Domestic Investment Laws Research Articles

Balance between Investment Protection and Sustainable Development under Tanzania-Canada BITs: Need for Progressive Domestic Investment Law

Interactions between foreign investment and host community raise questions as to the proper approach to balance investment protection and sustainable development interests. This article examines how Tanzania balances investment protection with social and environmental concerns. Tanzania has had a mixed practice with foreign investment and Bits. Few Bits were concluded in the early years after independence. But then the country experimented with socialism and self-reliance in late 1960’s and 1970’s, only to reverse trend in mid-1980’s. Tanzania concluded majority of her Bits in 1990s and 2000’s. From 2010, Tanzania concluded Bits which are conscious of sustainable development concerns. Tanzania-Canada BIT is a case in point. These Bits not only inserted explicit sustainable development provisions but also progressive investment standard provisions which afford the government space to regulate legitimate sustainable development objectives. However, this recalibration approach still faces practical challenges due inconsistencies of arbitral tribunals. To help fill this gap, the study considers the role of domestic investment laws in protecting sustainable development interests. In that regard, the study holds the view that domestic investment laws have to be sustainable development oriented in order to supplement other approaches of balancing investor rights with sustainable development interests of host states.

Domestic Investment Laws and International Economic Law in the Liberal International Order

AbstractInternational Economic Law (IEL) has largely regulated cross-border trade and investment in the post-WWII world. IEL has become an important part of the Liberal International Order that prescribes a set of rule-based relationships for international cooperation based on political liberalism, economic liberalism, and liberal internationalism. However, economic globalization has witnessed a relative decline, especially after the 2008 global financial crisis and the COVID-19 pandemic. This form of ‘de-globalization’ challenges the assumptions upon which modern IEL is premised. This introductory article to the special issue on ‘Domestic Investment Laws and International Economic Law in the Liberal International Order’ explains how domestic law has started playing an increasingly important role in regulating foreign investment. Often overlooked instruments such as Domestic Investment Laws, Investment Screening Mechanisms, and Investment Promotion Agencies are now important tools in promoting or restricting foreign investment flows. Expanding on this premise, the article examines the transition from international to domestic in the Liberal International Order with a focus on Domestic Investment Laws. The move to domestic law does not signal a new era of economic isolation for States. Instead, it presents an effort to achieve similar ends of attracting foreign investors using different means while exercising more control over foreign investment.

The Right to Hospitality in International Economic Law: Domestic Investment Laws and the Right to Invest

AbstractUnder the Liberal International Order (LIO) of the post-WWII years, foreign investment protection was meant to be granted by international law and institutions. But current economic de-globalization is giving way to institutional and legal de-globalization. Domestic laws relating to foreign investment, especially in the form of Domestic Investment Laws, are taking over International Investment Agreements as the standard means of regulating cross-border trade and investment flows. The article compares substantive and procedural standards of investor protection in international and domestic investment law, as well as old and new Domestic Investment Laws, with a focus on non-discrimination and dispute settlement. The move to domestic law in IEL does not always signify a trend for most states to isolate themselves from the international economy. Rather, it is often an effort to achieve similar ends as those of the LIO but using different means. The article discusses an alternative political economy framework for an international (economic) law of ends, the cornerstone of which is the right to hospitality.

International Organizations, Technical Assistance, and Domestic Investment Laws

AbstractCan supranational actors influence domestic policy? In this article, we study how international organizations have sought to shape the contents of domestic laws aimed at protecting foreign investment. Traditionally, the influence of international organizations on public policy has been assumed to run through loan conditionalities. We build on a recent strand of literature indicating that international organizations can also influence public policy through technical assistance. Empirically, we present a cross-sectional mapping of the protection that states offer foreign investors in domestic investment laws, and a mapping of the advisory activities of the three main organizations offering technical assistance on foreign investment laws: the United Nations Conference on Trade and Development, the Organization for Economic Co-operation and Development, and the World Bank. We find that there are significant variations in protection offered under domestic investment laws, and variation in international organizations’ technical assistance over time and across organizations. To explore technical assistance as a causal mechanism for influence on public policy more closely in this field, we conduct a case study of the development of domestic investment legislation in Bosnia and Herzegovina.

Domestic Investment Laws, International Economic Law, and Economic Development

Abstract‘Development’ is a legal concept which has been central to the practice of international economic law (IEL). This Article examines how ‘development’ continues to be at the heart of struggles between domestic investment laws (DILs) and international economic law. By examining over 3000 international investment agreements (IIAs) and DILs signed in the last seven decades, this Article identifies the ways in which the concept of development has evolved in tandem with the growth of international economic law by dividing the history of international investment law into six main phases. It traces the emergence of ‘development’ in DIL to the decolonization era arguing that post 1990, the proliferation of international investment treaties and growth of investment treaty arbitration have been used as tools of liberalization on the weak premise that this would lead to economic development. In this context, this Article examines closely the interpretation of ‘investment’ by ICSID tribunals, promotion of international arbitration for economic development, attempts to internationalize economic development contracts, continued relevance of the New International Economic Order, and shift to sustainable development in IEL discourse.

Domestic Investment Laws and State Capitalism

AbstractState capitalism and the liberal economic order have had an antagonistic relationship. While the international economic law rules have sought to reduce the role of the state in the economy, state-controlled entities have more recently increased in size and importance – both domestically, as well as internationally. In this connection, the article analyses the effects of state capitalism's expansion simultaneously with the domestic investment law of States. The article analyses the underlying principles of state capitalism in an effort to answer the question of whether domestic laws promoting investment – as defined in the special issue – are positive, negative, or neutral to state capitalists. The article further interprets the trends spawned by the propagation of the liberal international economic order as states realize their development targets and envisage to actively contribute to the regulation of international trade and cross-border transactions globally.

New Investment Rulemaking in Asia: Between Regionalism and Domestication

AbstractThe article analyses investment rulemaking in new Asian regionalism in the context of evolving national legislation and regional trade strategies. It argues that the Association of Southeast Asian Nations (ASEAN) and the Regional Comprehensive Economic Partnership (RCEP) represent Asia's pragmatic incrementalism in reforming the investment regime. The process reinforces the relationship between international economic law and domestic investment laws. In tandem with transforming international investment agreements, ASEAN expedited investment and services trade, and established the modern investor–state dispute settlement (ISDS) mechanism. The RCEP further buttresses the ASEAN centrality in regional frameworks by consolidating ASEAN Plus One agreements. Yet, the RCEP's omission of ISDS reflects a distinct approach that may confront challenges to state-to-state proceedings and treaty shopping under overlapping pacts. Finally, the research sheds light on Asian countries' recent investment agreements and domestic dispute settlement that complement the liberal international order. These developments provide valuable models for developing countries and contribute to the understanding of global investment reforms from an Asian perspective.

The Past, Present, and Future of Domestic Investment Laws and International Economic Law

AbstractThis article considers the past, present, and future of domestic investment laws. Its focus is on the ‘facilitative’ investment law, which aims to encourage foreign investment by granting substantive protections to foreign investors and consent to international arbitration over disputes with foreign investors. The article first contends that states had independent reasons to enact such facilitative investment laws alongside investment treaties, even though investment treaties perform very similar functions. Secondly, the article argues that investment laws can be characterized either as unilaterally assumed international obligations of states or simply as domestic laws of states, with differing consequences under each characterization. Thirdly, the article proposes four possible futures for facilitative investment laws: contamination, continuation, compromise, and contestation.

The Indonesian Government Participation in International Investment Law and Its Reform

International investment between countries is aimed at improving economic development of the state parties and its integration to the world economy. To attract foreign investors, the Government of Indonesia provides investment guarantees through BITs and domestic investment laws. However, in its implementation, those guarantees brought several disputes between Indonesian government and its foreign investors. Moreover, the BIT also shows an imbalance in the position between Indonesia as the host country and its foreign investors which affects the host state’s sovereignty. Reforms must be carried out in this area of law to strike a balance between the protection of foreign investors and the sovereignty of the host state. In addition, reforms in BIT must also be able to provide an equilibrium between economic improvement, human rights, and environmental sustainability. This article describes the participation of the Indonesian government in international investment law and the reforms that must be undertaken in the field of investment law, both at the domestic and international levels.

Asymmetric diffusion: World Bank ‘best practice’ and the spread of arbitration in national investment laws

Globally, 74 countries have domestic investment laws that mention investor-state arbitration and 42 of these laws provide consent to it. That is, they give foreign investors the right to bypass national courts and bring claims directly to arbitration. What explains this variation, and why do any governments include investor-state arbitration in domestic legislation? We argue that governments incorporate arbitration into their domestic laws because doing so was labelled ‘international best practice’ by specialist units at the World Bank. We introduce the concept of asymmetric diffusion, which occurs when a policy is framed as international best practice but only recommended to a subset of states. No developed state consents to arbitration in their domestic law, nor does the World Bank recommend that they do so. Yet we show that governments who receive technical assistance from the World Bank’s Foreign Investment Advisory Service are more likely to include arbitration in their laws. We first use event history analysis and find that receiving World Bank technical assistance is an exceptionally strong predictor of domestic investment laws with arbitration. Then we illustrate our argument with a case study of the Kyrgyz Republic’s 2003 law.

Asymmetric Diffusion: World Bank 'Best Practice' and the Spread of Arbitration in National Investment Laws

Globally, 74 countries have domestic investment laws that mention investor-state arbitration and 42 of these laws provide consent to it. That is, they give foreign investors the right to bypass national courts and bring claims directly to arbitration. What explains this variation, and why do any governments include investor-state arbitration in domestic legislation? We argue that governments incorporate arbitration into their domestic laws because doing so was labelled ‘international best practice’ by specialist units at the World Bank. We introduce the concept of asymmetric diffusion, which occurs when a policy is framed as international best practice but only recommended to a subset of states. No developed state consents to arbitration in their domestic law, nor does the World Bank recommend that they do so. Yet we show that governments who receive technical assistance from the World Bank’s Foreign Investment Advisory Service are more likely to include arbitration in their laws. We first use event history analysis and find that receiving World Bank technical assistance is an exceptionally strong predictor of domestic investment laws with arbitration. Then we illustrate our argument with a case study of the Kyrgyz Republic’s 2003 law.

International Investment Law and Domestic Investment Rules: Tracing the Upstream and Downstream Flows

Abstract International investment law and domestic law governing foreign investment strongly influence one another and indeed operate in a relationship of co-dependency or interoperability. Yet the flows between the two bodies of law, and their respective modalities of influence, remain generally unexplored in international legal theory. To shed light on this important phenomenon, this article traces the ways in which international investment law can affect the content of domestic investment law, using theories of international law compliance as a lens for such an understanding. It then proposes a set of pathways by which domestic law can influence the content of international investment rules. International law thus depends upon national law not only for its implementation but for its very content. Indeed, the regime of investment law will not tolerate significant discrepancies between the two. An appreciation of this dynamic is critical to evaluating the prospects of improvements to international investment law and can inform the ongoing discussions among stakeholders to this end.

The Conditions for Reform: a Typology of “Backlash” and Lessons for Reform in International Investment Law and Arbitration

Abstract Understanding the “backlash” it is facing is a necessary condition for a successful reform of international investment law and arbitration. The article develops a typology of backlash in international investment law and arbitration, identifying three main tensions in the field: contractualism vs. unilateralism; economic rationality vs. political rationality; flat world view vs. diverse world view. The article claims that the reform discussion, including at the UNCITRAL level, should be informed by this backlash typology. Two main lessons may be learned, one at the methodological level and one at the substantive level: first, the reform discussion needs to be informed by the study of systems of domestic investment law and policy; second, the reform discussion needs to move beyond its Investor-State Dispute Settlement (ISDS) confines and also include reform of the substantive law and administrative procedures of States and of international treaties.

International Investment Law and Domestic Investment Rules: Tracing the Upstream and Downstream Flows

International investment law and domestic law governing foreign investment strongly influence one another and indeed operate in a relationship of co-dependency or interoperability. Yet the flows between the two bodies of law, and their respective modalities of influence, remain generally unexplored in international legal theory. To shed light on this important phenomenon, this article traces the ways in which international investment law can affect the content of domestic investment law, using theories of international law compliance as a lens for such an understanding. It then proposes a set of pathways by which domestic law can influence the content of international investment rules. International law thus depends upon national law not only for its implementation but for its very content. Indeed, the regime of investment law will not tolerate significant discrepancies between the two. An appreciation of this dynamic is critical to evaluating the prospects of improvements to international investment law and can inform the ongoing discussions among stakeholders to this end.

ANALISIS KINERJA INDUSTRI TPT INDONESIA

Textile industry can be categorized the oldest industry in Indonesia. This is a significant industry, which provides not only on economic contribution but also on absorbing employment for the total 15% of all manufacture sectors.At the present, textile industry is facing some structural problems, such as the high cost of energy, insufficient of infrastructure, the low technology and well- worn of the machines, and also the overflowing of China's textiles into Indonesia markets. Those are causing high cost of production and further impeding competitiveness of domestic textile in the world marketOn the early stage, the textile industry development was boosted by the Foreign Investment Law (1967) and the Domestic Investment Law (1968). In addition, the export quota system grows up steadily during the period of 1984 to 2000, which reach to 18, 5% per year. For the last 5 years, however, the export shows a fluctuation. For 2000, the number reaches US$ 8.3 billion, and in 2009 goes to US$ 9.26 billion or just a tiny increase of 3.41 % per year.

The Changing Pattern and Future of Foreign Investment Law and Policy in Ghana: The Role of Investment Promotion and Protection Agreements

This article assesses the implications of investment promotion and protection agreements (ippas) for domestic investment law and policymaking in Ghana. It reviews the terms of domestic investment legislation prior to and after Ghana entered into ippas to ascertain the differences in the content of domestic laws and the role of the ippas in the changing pattern of foreign investment law and policy in Ghana. The review shows fundamental differences. Whereas, for example, under the pre-investment treaty domestic investment laws, a proposed investment could be admitted only if it would contribute to the national economy, the post-investment treaty domestic investment law requires only minimum capital for admission. What explains the fundamental change in the content of the post-investment treaty domestic law? The literature reveals that the change in government policy from a regulatory to a more investment promotion-oriented policy explains the shift in the content in investment law in Ghana. The post-investment treaty domestic law was enacted against the backdrop of structural adjustment policies that emphasised liberalization. The article argues complementarily that the coming into force of the ippas of Ghana also explains the changing pattern in the content of domestic investment law. Given the definitions of investment and the substantive obligations under the ippas, Ghana could not, even without independent policy change, retain the content of domestic investment law as was the case when she was not party to any ippas. The thesis is that ippas have the effect of limiting regulatory autonomy and will limit future legislative powers of the State in defining the content of domestic investment law and policy. This will ultimately determine the pattern and trend of domestic investment law and policy in Ghana. The article proposes that the ippas should be renegotiated to take into account the constitutional responsibility of the Government to protect the welfare of the people of Ghana.

The Interpretation of Consent to ICSID Arbitration Contained in Domestic Investment Laws

Consent to ICSID jurisdiction may be given in different ways. One option is for the host state to offer its consent to ICSID by way of its national legislation. The aim of this article is to discuss how a domestic provision granting jurisdiction to ICSID ought to be interpreted. The article first describes the requirements for consent to ICSID arbitration and examines the specific challenges posed by domestic law clauses that grant jurisdiction to ICSID. It then analyses consent clauses contained in investment laws of several states, with reference to relevant arbitral decisions. Finally, it turns to the issue of interpretation of such consent clauses. In this regard, the article discusses the possible role that the IDC ‘Guiding Principles’ on unilateral declarations of states of 2006 might play in interpreting domestic provisions containing an offer to arbitrate before ICSID.