to investors, as investment host countries. They saw bilateral investment agreements as an opportunity to attract foreign direct investment. They provide a certain standard in the treatment and protection of investments and thus influence the creation of an environment that favors the transfer of capital from one country to another. In modern economic conditions, there are almost no entities that are absolutely risk-averse. For this reason, bilateral investment agreements are counted on to play one of the key roles in minimizing the risks of investing in developing countries.

The Analysis of Institutional Factors and Chinese Outward Foreign Direct Investment Under the Belt and Road Initiative

Based on the combined data of the World Bank’s World Governance Indicators, World Development Indicators, etc., and taking 132 countries around the world from 2003 to 2019 as samples, this paper analyzes the effect of the institutional factors on outward foreign direct investment of China along the “Belt and Road”. Based on the four inspection dimensions, the paper examines the impact of the four factors on the outward foreign direct investment of China in the full sample countries and countries along the “Belt and Road”. The results show that the quality of political institution, economic freedom and the bilateral investment agreements have a significant positive impact on it. And cultural distance has a significant negative impact on it. The role of the four institutional factors in the countries along the “Belt and Road” has been weakened or strengthened to varying degrees. There is obvious heterogeneity between different development levels and different regions.

Amphibious Diplomacy

Abstract The European Union (EU) and Taiwan (officially the Republic of China) are both non-conventional polities in international relations and the study of diplomacy. On the one hand, the EU is a ‘unique economic and political union between 27 European countries’. On the other hand, Taiwan is able to concurrently carry out two distinct forms of foreign relations. First, diplomacy as a sovereign country with states that it maintains formal diplomatic relations. Second, in the relations with states and other polities without diplomatic ties, and under their divergent ‘One China’ policies, Taiwan operates as a paradiplomatic actor or one that is within the intervals of diplomacy and paradiplomacy. Observing such a phenomenon, this article proposes the notion of ‘amphibious diplomacy’ and empirically studies the notion through how, in practice, the EU and Taiwan have been carrying out their negotiation of the Bilateral Investment Agreement (bia) given the constraints of an absence of diplomatic relations and the EU’s ‘One China’ policy. The article incorporates first-hand material from semi-structured interviews with interlocutors whose work allows them to obtain practical knowledge about the EU-Taiwan bia.

Analysis of Business and Governments Responses to Security Clearance through a Case Study Approach

With the ongoing trade disputes between China and the US in recent years, Chinese companies have struggled with their acquisitions in the US. Some studies have mainly focused on how Chinese companies should respond to US national security reviews, while there is a lack of unified recommendations on the responses of the two governments. Therefore, based on the case of the acquisition of Snapdragon by Asymchem, a case study approach is used to explore the tripartite role of Chinese companies, the Chinese and US governments in the national security review system. The analysis concludes that the security clearance issues faced by Chinese companies acquiring US companies are: industry attributes and sensitive technologies, derogation agreements and political risks. Corresponding strategies are therefore proposed for the three parties to respond: rights-limiting acquisition options, lobbying and a US-China bilateral investment agreement to facilitate bi-national investment with the joint role of companies and both governments.

Excluding Intellectual Property from Bilateral Trade and Investment Agreements: A Lesson from the Global Health Crisis

Excluding Intellectual Property from Bilateral Trade and Investment Agreements: A Lesson from the Global Health Crisis

Investment issues in relations between the PRC and EU

The article discusses the role of direct investment in cooperation between China and EU member states. China’s role as a global investor and financier has grown rapidly in recent decades. The bilateral investment agreement opens up great opportunities for both parties. Currently, cooperation in this area is regulated by bilateral agreements between states. In addition, today China is stepping up the promotion of the “One Belt, One Road” initiative, one of the ultimate goals of which is Europe. However, China’s somewhat increased investment in the European Union has generated much controversy. This highlights China’s desire to take over the European economy. The purpose of the work is to analyze the investment policy of China and the countries of the European Union and determine its features. When writing the article, qualitative, quantitative and comparative analyzes of scientific research were used. In the course of the study, the history of the development of investment relations between the two parties was studied and its current state was analyzed. In recent years, writers have focused on the “Global Gate” initiative to slow down China’s influence in the European Union. This article aims to carefully examine the relationship between Chinese investment in Europe and Chinese influence in the region.

The Effect of Foreign Capital Inflows on Economic Growth in Nigeria

Foreign capital inflows are major forms of resource transfer from the developed to the developing countries where they are usually found to be more productive and the result can be positive or negative. Hence, the work set out to empirically investigate the effect of foreign capital inflows and some selected macroeconomic variables on economic growth in Nigeria. The study applied the autoregressive distributed lag (ARDL) model on time series data for the period, 1981-2020. The findings from the paper indicate that foreign capital inflows: FDI, Gross fixed capital formation and personal remittances have significant impact on real gross domestic product in Nigeria. Consequently, the study recommends that government should continue to fine tune bilateral trade and investment agreements with other nations of the world.

Power Imbalance in Africa-China Investment and Development Deals: The Case of Zimbabwe (2000–2018)

This paper seeks to flag the reality of the socio-economic impact of power imbalance in the negotiation and implementation of infrastructural projects constructed in Zimbabwe and funded by China Exim Bank, China’s main financial arm in Africa. Reviewing the China-Zimbabwe financial deals concluded during President Mugabe’s regime from 2000 to 2018, I use existing credible online-available data and draw on analysis conducted in the framework of a PhD study carried out between 2019 and 2020. I argue that China had an overriding negotiating upper hand in these deals, which limited the economic and social gains that Zimbabwe could expect—and could obtain—from the bilateral relations. The mobilization of financial resources and popular disapproval of Chinese-led projects constitute the biggest obstacles to the efficient implementation of infrastructure development in the country. The paper underlines that the Zimbabwean population has borne the brunt, on one hand, of the predatory attitude of Chinese contractors, and on the other, of the irresponsibility of the Zimbabwean government, unable so far to formulate policies that enhance debt sustainability or to take action on citizen grievances, such as underpayment and maltreatment at the hands of the Chinese contractors. The discussion highlights how much, in the case of China-Africa relations, the ideal goal of mutual benefit for each State involved in bilateral investment agreements falls short of expectations.

РОЛЬ ИНВЕСТИЦИОННЫХ СОГЛАШЕНИЙ В РАЗВИТИИ ЦИФРОВОЙ ЭКОНОМИКИ И ИХ РЕАЛИЗАЦИЯ НА ВНУТРИГОСУДАРСТВЕННОМ УРОВНЕ

This article explores the issues of legal regulation of investment agreements in the digital economy in a period of enhanced technology development. Economic and political imperatives are combined with technological innovation to drive the growth of the digital economy, with growth rates particularly high in developing countries. The strategy for this growth should be private sector driven, government driven, and reviewed by civil society and academia. Over the past decades, one of the most remarkable developments in international investment law has been the extraordinary increase in the number of agreements concluded regarding the protection or liberalization of foreign investment, where the investment regimes provided by States and the position of foreign investors play a special role. However, the foundations for these actions are missing with the definitions, concepts, and indicators of the digital economy, which is currently in quite a mess. The main purpose of the article is to reveal the essence of the digital economy, bilateral investment agreements, investment activities, crypto assets, as well as issues of improving the understanding of tokens and cryptocurrencies, including them in agreements from the point of view of the prospects for the development of the digital economy in accordance with the new adopted regulatory legal acts of the Republic of Uzbekistan.

What is so special about CAI?

ABSTRACT This article examines the EU-China Comprehensive Agreement on Investment (CAI) in the light of investment chapters contained in trade agreements that China and the EU have signed (separately obviously) with two countries: the Republic of Korea, like most EU countries, a member of the Organization for Economic Co-operation and Development, and Vietnam, a developing country and a nonmarket economy, where, like in China, state-owned enterprises play a substantial role. We find that the CAI innovates compared to these earlier trade agreements in some important dimensions, especially as far as the commitments accepted by China are concerned. Hence, the bilateral EU-China investment agreement could be useful for a future multilateral agreement in areas where current WTO rules do not provide sufficient discipline for countries like China.

New generation of investment agreements in the regime of the European Union

The judgment of the Court of Justice of the European Union as of 6 March 2018 in Case C-284/16 changed the system and coordination of investment relations of the Member States of the European Union. The judgment set a fundamental precedent that changed the system of international investment law and placed the investment arbitration, conducted due to bilateral investment agreements between the EU and the Member States. The aim of the scientific study is to point to the new generation of the EU investment agreements which, in accordance with their importance, will influence the development of international investment relations between EU Member States and non-member countries of the world. The study was elaborated on the analysis of the rules of legal logic, systematics, accuracy and the generalization of conclusions. The analysis and interpretation of obtained results have proved that the traditional system of international investment agreements is being changed. A new model is emerging in the regime of investment agreement of the European Union.

The Emerging Power Play in the Mekong Subregion: A Japanese Perspective

The Emerging Power Play in the Mekong Subregion:A Japanese Perspective Kei Koga (bio) As one of the most active development donors in Southeast Asia, Japan has committed to socioeconomic development in the Mekong subregion since the end of the Cold War. However, as the Sino-U.S. rivalry intensifies, socioeconomic development in Asia, including the Mekong subregion, has become a theater for strategic competition. In 2013, China initiated the Belt and Road Initiative (BRI), raising its economic and political influence in the region through massive development assistance. For its part, Japan launched the Partnership for Quality Infrastructure (PQI) in 2015 to boost its assistance to Asia, and Tokyo strengthened its development cooperation with like-minded partners, particularly the United States, by establishing joint frameworks such as the OPIC-JBIC-Australia agreement on development finance in 2018 and the Blue Dot Network in 2019.1 Is the Mekong subregion destined to be subsumed into a power play of China versus Japan and the United States? This essay argues that Japan does not always aim to counterbalance China's growing influence in the Mekong subregion and could even play a role to ease geopolitical tensions in the region. Although the intensified U.S.-China strategic competition narrows Japan's diplomatic space to engage China, the Mekong subregion is still a potential area for Japan-China cooperation, mitigating the negative impact of great-power rivalry. Under the condition that China meets "quality infrastructure" standards, Japan and China could explore cooperation on development policy through a working-level bilateral dialogue, the ASEAN +3 (the Association of Southeast Asian Nations members plus China, Japan, and South Korea), and the East Asia Summit. The Development of Japan-Mekong Relations Japan's development commitment to the Mekong subregion began near the end of the Cold War, when Vietnam and Laos moved to become market [End Page 28] economies in the late 1980s and the Paris Peace Accords for Cambodia were signed in 1991. To facilitate the subregion's socioeconomic development, Japan created the Forum for Comprehensive Development of Indochina in 1993 to promote connectivity, such as the Greater Mekong Subregion's East-West Economic Corridor that aimed to improve transportation and economic integration between the states. Japan's Ministry of International Trade and Industry (MITI) and the ASEAN Economic Mechanism (AEM) also established the AEM-MITI Working Group of Economic Cooperation for Indochina and Myanmar in 1994 to facilitate market economy and infrastructure development.2 After ASEAN incorporated all five Mekong subregional states as members, Japan aimed to help address the "ASEAN divide"—the large economic and development gap between the original ASEAN members and the new members, Cambodia, Laos, Myanmar, and Vietnam (CLMV). Accordingly, when Cambodia, Laos, and Vietnam (CLV) proposed the concept of a "development triangle," they successfully solicited Japan for political and financial support.3 The countries then created the Japan-CLV framework, through which they held summits and foreign ministers' meetings annually from 2006 to 2008 to discuss subregional development schemes. From 2007 onward Japan's socioeconomic focus began to shift when it launched the Japan-Mekong Region Partnership Program. The program has three pillars: (1) economic integration, (2) trade and investment expansion, and (3) "universal values" and common goals, particularly the Millennium Development Goals.4 Japan then expanded its official development assistance (ODA) to the region and conducted negotiations for bilateral investment agreements with Cambodia and Laos, respectively. This Japan-Mekong framework was rapidly institutionalized through regular foreign ministers' meetings from 2008 and summits from 2009. The framework also gradually incorporated discussions over regional strategic [End Page 29] issues, such as the management of China's rapidly growing influence in the Mekong subregion.5 In 2010, Japan's intention to shape the subregional order based on existing international rules and norms grew clearer. It used the Japan-Mekong cooperation framework as a steppingstone for this agenda, corresponding with the U.S. "rebalancing" strategy and the Lower Mekong Initiative (LMI). To be sure, Japan still emphasized socioeconomic development as a top priority. The Tokyo Strategy 2012, which was issued during the 4th Mekong-Japan Summit and encapsulated three-year cooperative guidelines, aimed to build connectivity through infrastructure development, improve the investment environment...

The Effects of BITs on Contract Execution in Developing Countries: Some Implications for the COVID-19 Crisis.

Bilateral investment agreements are bilateral treaties between capital exporting countries and host countries, which is specially used to protect international investment, and the contract execution is directly related to the daily operation of multinational enterprises. Based on the panel data of 73 developing countries from 2005 to 2019, this paper examines the improvement effect of BITs on the contract execution of host countries. The study found that both the overall bilateral investment agreements and the bilateral investment agreements in force can significantly improve the contract execution of the host country. Due to the differences between the civil law system and the common law system in many aspects, such as the source of evidence and trial mode, the effect of BITs on the improvement of contract execution in host countries of the common law system is more prominent. In terms of specific impact, the improvement effect of BITs on time is significantly better than cost. The core conclusion is still valid after changing the estimation method and eliminating abnormal samples.

What Changes Should be Made by China under Article 20.16 of CPTPP

For the first time, Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) presents the series of environmental provisions as a separate chapter in a multilateral economic and trade agreement. This chapter deals with specific areas of environmental protection. Article 20.16 of the CPTPP is about marine capture. This article contains requirements for fisheries management systems of the contracting Parties, restrictions on illegal, unreported and unregulated Fishing (IUU fishing), and prohibitions and modifications of fishery subsidies granted by the contracting Parties. China is the largest fishing nation in the world, so Article 20.16 of the CPTPP will have a significant impact on China if China successfully joins the CPTPP after its application in September 2021. The issue of legal convergence is particularly important currently. WTO has passed the Agreement on Fisheries Subsidies, reaching an agreement on the issues such as the identification of IUU fishing and fishery subsidies based on Special and Differential Treatment. However, there are still several additional provisions waited to be negotiated, which China needs to keep working hard on.[1] In addition, although China has relatively domestic legislation in this area and has actively signed and participated in relevant international documents, it still lacks legal provisions on fishery subsidies and has not signed The Agreement to Promote Compliance with International Conservation and Management Measures by Fishing Vessels (Compliance Agreement). All of these will limit China's voice and basis for environmental provisions in bilateral free trade agreement negotiations. China should clarify the relevant concepts, improve its domestic legislation, accelerate its accession to relevant international documents and treaties, and upgrade its bilateral investment agreements in a timely manner.

The third wave of China’s open door policy

In a world that is changing dramatically, China needs a third wave of opening. This article addresses several issues, including what the third opening looks like based on the two previous openings in modern China, why a third opening is necessary, and how to open up to the outside world in the future. In particular, a new period of strategic opportunity is required to solve the problem of “being scolded” and to achieve China’s sustainable development. This period will be created more proactively and unilaterally through five approaches, namely, (1) harmonizing domestic market standards, (2) reorganizing and re-identifying existing international rules, (3) modernizing the governance system, (4) allowing local and social level openness, and (5) promoting negotiations to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and advancing the U.S.–China Bilateral Investment Agreement negotiations. With respect to internal and external circulation, China can integrate domestic and international markets and internationalize China’s rules while aligning with the international community. Ultimately, the internationalization of China’s rules will be achieved through the integration of domestic and international markets.