International Investment Law Research Articles

Sovereignty or State Responsibility? Expropriation and the Right to Regulate in International Law on Foreign Investment

A state is entitled to be bound by investment agreements, including expropriating alien property on its territory. In international law, both represent the state’s sovereign principle within the boundaries of territorial integrity. Expropriation and the right to regulate are usually included in investment agreements as part of the substantive rules. This study uses a normative juridical approach. This approach is carried out by examining the library materials, which are secondary data; especially the principles and norms of law. While the aim of this research is to examine the legal aspects of several key concepts within the international investment law regime—the right to regulate and expropriation, both in terms of its regulation and implementation, in order to find best practices. Expropriation and the right to regulate are essentially like two sides of the same coin. This is because lawful expropriation implies state obligations (compensation), whereas unlawful expropriation implies state responsibilities (restitution or reparations). Meanwhile, the right to regulate (police powers), which is based on the concept of state sovereignty, does not. Lawful expropriation is defined as the state measures carried out with the due process of law, in a non-discriminatory manner, for the purpose of the public interest and is accompanied by the payment of compensation. In terms of expropriation, the right to regulate can be regarded as a form of lawful expropriation that does not necessitate compensation.
 Keywords: international investment law, expropriation, the right to regulate

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.

Vulnerability Theory as a Paradigm Shift in International Investment Law: Reimagining the Role of the State

Abstract This article argues for a fundamental raison d’être reconceptualization of international investment law (IIL) through Martha Fineman’s ‘vulnerability theory’. The theory helps identify the structural sources of IIL’s shortcomings, whilst philosophically challenging the one-sided view that foreign investors are entitled to protections, but are free from obligations vis-à-vis the communities affected by their undertakings. Emphasizing the productive power of the state to take positive action that acknowledges ordinary citizens’ embeddedness within, and dependence upon, surrounding structures, the vulnerability theory challenges the hegemonic perception of the state as a source of danger – a view which has hitherto undermined both the potency and the enforceability of investor obligations. Used as a heuristic device in studying both IIL’s existing structures and the potential avenues for reimagining it, Fineman’s theory not only shines a novel light on the foundational premises of IIL, but also grants theoretical traction to existing ideas about improving the system.

Arbitrating Investment Disputes in Time of Geopolitical Unrest: Focus on Investment Protection in Russia

Russia’s illegal full-scale invasion of Ukraine in February 2022 and the resulting war have had profound humanitarian and economic consequences affecting the lives of people in Ukraine and the region’s economic stability. The international community imposed unprecedented economic sanctions on Russian entities and individuals to condemn Russia’s actions in Ukraine. As expected, Russia retaliated and issued a series of counter-measures targeting foreign investors within Russia and occupied territories in Ukraine. Such measures will give, and have already given rise to claims by foreign investors in Russia for breaches of international investment law. This article analyses the restrictive measures targeting foreign investment imposed by Russia in response to international sanctions. It further discusses their legal implications for foreign investors. An overview of investment protections afforded under international investment treaties and international conventions as potential sources of redress for foreign investors follows in section 3. The final section highlights the challenges of pursuing investment treaty claims against Russia in the current geopolitical context (section 4). investment treaty arbitration, sanctions, counter-sanctions, investment protection in Russia, Ukraine, foreign investors, expropriation, fair and equitable treatment, narrowly worded arbitration clause, nationalization

ВЗАИМОДЕЙСТВИЕ МЕЖДУНАРОДНЫХ СТРОИТЕЛЬНЫХ КОНТРАКТОВ И ДОГОВОРОВ ОБ ИНВЕСТИЦИЯХ: ВОЗМОЖНОСТИ ДЛЯ ГАРМОНИЗАЦИИ КОММЕРЧЕСКИХ И ОБЩЕСТВЕННЫХ ИНТЕРЕСОВ

The article analyzes the interaction of the provisions of international construction contracts and bilateral investment treaties. The aim of the study is to identify opportunities for harmonizing commercial and public interests through model contractual clauses. The results can serve as a reference point for reforming norms and practices in the field of cross-border infrastructure. Opportunities for integrating commercial and government priorities in the areas of stabilization, arbitration, insurance, and information disclosure are being explored. Innovative provisions of standard contracts are proposed, designed to harmonize the interests of investors, the state, and society. The texts of model international construction contracts, bilateral investment treaties, multilateral conventions, scientific publications on private international investment and construction law, etc. were used as materials. The article used such methods as comparative legal analysis of provisions of contracts and agreements, system analysis of interrelationships between commercial and public-law norms, content analysis of scientific publications and expert sources, and analysis of the arbitration practice of resolving disputes from contracts and agreements. The integrated approach allowed for a comprehensive review of the interaction of international commercial contracts and investment agreements and the development of recommendations for their harmonization in the interests of all parties.

Local Communities, Indigenous Peoples, and Reform/Redefinition of International Investment Law

Abstract Calls to rethink international investment law (IIL) are not new. Yet, current reform efforts have been largely moderate undertakings that do not challenge the underlying rationale and structure of IIL, which have significant implications for local communities and Indigenous peoples. This article argues that while some ongoing reforms may mitigate some challenges of IIL, they do not challenge IIL’s underlying rationale and structure which form the basis for most of the system’s legitimacy concerns. To effectively address IIL’s legitimacy concerns, it must move from moderate reform to perspectives that can foster redefinition of the system, and this requires a re-turn to IIL’s encounters with local communities and Indigenous peoples. The article presents and elucidates three principles that engage the transformative potential of the positions of local communities and Indigenous peoples and support redefinition of IIL – self-determination and agency, democratization, and a reconstructed investment law consciousness.

Incorporating the Social License to Operate into International Investment Law: Taking Stock from the Brazilian Experience

Abstract The social license to operate can be broadly defined as the social acceptability of an investor’s business practices by local communities. This article argues that the social license to operate can be incorporated into international investment law by allowing for local communities’ participation. The Brazilian cooperation and facilitation of investments agreements (CFIA) are used as a benchmark to sustain this argument. I explain that the CFIAs make room for the social license to operate at a procedural and at a substantial level. First, local communities can participate in the dispute prevention procedures provided for by CFIA. By this means, they bring a third party’s perspective into the investor-State relationship by voicing its concerns on the investors’ activities. Substantially, this can be supported by the detailed provisions on corporate social responsibility enshrined in the CFIA and which can be invoked by the local communities during the dispute prevention procedure.

Indigenous Peoples in International Investment Law: Time for a New Dispute Resolution Procedure

Abstract This article examines the role of indigenous communities in international investment law. It concludes that indigenous communities have only limited agency in the context of investment law-making and adjudication. Such limitations continue the colonial legacy of international law. If international investment law aspires to achieve legitimacy, the departure from the exclusionary practices is necessary. In this context, the article recommends carving out the investment disputes that involve indigenous peoples and/or impact their livelihoods from the traditional model of investor-State dispute settlement. It further argues for reframing investment rules to account for indigenous laws and practices.

International Investment Law Reforms and the Draft Business and Human Rights Treaty: The More Things Change, the More They Remain the Same?

Abstract Foreign investors enjoy the best of both worlds, often to the detriment of local communities, indigenous groups and other rightsholders who suffer violations in their wake. Such investors operate transnationally and access vast amounts of resources in host States around the world enjoying substantial rights secured through numerous trade and investment agreements while their human rights and other obligations remain less clear and more difficult to enforce. Given the relatively undertheorized interaction between efforts to come up with a binding treaty within the regime of business and human rights (BHR) and the reforms currently underway in the regime of international investment law (IIL), this contribution argues that despite reforms in IIL and progress towards a BHR treaty, rightsholders are likely to remain under protected in reality.

Benign and Radical Africanization in International Investment Law and Investor-State Dispute Settlement in Africa

Abstract The current Africanization approaches mask some nuances present in current reform efforts of international investment law (IIL) and investor-State dispute settlement (ISDS) in Africa. I adopt the categorization of international law scholarship in Africa developed elsewhere into two trends: contributionist (weak) and critical (strong) scholarship. For reforms in African IIL and ISDS, I relabel this trends benign Africanization representing the contributionist (weak) strand and radical Africanization representing the critical (strong) strand. I argue that African states must focus on wider economic justice engendered in the radical Africanization approach. I propose three lines of action that will implement radical Africanization: first African States, in their reforms, must focus on both extra and intra-African investment; second, the reforms must engage deeply seated substantive issues in addition to the current procedural reforms; and finally, African States must have a real reckoning and engagement with the imperial history of IIL generally and ISDS specifically.

Fine Balance: Empire, Neoliberalism, and the Fair and Equitable Treatment Standard in International Investment Law

Abstract In this article, I show how the framework of empire remains central for analyzing contemporary international investment law. Moving beyond criticisms about the domination of global South polities by the West, or by a transnational capitalist class, I suggest instead that ‘empire’ can help us analyze the protocols of reasoning in investor-State arbitrations. Through a close reading of scholarship on the fair and equitable (FET) clause, and a recent arbitral award arising out an FET claim, I show that the field is characterized by an imperial mode of legal reasoning. This mode was reason was produced by a foundational distrust of postcolonial developmental States. It involves judging concrete State action against a fictional universal baseline that represents the ordoliberal utopia of an austere rule of law bound State. Crucially, in investor-State dispute settlement, this form of reasoning remains discernible even when foreign investors do not succeed.

International Investment Law and Climate Change: Reframing the ISDS Reform Agenda

Abstract Ongoing investment law reform processes take the investment treaty system as the starting point. While this can generate actionable reform options, it also entrenches ‘path dependency’ and forecloses space for more foundational questions. This article argues that, in the context of climate change, effective reform requires re-embedding debates within a policy space that places climate at its centre. The argument entails recognising: (i) climate change as a comprehensive ecological, economic and social challenge; (ii) the preferential nature of the protections investment treaties establish for foreign investment; and (iii) the structural misalignments that exist between this legal regime and climate action. It also involves interrogating the normative considerations invoked to justify investment protection treaties. The findings highlight the need to reorient collective reflection towards designing reforms that – rather than address narrowly defined concerns within the current system – develop a new system that can respond to 21st century challenges.

Reform and Retrenchment in International Investment Law: Introduction to a Special Issue

Reform and Retrenchment in International Investment Law: Introduction to a Special Issue

The Anti-Reformist Stance in Investment Law

Abstract This article articulates an ‘anti-reformist’ stance toward the reform of international investment law and dispute settlement. The mainstream debates over the future of investment law are generally ‘reformist,’ in the sense that they seek to maintain the system of special legal rights afforded to a discrete class of persons defined as ‘investors’. This system of special rights amplifies investors’ power vis-à-vis other constituencies and is premised on flimsy assumptions about the investor’s vulnerability that are not borne out either in theory or in practice. Drawing on recent work in other fields, this article sketches an anti-reformist approach that asserts these fundamental challenges, even as it remains engaged in contemporary reform debates. It also discusses the near-term implications of this approach for procedural and substantive reform of investment treaties, as well as the long-range goals of an anti-reformist stance.

Analysis of Green Liability on Environmental Damage--State Responsibility in International Investment Law

Long before the birth of international environmental law, disputes over transboundary environmental damage have long existed in global trade and investment. Since the promulgation of the Rio Declaration on Environment and Development, with the arrival of the Period of Liberalization in international investment, the environmental issues involved in cross-border investment have skyrocketed, and international judicial bodies such as the International Court of Justice and the International Tribunal for the Law of the Sea have adjudicated a number of disputes over transboundary environmental damage. These post-Rio transboundary environmental damage disputes are characterized by complex afflictions, wide scope and serious damage. At this stage of adjudication, international judicial institutions have not developed relatively stable standards, principles and systems for ex post facto remedies for transboundary environmental damage. From the perspective of state responsibility, this paper analyzes the issue of transboundary environmental damage theoretically and practically, and explores the attribution, standards, and requirements of responsibility for cross-border environmental damage arising from international investment and the formation of the ex post facto remedy system, in order to provide reference for the establishment of a more sound and refined remedy mechanism of transboundary environmental damage in future international investment practice.

Digital Rights and Digital Currency as an Object of Protection in International and Russian Investment Law

Digital Rights and Digital Currency as an Object of Protection in International and Russian Investment Law

Treaty influencers: a computational analysis of the development of international investment law

ABSTRACT This article uses computational methods to analyse the development of the international investment law regime, seeking to understand how, when, and by whom change in treaty language occurs. The study uses a novel computational method to explore the influence of different states on the language of international investment treaties and the spread of language patterns. The analysis reveals a hegemony of Western European, rather than North American influence, and further highlights a clear early mover advantage for obtaining language spread. The article discusses the implications of these findings for the investment treaty system, particularly the limited impact of hard negotiating power compared to early entrance and convincing legal language.

Fair and equitable treatment as a combination of principles of law.

The article is dedicated to such a customary law-based criterion of the compliance of states’ behavior within their international obligations as it is the fair and equitable treatment. This investment treatment, from the one side, is an interweaving of the legal principles of justice and equality, and from another, is formed by interpretations of decisions of international investment arbitrations. In the article also listed and briefly described some principles of law including general and specific for the branches of investment law and international investment law as well as some cross-branch legal principles. The listing and descripting of mentioned legal principles is done based on well-known theoretical-pedagogical sources and acts of international organization. These legal principles create a noticeable influence on interpretation of the fair and equitable treatment by international investment arbitrations. On the basis of authoritative works on the international investment law a modern list of some elements of the fair and equitable treatment is also provided, some of these elements are either based on key legal principles for the branch of international investment law, or are their direct embodiment. There are also quotations from decisions of international arbitrations regarding foreign investments, which are provided as examples in the material. These examples make it possible to express the legal nature of the fair and equal treatment from the point of view of influence of certain principles of law on it or transfer the general conceptual meaning of this investment treatment as the protecting international investments remedy. Key words: investment treatment, fair and equitable treatment, general principles of law, legal principles of international investment law.

Insurgency, State Responsibility, and International Investment Law

Insurgency, State Responsibility, and International Investment Law

Human Rights Due Diligence and the Climate Change Dimension: Implications for Investor Responsibility in International Investment Law

Abstract The concept of human rights due diligence (hrdd) of businesses under the United Nations Guiding Principles on Business and Human Rights (ungps) is an important milestone in the standards of business conduct. The responsibility of businesses to conduct hrdd is focused on the human rights risks to, or impacts on, communities from business activities. Recent developments highlight the increasing convergence and integration between the ungps’ framework of hrdd and climate change. This synergy contrasts starkly with the state of the international investment regime, which has traditionally been characterized as operating in isolation from other fields in international law, notably human rights and environmental law. Given that international investment law is now increasingly featuring the human rights responsibility of foreign investors – in particular with respect to the ungps’ framework of hrdd or its public-interest aspect – the intersection of human rights and international investment law serves as a potential pathway to advancing investor responsibility for the climate-related harm that investment activities may cause.