International Investment Law Research Articles

Connecting International Investment Law and International Human Rights Law in the Application of Full Protection and Security Due Diligence Standard

Connecting International Investment Law and International Human Rights Law in the Application of Full Protection and Security Due Diligence Standard

Völkerrechtlicher Investitionsschutz made in Germany? Zur Genese und Gestalt des ersten BIT zwischen Deutschland und Pakistan (1959)

International Investment Protection Made in Germany? On the Genesis and Shape of the First BIT between Germany and Pakistan (1959) The investment protection treaty concluded between Germany and Pakistan in 1959 is generally regarded as a milestone in the development of international investment law. It has entered the collective memory as the first bilateral investment treaty (BIT). In this article, we analyse archival sources to investigate what makes this treaty the first of its kind and why it was Germany that concluded this agreement at that specific time. Through historical analysis, we outline how previous instruments of investment protection influenced the creation and design of the BIT. In this context, continuities with legal practices and patterns of argumentation of the colonial period become apparent. In addition, we trace the ideas driving the BIT and its negotiation process. Considerations of economic policy in the context of immense trade surpluses were crucial. The emergence of the first BIT was moreover closely linked with domestic legal instruments, such as the federal investment guarantee scheme (Bundesgarantien). In short, German BITs should be understood as an appendix of the budget acts. Throughout, we highlight the extensive influence of the financial industry – especially via Hermann Josef Abs.

DONALD TRUMP, TPP, NAFTA AND INTERNATIONAL INVESTMENT LAW: TIME TO PANIC OR TIME FOR HOPE?

When newly elected President Donald Trump took the office he almost immediately, with a stroke of a pen, withdrew the US from Trans Pacific Partnership (TPP) and vowed to do the same with North American Free Trade Agreement (NAFTA). Given the magnitude and the significance of both of these treaties not only for international trade, but also for international investment, the urgency of such decisions seem unprecedented. This article examines potential impact of these developments on international investment law regime in the broader context of globalization issues.

Chasing the Rabbit: The Resurgence of General Principles of Law in International Investment Law and Beyond

Chasing the Rabbit: The Resurgence of General Principles of Law in International Investment Law and Beyond

Harmonizing Commercial and Investment Arbitration: Conflict Dynamics

This article provides an independent analysis of the scope and extent of arbitration under investment agreements, and the implications of the possible convergence in the process of harmonization of international commercial arbitration law.The successful settlement of any dispute depends on the compatibility of the nature of the dispute with the technique to which it is submitted for resolution. In the last decade, there was a constant increase in the number of disputes that were subjected to arbitration and a major chunk of those disputes covered a comparatively new but known area called international investment law. With economic globalization allowing the free flow of foreign direct investment (FDI) in and out of a country, the existing regulatory framework in international law to standardize investment liberalization is often seen as ineffective, hence the consequent disputes. Here, arbitration offers a suitable framework for the amicable settlement of commercial disputes covering investment agreements with the assistance of bilateral or multilateral agreements between the states. Preferential trade agreements pertaining to investment often contain an arbitration clause for the settlement of future disputes between parties. At this juncture, one may find that there exists a fundamental dilemma in ascertaining the true nature of investment arbitration and how it is different from commercial arbitration. For example, the protection being offered to human rights under the purview of investment arbitration may generate doubts in the minds of investment arbitrators. In commercial arbitration, divergences in a pluralistic order become particularly relevant whereas the diverse legal cultures supported by individual constitutional frameworks have a direct impact on investment arbitration due to their practical application. The article also discusses the need for harmonized rules governing arbitration procedures while maintaining the functional dissimilarities between commercial and investment arbitration.

Holding Transnational Corporations Accountable for Environmental Harm Through Counterclaims in Investor-State Dispute Settlement: Myth or Reality?

Abstract Considering the imperative need to protect our environment, the present article begins by highlighting the absence of a comprehensive international framework under which transnational corporations may be held accountable for environmental harm. Drawing from the successful decisions on environmental counterclaims in Perenco v Ecuador and Burlington Resources v Ecuador, this article thus argues that this legal void could be filled by holding transnational corporations accountable for environmental harm under international investment law. However, the practice of environmental counterclaims as they have materialised in these recent decisions emphasises the existence of a gap between theory and reality and, thus, their limited chances of success. It is nevertheless suggested that, in the context of current debates surrounding an investor-State dispute settlement reform, States hold the cards to ensure that transnational corporations are held accountable for environmental harm under international investment law.

Does International Law Need a Conscience? Evaluating the India–South Africa Proposal to Suspend TRIPS Obligations and the COVID-19 Vaccines

Abstract There is undoubtedly a consensus within the international community that ‘vaccine nationalism’ is an undesirable state of affairs. However, states are self-interested actors and in the absence of constraints imposed by international economic law this pursuit of rational self-interest is likely to result in an outcome that is unjust on a global scale. The recent proposal by India and South Africa to suspend TRIPS obligations for the duration of the COVID-19 pandemic has been rejected within the WTO. This proposal constitutes a recognition of the inadequacies surrounding the TRIPS compulsory licensing scheme. Yet, the immersion of intellectual property law within international investment law together with the proliferation of free trade agreements containing TRIPS-plus obligations would likely have made such a proposal unworkable. We argue that the fundamental problem is that the TRIPS Agreement lacks a defined concept of conscience that governs both its operation and interpretation. Such a principle exists in the common law within the field of private law. The principle, in its various doctrinal iterations, navigates the tensions between different parties while serving an underlying purpose of justice within the common law. It has much to offer international intellectual property law.

Investor-State dispute settlement (ISDS) cases and India: affronting regulatory autonomy or indicting capricious state behaviour?

PurposeThe dominant narrative in the investor-State dispute settlement (ISDS) system is that it enables powerful corporations to encroach upon the regulatory power of developing countries aimed at pursuing compelling public interest objectives. The example of Phillip Morris, the tobacco giant, suing Uruguay’s public health measures is cited as the most significant example to prove this thesis. The other side of the story that States abuse their public power to undermine the protected rights of foreign investors does not get much attention.Design/methodology/approachThis paper reviews all the ISDS cases that India has lost to ascertain the reason why these claims were brought against India in the first place. The approach of the paper is to study these ISDS cases to find out whether these cases arose due to abuse of the State’s public power or affronted India’s regulatory autonomy.FindingsAgainst this global context, this paper studies the ISDS claims brought against India, one of the highest respondent-State in ISDS, to show that they arose due to India’s capricious behaviour. Analysis of these cases reveals that India acted in bad faith and abused its public power by either amending laws retroactively or by scrapping licences without following due process or going back on specific and written assurances that induced investors to invest. In none of these cases, the foreign investors challenged India’s regulatory measures aimed at advancing the genuine public interest. The absence of a “Phillip Morris moment” in India’s ISDS story is a stark reminder that one should give due weight to the equally compelling narrative that ISDS claims are also a result of abuse of public power by States.Originality/valueThe originality value of this paper arises from the fact that this is the first comprehensive study of ISDS cases brought against India and provides full documentation within the larger global context of rising ISDS cases. The paper contributes to the debate on international investment law by showing that in the case of India most of the ISDS cases brought were due to India abusing its public power and was not an affront on India’s regulatory autonomy.

Towards Greater Investor Accountability: Indirect Actions, Direct Actions by States and Direct Actions by Individuals

Abstract Investor accountability in international investment law (IIL) has been gaining increasing traction in recent years. Most visibly, some states have included investor obligations in their investment treaties, while others have made them part of their model treaties. While highly significant for the substance of IIL, these duties need adequate procedural tools to enforce them. Otherwise, investor obligations will be only decorative features of investment treaties without any legal meaning. The oft-discussed option of counterclaims is limited insofar as it may only be launched after an investor has made a claim against a state. As a result, it is important to identify other potential pieces of the procedural infrastructure for investor accountability. This article analyses three such methods: indirect actions that link an investor's access to arbitration to its compliance with legal rules and standards, whether in domestic or international law; direct actions by states against investors; and direct actions by individuals against investors. In each case, we assess the existing legal landscape of arbitral and treaty practice, the most promising legal avenues for advancing that method of accountability, and potential challenges to these avenues. Given the procedural focus of the negotiations for ISDS reform taking place at UNCITRAL Working Group 3, it is a particularly opportune time for this exploration of these options.

Protecting concessionary rights: General principles and the making of international investment law

AbstractThis article engages with the history of international investment law in the first half of the twentieth century. It traces how international lawyers inscribed their vision of an international legal order protecting private property of Western companies against attempts at nationalization in the wake of socialist revolutions and the decolonization of large parts of the world. The article focuses on the role of ‘general principles of law as recognized by civilized nations’ as building blocks for an international legal order today called international investment law. Rather than describing a direct line between contemporary standards of protection and the invocation of general principles, the article develops conditions of possibility for the emergent field of international investment law. These conditions are located both in arbitral practice, as well as in international legal scholarship of the early twentieth century. Based on the analysis of such arbitrations over disputes resulting from concession agreements and scholarly writings in the interwar period, the contribution draws out the modes of authorization upon which the legal claims advanced by international lawyers rested. At the heart of the vision were ideas of ‘modernity’, ‘civilization’, ‘equity’, and ‘justice’ that enabled a hierarchization of difference, locating Western claims to legality above rivalling claims of socialist and ‘newly independent’ states. These ideas ultimately constituted the paradox of a ‘modern law of nature’ that claimed timeless universality while authorizing the ordering of foreign property in line with Western conceptions of modernity.

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.

Business, Human Rights and the Environment—Using Macro Legal Analysis to Develop a Legal Framework That Coherently Addresses the Root Causes of Corporate Human Rights Violations and Environmental Degradation

This article applies ‘macro’ legal analysis to the challenge of legal reform related to corporate responsibility for human rights violations and degradation of the environment. It recognises that the approaches from different communities of lawyers to the negative impacts on human rights and the environment caused by companies, sometimes operate in isolation from each other, are not always mutually supportive, can lead to a fragmentation of effort, and may not address the root causes of the problem. In particular, this article analyses the extent to which existing approaches tend to address symptoms of the issues, rather than the root causes themselves. It makes the case that in this regard specific root causes exist within the frameworks of corporate law in all jurisdictions and various aspects of international economic law too. To carry out the study, it employs macro legal analysis, a methodology not previously applied in this field, as a means of developing an understanding of the legal frameworks that, it argues, influence corporate decision making that can affect human rights and the environment. It undertakes an analysis that incorporates relevant corporate law, World Trade Organisation (WTO) law, international investment law, the law relating to multilateral development banks (MDBs), and international insurance law. By using this form of anlaysis it is possible to show how legal frameworks can operate in unison, reinforcing each other providing a cumulative effect that can influence corporate decision makers. Finally, based on the results of the analysis, it suggests a possible strategy of macro-level reforms that could be applied to the re-design of relevant legal frameworks to better facilitate the full protection of human rights and to achieve net zero degradation of the environment. As a result it seeks to demonstrate how this approach can be strategically applied by both human rights and environmental lawyers as a common pathway towards effective legal reform.

Police Powers Doctrine: a reliable State Defense in times of Covid-19?

As measures taken against the threats of Coronavirus to the public health affect investments in South America and internationally, states are looking for defenses under international law to counter potential Investor-State claims. This article explores whether the Police Powers Doctrine could justify the policy measures taken to protect the public health during the Covid-19 sanitary crisis and avoid the payment of compensation for alleged indirect expropriations. The analysis will first lay out the general application of Police Powers Doctrine under international investment law. To do so, it will mainly investigate the interpretation of the Doctrine in cases relating to the protection of public health. Finally, it will assess the strength of the Doctrine in defending general policy measures taken during the Covid-19 sanitary crisis. The paper argues that, while most measures should qualify under the Police Powers Doctrine, arbitral tribunals might examine additional conditions to accord their legal qualification of an exercise of police powers with the specific facts of a case.

The Development of International Investment Law through 2020 Arbitral and Domestic Case Law

The Development of International Investment Law through 2020 Arbitral and Domestic Case Law

ISDS Reform: The Long View

Abstract This lecture surveys the criticisms directed at international investment agreements (IIAs) and their reliance on investor-State dispute settlement (ISDS), as well as the leading reform venues that have been addressing such criticisms: UNCTAD, ICSID, and UNCITRAL. It argues that despite these ambitious efforts, the international investment regime’s reliance on investor-State arbitration will not be wholly displaced by any of the alternatives under active discussion – from national courts to mediation to a Multilateral Investment Court. In the long run, current reform efforts are likely to produce an ever more complex regime, governed by more diverse substantive rules interpreted by more complex options for dispute resolution. The focus on reforming the ways investor-State disputes are resolved fails to respond to doubts about the need for IIAs, undermines aspirations to harmonize international investment law, and ignores dire needs for stimulating (and protecting) foreign capital flows to achieve the goals of the Sustainable Development Goals – from mitigating climate change to preventing the next pandemic.

Due Diligence in International Investment Law

The obligation to exercise due diligence – which is commonly understood as the degree of care that is legally required or that is to be reasonably expected – emerged in international law in the seventeenth century to mediate inter-State relations. Due diligence then developed throughout the nineteenth and twentieth centuries in the context of the protection of aliens. Against this background, the article analyses the obligation to exercise due diligence in international investment law. The analysis shows that due diligence plays an important role in several aspects of the protection of foreign investments. First, it is accepted that investors should act with due diligence to: (1) benefit from the standards of protection set out in investment treaties; and (2) ensure compliance with host State law. Second, host States are expected to exercise due diligence with regard to substantive standards of protection, particularly the full protection and security (FPS) standard. While investment tribunals have clearly identified the scope of investors’ and host States’ due diligence, there is no conclusive indication as to the precise requirements to comply with the obligation to exercise due diligence. Due diligence, fair and equitable treatment standard, legitimate expectations, host State law, full protection and security standard

Export Credit Agencies, International Investment Law and the Spectre of Unsustainable Developing Countries' Debts

This article argues that the activities of Export Credit Agencies (ECAs), which provide political risk insurance to cover exports and foreign direct investments (FDIs), may be undermining the goals of Investor-State Dispute Settlement (ISDS). ISDS is supposed to limit investment disputes so that they are between the investor and host-state of the investment (investor-state disputes). However, since ECAs are quasi-governmental organisations that support FDIs, they can effectively elevate such investment disputes so that they are between the host-state and home-state of the investor (state-to-state disputes). This has implications for the necessity defence in international investment disputes, which is likely to feature in cases triggered by governmental measures taken in response to the COVID-19 pandemic. Further, the article argues that the activities of ECAs often precipitate unsustainable debt accumulation in developing countries. And these situations are becoming increasingly combustible because ECAs have escalated their activities to season investment programmes with foreign and geopolitical influence. This may worsen in the aftermath of the COVID-19 pandemic. The article concludes that increased transparency and a sustainability element in the activities of ECAs are essential to both expose these risks more broadly and to create a space under the canopy of international economic law for more sustainable growth from the understory of developing nations.

Book Review: Rules and Practices of International Investment Law and Arbitration, by Professor Dr Yannick Radi ed., Cambridge University Press. 2020.

Book Review: <i>Rules and Practices of International Investment Law and Arbitration</i>, by Professor Dr Yannick Radi ed., Cambridge University Press. 2020.

The UK Supreme Court Judgment in Micula v Romania:A Landmark Judgment for the Relationship between EU Law and International Investment Law?

The UK Supreme Court Judgment in Micula v Romania:A Landmark Judgment for the Relationship between EU Law and International Investment Law?

Development of International Investment Law within the Framework of the Eurasian Economic Union

At the present stage of development of international investment relations, national legislation is not able to fully ensure the regulation of international investment relations, single-handedly create the conditions necessary for the free movement of capital, and adequately ensure that the rights and interests of foreign investors are respected. Free movement of capital requires similar principles, forms and methods of their legal regulation, which contributes to the creation of a single legal space. However, at the present stage of development of international law, the creation of a global and effective investment law is not possible. Regional cooperation between states is of particular importance in such conditions.