Bilateral Investment Treaties Research Articles

Uluslararası Yatırım Antlaşmalarının İhlalinde Demokratik Yönetişim ve Dolaylı Kamulaştırmanın Rolü

Democracies are thought to violate treaties less frequently than non-democracies, yet democracies violate
 bilateral investment treaties (BITs) just as often as non-democracies. Though democratic governments may
 intend to meet their international obligations, and though democratic institutions provide greater political
 constraints to encourage compliance, investment agreements may conflict with the goal of maintaining domestic
 public support. Specifically, we argue that credible elections create strong incentives for governments to side
 with domestic voters, and to pass legislation that violates investment agreements. The results suggest that the
 ability of voters to sanction leaders is an important mechanism that incentivizes governments to pass legislation
 that potentially violates investment treaties through indirect expropriation.

Here Comes Doomsday … Or Does It? – Implications of Achmea on Intra-EU Investment Arbitration in Light of Recent Case Law

This article follows recent developments in the intra- EU investment arbitration case-law after the publication of the CJEU’s judgment in Slovak Republic v Achmea BV (Achmea judgment) and the subsequent signing of the so-called ‘Achmea declarations’ on 15 and 16 January 2019 and the Agreement for the Termination of Bilateral Investment Treaties Between the EU Member States on 5 May 2020 (Termination Agreement). Although the decisions of investment tribunals analysed in this article show that all tribunals uniformly dismissed the jurisdictional objection of the respondent States based on the cjeu’s conclusions in the Achmea judgment, this article explores the very different reasons adopted by the tribunals when doing so, and the potential challenges ahead, especially once the Termination Agreement enters into ‘full’ force. Based on different approaches taken by the tribunals with regard to the applicability of the Achmea judgment, this article addresses its implications separately for ect arbitrations, icsid arbitrations and bit arbitrations, while drawing attention to the important similarities and differences between the decisions.

Role of Bilateral Investment Treaties in Promoting FDI: A Critical Review of Literature with Special Reference to Developing Economies

Role of Bilateral Investment Treaties in Promoting FDI: A Critical Review of Literature with Special Reference to Developing Economies

The 2019 Dutch Model Bilateral Investment Treaty: Navigating the Turbulent Ocean of Investment Treaty Reform

The 2019 Dutch Model Bilateral Investment Treaty: Navigating the Turbulent Ocean of Investment Treaty Reform

Screening of Foreign Investments and the Bilateral Investment Treaties of Bangladesh

Since 1960, about 2852 bilateral investment treaties (BITs) have been signed. Of them, 2298 BITs are in force at present. In the last 61 years, the WTO members failed to conclude a global treaty to regulate FDI in host countries, consequently, the BITs have played a significant role to regulate FDI. As a member of the WTO, Bangladesh has signed 31 BITs so far with various states to allow and increase the inflow of FDI into the country. Bangladeshi foreign investment laws and BITs mainly protect foreign investors. However, neither of them has any specific provision regarding the screening of foreign investments in Bangladesh. Two questions have been addressed in this paper: (a) Do the BITs of Bangladesh allow the host state for screening of foreign investments at the entry stage? (b) Should the screening of FDI be required during the pre-entry stage in Bangladesh? In this paper, a doctrinal research method has been used to critically analyze 15 BITs to explore whether there is any reference for screening of foreign investments in Bangladesh. We find that the existing Bangladesh BITs have provisions to promote and protect foreign investments but have no reference in relation to the screening of foreign investments. Therefore, the author has recommended that the Government of Bangladesh can consider specific provisions for screening of FDI in future BITs.

BALANCING INVESTOR PROTECTION WITH A STATE’S REGULATORY AUTONOMY IN THE AMENDED SADC FIP

This article focuses on the 2016 Amended Annex 1 to the Southern African Development Community (SADC) Finance and Investment Protocol (FIP) (the Amended Annex), which entered into force on 22 August 2017. It aims at a comprehensive assessment of the adequacy of the Amended Annex in balancing investor protection with SADC member states’ quest for domestic policy space in the content of the treaty provisions. Prior to the amendment, the 2006 SADC FIP contained clauses that were considered challenging in the old international investment agreements (IIAs) – such as broad definitions of “investor” and “investment”, provision for international arbitration as a recourse, and according foreign investors fair and equitable treatment (FET) and most favoured nation (MFN) treatment. The challenges associated with bilateral investment treaties (BITs) (especially investor-state dispute settlement (ISDS) mechanisms, restrictions on sovereign policy space and regulatory autonomy) necessitated a review by the SADC member states of the 2006 SADC FIP. The purpose of this article is to reflect on the implications of the 2016 Amended Annex 1 to the SADC FIP with a view to finding a balance between protection enjoyed by investors and the host states’ right to regulate. The article adopts a comparative international law approach, which is useful in order better to understand a SADC member country’s approach to foreign investment protection.

Comparative Analysis of Bilateral Investment Treaties of the Russian Federation

The paper analyzes bilateral investment treaties, one of the parties to which is Russia. The article compares the provisions contained in the 1992 and 2001 model agreements of Russia, as well as the provisions of the 2016 Regulations. The concepts of “foreign investor” and “investment” are considered, discrepancies in the concepts and wording used in treaties with different states are revealed. In a comparative aspect, the authors explore the operation of treaties over time, the use of the standard of fair and equal treatment, and the application of provisions on expropriation. The features of the formulation of the national treatment standard and the most favored nation treatment standard, as well as the umbrella clause are revealed.

Bilateral Investment Treaties

This paper, “Bilateral Investment Treaties: Liberal Tools Encouraging Greater Financial Direct Investment or Economic Nationalist Instruments?” will examine the legal arguments on how best to regulate Foreign Direct Investment, especially exploring the ramifications of the widespread use of Bilateral Investment Treaties (BTIs).

Rebus sic stantibus as a Stabilizing Doctrine in the Climate Crisis

Abstract In the face of massive, unanticipated and even disjunctive changes, the balance of the respective interests of the state parties to existing treaties may no longer survive the changed—or changing—climate landscape. While, ideally, the co-contracting states to such treaties could mutually agree to terminate or revise their treaty obligations to accommodate such changes and redress the now imbalance of interests in the treaty, some scenarios are bound to be contentious. In such cases, is there any other procedure that can provide for an orderly and fair adjustment of treaties so as to avert a breakdown of the network of treaties and a destabilization of world order? This article proposes that the rebus sic stantibus doctrine may function as a stabilizing doctrine for maintaining and possibly adjusting treaty regimes in an orderly fashion. Unlike the doctrine of necessity or many explicit treaty carve-outs, such as the security exception of the US Model Bilateral Investment Treaty, the doctrine of rebus sic stantibus may allow for both an objective test and also one that must be pleaded before a third-party arbiter. For this reason, rebus operates within controlled limits. Rebus offers an international tribunal the opportunity to set out a fair termination or revision of a climate-impacted treaty. I trace the evolution of rebus as a stabilizing doctrine and illustrate the potentialities of its application to the climate crisis.

Bilateral Investment Treaty and Foreign Direct Investment in India

India has one of the largest Bilateral Investment Treaty (BIT) networks with other counties around the world. The BITs is to promote foreign investment by increasing investor confidence, empowering individual private parties to take international arbitral proceedings against the threat of appropriation by the government of the host country. This paper analyses the effect of BITs on FDI inflows in India using panel data for 76 countries for the time period 2000-2016 applying a dynamic panel generalised method of moments instrumental variable estimation method. The differenced GMM and system GMM estimates show a significant negative effect of bilateral investment treaties on the FDI inflows in India. While the lagged FDI has a significant positive effect, the financial openness of the source nations is reducing FDI inflows to India. The POLCON index shows that the countries with lesser political constraints have positive FDI outflow towards India. As opposed to domestic variables, the Chinn-Ito and POLCON indices have a greater share of change in FDI inflows to India. It seems that the BITs is not efficient enough to create investor confidence to invest in India.

Backlash Against ISDS

Over the years, Investor-State Dispute Settlement (ISDS) has spurred a lot of controversies on its legitimacy and integrity. The criticisms mainly stem from the obscuring effect of ISDS on legitimate government regulation and the adventurist manner in which arbitral tribunals interpret substantive rights favouring foreign investors. This, in turn, has resulted in a backlash by States which is illustrated through various forms ranging from withdrawal from traditional Bilateral Investment Treaties (BITs), the development of new era BITs, to extremities of eliminating ISDS all-together. Although there are plausible reforms that have been adopted, the system is still a work in progress. Mechanisms must be incorporated to strike a balance between promotion and protection of investment and the sovereign right of the State to regulate investment in the public interest. Innovation and the adoption of regulatory tools that meet individual States developmental needs will play a focal role in attaining a comprehensive International Investment Agreements (IIAs) reform. This paper argues that a paradigm shift from the competing interests of States and investors to a sustainable development approach will achieve a necessary balance in ISDS taking into account the interests of all stakeholders involved in investment arbitration.

Contents of the National Interest of Indonesia in the Bilateral Investment Treaty

Economic cooperation between subjects of international law is generally expressed in various forms of agreements or international trade and investment between countries aimed at obtaining benefits from the parties entering into international cooperation. However, the BIT made by the Government of Indonesia still does not contain a balance between the rights and obligations of Investors and the Indonesian National Interest. This research is a normative research with statutory and case approach. The results of the study indicate that the current Indonesian investment agreement does not fully contain the national interest because it is based on social welfare based on Law No. 11 of 2009 has not been achieved by looking at the fact that there are still many people around the Freeport mining area who are still under poverty and housing and health conditions are very minimal compared to luxury buildings around the mine. In addition, the customary tribes around the investment (mining) location have their ulayat rights taken away and do not get protection. Based on economic theory, especially the middle way theory, investment agreements should not only provide benefits to investors but must also provide benefits to the recipient country of capital in this case the national interest. Keywords: Bilateral Investment Treaty, National Interest, Indonesia DOI: 10.7176/JLPG/115-04 Publication date: November 30 th 2021

The global governance of FDI and the non-market strategies of TNCs: explaining the “backlash” against bilateral investment treaties

This article seeks to explain recent decisions by countries to terminate their existing bilateral investment treaties (BITs) and revisit their commitment to future international investment agreements (IIAs). It argues that BITs, transnational corporations (TNCs), host States and international arbitration institutions form a decentralized system of global governance of foreign direct investment (FDI), based on insights from the fields of international political economy and international law, and that the nonmarket strategies of these TNCs have not only shaped the contours of this system but have also prompted host States to reform this system, from the perspective of a “political bargaining model”. The article illustrates this argument through the case of South Africa, which terminated its BITs with several European countries as a response to cases of investor–State dispute settlement (ISDS) and has sought to redefine its engagement with this system of global governance as a result.

Multilateral Principles in a Bilateral World

Abstract Multilateralism in international investment law is a multifaceted concept with a complex and eventful history. Multilateralism is a paradigm for international investment relations and is also present in the caselaw of investment arbitral tribunals, regardless of whether they consider bilateral or multilateral investment treaties. Indeed, in most cases, they interpret treaty provisions as part of a multilateral system. Further, multilateralism is present every time States act in concert with other States or consider other States’ investors’ legitimate interests. It also emerges that, in some instances, multilateralism has become mandatory. For example, this is the case concerning sustainable development or climate change. In these areas, international law requires multilateralism. States are under an obligation to co-operate for purposes of achieving or promoting multilateral solutions. However, concerning the international investment law context, such a concept is not present. The general assumption is that States’ participation in multilateral practises is left to their discretion: it is voluntary or consensual. In this article, we question that assumption. In this article, we offer a brief review of multilateral experiences in international investment law in the 20th century and provide an analysis of multilateralism in a historical context. Then we turn our attention to the current state of affairs to appreciate it in light of the past. Further, we discuss the future, and in particular, mandatory multilateralism in international law with respect to sustainable development. Here we identify the principles, which might justify mandatory multilateral approaches. Finally, we consider whether the principles justifying mandatory multilateralism in international law are applicable in the context of international investment law as well. We attempt to answer this question in the affirmative and point out further areas of research.

The New Italian Model Bit Between Current and Future Trends

Abstract In 2021, the new Italian Model Bilateral Investment Treaty has been published. It replaced the 2003 Model bit and can be considered as a significant example of the “new generation of bit s”, which try to better balance investor rights with the public prerogatives of States. The Model Treaty also introduces significant innovations as to the conduct of arbitrators and the corporate social responsibility of investors and is also aimed at coordinating Italian and European foreign investment policies. This article offers a view of this new Model bit and tries to insert it in the broader context of the proposed reforms regarding international investment law and arbitration.

Itisaluna and Others v Iraq: The OIC Agreement Conundrum: Consent to ICSID Arbitration and the MFN Clauses Saga

In an Award dated 3 April 2020 (Itisaluna Award), the Tribunal analyzed whether the most favoured nation (MFN) clause in article 8 of the Organization of Islamic Co-operation (OIC) Agreement allows a foreign investor to import a provision permitting access to International Centre for the Settlement of Investment Disputes (ICSID) arbitration from bilateral investment treaties (BITs) concluded between Iraq and third countries. In this Award, the Tribunal dismissed the Claimants’ attempts to use the MFN clause in the OIC Agreement to import Iraq’s consent to ICSID arbitration from other BITs. The Tribunal declined jurisdiction on the ground that the OIC Agreement does not establish clear consent to ICSID arbitration. The Tribunal majority’s approach was subject to a dissent by arbitrator Peter, who was of the view that the Tribunal had jurisdiction on the ground that the general consent to arbitration in article 17 of the OIC Agreement could extend to...

The Applicability of the Russia-Ukraine Bilateral Investment Treaty to Crimea in the Light of the Duty of Non-recognition in International Law

According to international law, Russia’s territorial claim over Crimea shall not be recognized as it was brought about by a violation of the prohibition of violence. Despite this obligation, several arbitral tribunals have recently accepted jurisdiction in claims brought by Ukrainian investors under the Russia-Ukraine BIT and declared the Russia-Ukraine BIT applicable. I consider the arbitral tribunals’ reasoning to be inconsistent with the duty of non-recognition. Therefore, I analyze possible alternative ways in which Ukrainian and non-Ukrainian investors can obtain protection for their investments in Crimea under the Russia-Ukraine BIT without implicitly recognizing Russia’s territorial claim over Crimea. International Investment Law, Duty of non-recognition, Crimea, Annexation, Jurisdiction ratione loci

Buying-up Europe No More? How the European Union has Responded to the Challenges of Chinese Foreign Direct Investment

towards Chinese outward foreign direct investment (OFDI) has evolved over the past decade. I contend that the EU was quite receptive to Chinese OFDI at the beginning of the decade, due to both ideological leanings and the economic context of a post-crisis Europe. I then illustrate how the EU slowly adopted a more guarded and critical approach towards Chinese OFDI. This paper will focus specifically on four key issues surrounding Chinese OFDI policy: national security, technology transfers and IP theft, state support for Chinese firms, and market access, ultimately arguing that bilateral investment treaty (BIT) negotiations and the new EU investment screening mechanism are the main policy levers being used to address these concerns. For the sake of this paper, I will use the OECD’s definition of OFDI.

Environmental Challenges, Opportunities, and Policy Implications to Materialize China’s Green Belt and Road Initiative

China’s Belt and Road Initiative (BRI), announced in 2013, is an unprecedented mega-project that aims to improve connectivity between China and over 70 countries through infrastructure investment and regional cooperation. It has unparalleled potential to bring about positive economic development across vast regions of the world but, at the same time, may inevitably come with considerable environmental challenges. Even so, opportunities exist to prevent or mitigate environmental risks and realize China’s promise of a green BRI. China has proposed to construct a green BRI. The existing environmental law framework of host states, green development practices by China and BRI participating countries, and the role of bilateral investment treaties (BITs) as well as multilateral environmental agreements (MEAs) all increase the odds of a green BRI. This article contributes to existing BRI-related literature by examining the environmental challenges and opportunities of the BRI and providing suggestions on building a comprehensive environmental protection mechanism. It is suggested to stringently implement environmental norms and green BRI policies, make greater use of BITs and MEAs, bring together various actors, mobilize all available resources, and establish an efficient environmental dispute settlement and environmental remediation system.

Economic Policy Uncertainty, Bilateral Investment Treaties, and Chinese Outward Foreign Direct Investment

This paper examines the effect of bilateral investment treaties (BITs) in promoting Chinese outward foreign direct investment (COFDI) in the presence of rising economic policy uncertainty in China's partner countries. We postulate that the signing of BITs should help stimulate COFDI because the treaties send a credible signal to foreign investors about the host country's intent to protect Chinese investment, and make it more difficult for the host country to violate its treaty obligations. BITs that contain rigorous investment protection and liberalization provisions, in particular, should be more likely to encourage COFDI as they directly influence Chinese investors' expectations about the stability, predictability, and security of the host market. However, while BITs generally promote COFDI, host country economic policy uncertainty may also limit their effectiveness. This is because uncertainty tends to undermine investor confidence, trigger capital flows from high- to low-risk countries, and dampen commercial activities. Poisson pseudo-maximum likelihood (PPML) estimation models of the determinants of COFDI to 188 countries between 2003 and 2017 lend substantial support to our conjectures.