International Investment Regime Research Articles

Reshaping International Investment Regime from Human Rights Perspective

The impact of foreign investment on the human rights generally has increased and interaction between them has shown to be complex in nowadays. Human rights considerations enter into the discourse of international investment law since increasing number of states are beginning to include references to human rights in their investment treaties and investor-state contracts, in particular for the new generation of investment treaties. Human rights related issues have played a vital role in various contexts of investment proceedings as w ell and whether an investment tribunal can apply to human rights law depends both on the relevant jurisdictional clause and the applicable law. To consider all this issue, the article takes a qualitative approach by examining secondary data, in particular, difference concepts, legal documents and applying case law as well. Moreover, in order to present existing window of opportunity for States, article outlined some findings and recommendations.

Why is there no investor-state dispute settlement in RCEP? bargaining and contestation in the investment regime

Abstract The Regional Comprehensive Economic Partnership (RCEP) is one of the most important mega-regional trade agreements signed to date. Yet, it failed to include an Investor-State Dispute Settlement (ISDS) mechanism in its investment chapter. What explains this omission? To unpack this, we examine international negotiations as a two-step process. In the first stage, we theorize that initial preferences towards ISDS are based on countries’ orientation toward foreign direct investment (FDI), experience with ISDS, and past treaty practice. Second, we theorize that during protracted negotiations, adverse regime developments and domestic politics can have a profound impact on treaty design. To test our framework, we examine the RCEP negotiations. Our analysis shows that mounting cases as well as the eroding norm of ISDS in other treaties lowered support for ISDS as the negotiations progressed. Then, a change of government in Malaysia shifted that country’s position dramatically, which tipped the balance against ISDS in the final round of negotiations. Our findings have important implications for the international investment regime. They highlight the factors that determine countries’ initial preferences while also demonstrating the importance of developments during the negotiations, which can lead to the abandonment of the institutional status quo.

A BIT of Protection for Non-Fungible Tokens: Digital Assets as a Catalyst for Economic Growth

Abstract An inevitable consequence of technological advancement is that it triggers regulatory challenges for law and policymakers. The regulation of digital assets has generated much debate in this regard. The central objective of this article is to examine the regulation of one particular type of digital asset, NFTs, through an international investment law lens. The international investment regime offers investors high levels of protection against breaches of obligations by host states for covered investments. The aim of the article is to determine whether NFTs can be considered as covered investments for the purposes of the application of bilateral investment treaties (BITs) and treaties with investment provisions (TIPs), and further to examine whether that regime would provide an appropriate regulatory framework for investment in NFTs.

Compliance politics and international investment disputes: a new dataset

Abstract The ability to ensure compliance with investor-state arbitral awards is often regarded as one of the strengths of the international investment regime. Yet, there have been few systematic studies of compliance to assess the extent to which states have actually complied with adverse investor-state compensation awards. This paper presents a new dataset that enables empirical research on compliance with these decisions; it is the first publicly available dataset to focus on what happens after awards are handed down, and in this way complements other databases on international investment law. This paper explains the data collection process (and its associated challenges), discusses the design choices made in selecting inputs and variables, presents a descriptive overview of the data, and examines how variables can be used in future research. Moreover, various cases are used as illustrations of the challenges of collecting and coding data on post-award processes and we explore what missing data can tell us about compliance dynamics.

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.

Non-state actors, extractive industries, and the investment regime: What can be learned from six Amazonian investor-state disputes?

The international investment regime was designed to reduce political risks—risks created by government action or inaction—faced by enterprises venturing abroad. It assumes that political risks are due to unitary host states, who, guided by national interests, would confiscate profitable foreign enterprises when opportune. This article argues, however, that political risks can have a different origin. In ecologically vulnerable areas, extractive projects can be polarizing, as some groups benefit from their existence while others suffer their consequences. In this setting, non-state actors may fight legally and politically to attract or expel extractive industries, generating policy uncertainties and political risk. To check this argument, the article examines five investor-state disputes coming from extractive projects located in the Amazon and which were caused, in part or completely, by the actions of non-state actors. The cases studied provide insights into the importance of non-state actors in the investment realm as well as the inadequacies of the current investment regime.

Race & International Investment Law: On the Possibility of Reform and Non-retrenchment

The international investment regime is in flux. The mainstream practice of investment law and arbitration works on the basis of the regime's foundations in contract and property law. However, critical scholarship in the field has unearthed the coloniality of power that permeates both the practice of international investment law and the current reform exercise led by the United Nations Commission on International Trade Law (UNCITRAL) Working Group III. These critical scholars warn of the imminent reproduction and entrenchment of the systemic inequities, power asymmetries, and investment law's investor-state dispute settlement (ISDS) regime which is skewed against post-colonial host states. The two books1 under review offer a range of thought-provoking approaches for analyzing the past, present, and future of investment law. This Review Essay categorizes these books into two modes of critical scholarship on international investment law: moderate and radical.2 In Part II, I flesh out the conceptual categories of moderate and radical critique. In Part III, I analyze the books under review through the lens of these two conceptual frameworks. In Part IV, I turn to the question of race and investment law. This Review Essay suggests that race should not be neglected in our analysis of the past, present, and, most importantly, the future of investment law—a core theme that both books under review does not engage with. Part V briefly concludes.

International Investment Law in the Shadow of Populism: Between Redomestication and Liberalism Re‐Embedded

The international investment regime is in crisis, nowhere more so than in regard to the investor–state dispute settlement system. While several developing countries have been critical of the system for some time, rich countries like the US and EU states—once the principal promoters of this regime—are now acknowledging problems and advancing reforms. This change of position has been fueled by the mobilization of civil society and the emergence of domestic populist movements on both the right and the left, reflecting widespread discontent with the past three decades of neoliberal globalization and its effects on job losses, lower wages, and increasing inequality. This article argues that this shift has opened up a unique opportunity for developing countries that want reform, as there is less pressure (real or imagined) from rich countries to continue with an old model that no longer serves. Two paths present a possible way forward: (a) Participating countries can disengage from investor–state dispute settlement and opt for the redomestication of international investment law, rekindling the Calvo doctrine, or (b) they can follow John G. Ruggie’s “embedded liberalism” to re-embed the international investment regime with values and social objectives that are now deemed politically indispensable. This article explores each of these paths, with a particular focus on Latin America. It argues that although populism creates pressures to change or abandon the regime, in developing countries it also generates constraints that may prolong the status quo.

The International Investment Regime and Climate Change Goals: Clash of the Existing Systems and Available Balancing Tools

International commitments of states require them to adopt regulatory measures aimed at reducing CO2 emissions to combat climate change. This is likely to trigger a wave of investor-state claims by affected foreign investors, mostly from the fossil fuel industry. As no precedent currently exists, this article seeks to analyse how investment tribunals might approach such claims and balance substantive protections under international investment agreements with host states’ obligations under the international climate change regime. After a brief overview of international climate change law, the article considers whether investor-state dispute settlement may serve as an enforcement mechanism for states’ international climate change commitments, or rather investors’ claims cause a regulatory chill. The article further analyses how international climate change law might be applied in investment treaty disputes and concludes that it is likely to be invoked to interpret standards of investment protection. Finally, the view is adopted that the police powers doctrine defence and invocation of general public policy exceptions, contained in new generation investment treaties, might excuse host states from compensation for regulatory measures adopted in furtherance of climate goals.

Is investment facilitation a substitute or supplement? A comparative analysis of China and Brazil practices

Investment facilitation, which tackles ground-level obstacles to FDI and has no substantial challenges to regulatory space, is emerging as a new trend of global governance. Meanwhile, the content and method to implement investment facilitation are still evolving. Both as top FDI destinations and largest emerging countries in South America and Asia respectively, Brazil and China have adopted somewhat different approaches towards investment facilitation. Due to traditional resistance to BITs network, Brazilian developed a new model of investment treaty, i.e., Cooperation and Investment Facilitation Agreement (CIFA). CFIAs primarily focus on investment facilitation through institutional cooperation, but the scope and degree of investment protection are quite insufficient. China’s approaches towards investment regime are inclusive, i.e., it is a practitioner of investment facilitation as well as a proponent of IIAs with a balanced ISDS mechanism. On the one hand, while investment protection and liberalization system are essential part of good business environment, IIAs don’t necessarily lead to friendly regulatory environment to attract FDI inflows. In this regard, the policy of investment facilitation is complementary to existing international investment regime. It is suggest that China draws some experiences from Brazil in terms of institutional governance and establishing a similar and effective dispute prevention system. On the other hand, access to justice is still important to foreign investors, the policy of investment facilitation can’t act as a total substitute of traditional BITs worldwide. Considering the Brazilian investors’ increasing outbound investment and the growing needs of investment protection, it is suggested that China’s open and liberal policies are worth learning for Brazil.

Evaluating the Legitimacy of the Investor-State Dispute Settlement Mechanism for the AfCFTA

Phase two of the negotiations on the African Continental Free Trade Area (AfCFTA) has begun. This phase includes negotiating the protocol on investment. The International Investment Regime (IIR) allows foreign investors to institute proceedings against states through Investor State Dispute Settlement (ISDS), which is criticised as undergoing a ‘legitimacy crisis’. This paper assesses the legitimacy of ISDS to evaluate whether it is a suitable mode of adjudicating international investment disputes in the AfCFTA. Accordingly, it sets out the criteria to be used in assessing legitimacy and further uses these criteria to appraise the legitimacy of ISDS, ultimately demonstrating that the present ISDS framework lacks sufficient legitimacy to be adopted as the mode of adjudicating international investment disputes in the AfCFTA. This is because of the perception that ISDS is unfair and biased due to its imperial and neo-colonial background and the excessive corporate power it grants to foreign investors. ISDS is also lacking in transparency and democratic values and conflicts with the AfCFTA’s objective of sustainable and inclusive socio-economic development. The paper advocates against the inclusion of ISDS in the AfCFTA protocol on investment and asserts that the challenge is in finding a mode of adjudication that is more equitable and inclusive than ISDS.

Political economy of South–South relations: an analysis of BRICS’ investment protection agreements in Latin America and the Caribbean

In the late 2000s, the emergence of the BRICS (Brazil, Russia, India, China and South Africa) gave rise to expectations of an alternative for the countries of the Global South in relation to the traditional powers. In this paper, we investigate international investment agreements between the BRICS and Latin America and the Caribbean (LAC). We seek to identify to what extent the BRICS can promote changes in the international investment regime or, on the contrary, reinforce the traditional model of foreign investment protection. To this end, we investigated LAC’s political-economic relations with each BRICS country through document analysis of their models of agreements and secondary data analysis of investment, trade, and credit flows, as well as social and environmental conflicts. We conclude that, although some of the BRICS have promoted important innovations in their investment agreements, the models used by each member with their Latin American counterparts mostly reproduce (except for Brazil) the traditional model. Further, the bloc’s economic relations with LAC have largely reinforced the region’s role as an exporter of raw materials, reproducing asymmetric relations of dependency. Therefore, LAC–BRICS relations, despite representing a geopolitical counterpoint, are limited in contributing to a socially just and sustainable development process.

Economic Narratives and the Legitimacy of Foreign Direct Investments

In the 1990s, the primary focus of the international investment regime shifted from the restriction and regulation towards the promotion and attraction of foreign companies. Dominant accounts in the international political economy literature emphasize the role of interests and institutions in explaining this policy shift but pay little attention to their legitimation. This article argues that transformations in dominant economic discourses—and in particular the rise of the competitiveness narrative—played an important role in granting legitimacy to this U-turn in international economic affairs. To test the argument, the article focuses on the impact of the differential changes in the portrayal of greenfield and mergers and acquisitions (M&A) inward foreign direct investments (IFDI) in economic discourses in the UK before and after the rise of the competitiveness narrative. In line with the theoretical argument, findings indicate that individuals who passed their early adulthood in a period in which the narrative of economic statism was still prevalent hold notably more skeptical views of M&A IFDI even though they are otherwise not more opposed to investments from abroad. A causal mediation analysis lends further empirical support to the argument.

Non-Precluded Measures (NPM) in Bilateral investment Treaty (BIT) (An appraisal study)

Non-precluded measures (hereinafter NPM) clauses have become a problematic in the modern international investment regime. As an integral aspect of attempts to recalibrate the publicprivate balance in investment treaties, these clauses are intended as a corrective to the proinvestor interpretations of early arbitral tribunals. They provide for the primacy of public policy over investment protection standards under certain conditions. This paper attempts to identify the proper way in the drafting of NPM clauses and identify their common elements. It will examine the terms that must be met in order that host states can have resort to them, as well as the role that is provided  or denied  to arbitrators in circumscribing the suitability of an impugned measure in relation to the objective being pursued. Furthermore, recent investment arbitrations have pointed out the latent interpretive ambiguities that can be in NPM clauses. In fact, it will be argued that while NPM clauses do raise some difficulties with respect to extending the policy space of contracting parties, they are slightly  effective in ensuring that public policy is a permanent feature of arbitrators’ matrix of decisionmaking.

The Role of Human Rights in International Investment Arbitration: Arguments Raised by the Parties and Procedural Implications

Abstract This article focuses on human rights arguments raised in investment arbitration, and examines their role in the adjudication of investment disputes. It is indicated that the rejection of human rights arguments is not necessarily based on the inapplicability of human rights claims to the investment arbitration process. As shown in several cases, arbitral tribunals refused to accept human rights arguments, mainly because the parties to the dispute failed to demonstrate any relevance or impact of their claim on the investment at stake. Still, no solid legal reasoning can be noticed when tribunals rejected the relevance of human rights. Nevertheless, even if the current legal framework does not favour further involvement of human rights-based claims, we observe several developments in the treaty making practices. Such practices seek to “harmonize” human rights concerns with the international investment regime by introducing corporate social responsibility (CSR) standards or by including specific provisions relating to human rights.

Does international trade and investment liberalization facilitate corporate power in nutrition and alcohol policymaking? Applying an integrated political economy and power analysis approach to a case study of South Africa

BackgroundWhile there is a growing body of legally-focused analyses exploring the potential restrictions on public health policy space due to international trade rules, few studies have adopted a more politically-informed approach. This paper applies an integrated political economy and power analysis approach to understand how power relations and dynamics emerging as a result of the international trade and investment regime influence nutrition and alcohol regulatory development in a case study of South Africa.MethodsWe interviewed 36 key stakeholders involved in nutrition, alcohol and/or trade/investment policymaking in South Africa. Interview transcripts and notes were imported into NVivo and analyzed using thematic analysis. We used a conceptual framework for analyzing power in health policymaking to guide the analysis.ResultsUnder the neoliberal paradigm that promotes trade liberalization and market extension, corporate power in nutrition and alcohol policymaking has been entrenched in South Africa via various mechanisms. These include via close relationships between economic policymakers and industry; institutional structures that codify industry involvement in all policy development but restrict health input in economic and trade policy decisions; limited stakeholder knowledge of the broader linkages between trade/investment and food/alcohol environments; high evidentiary requirements to prove public health policy effectiveness; both deliberate use of neoliberal frames/narratives as well as processes of socialization and internalization of neoliberal ideas/values shaping perceptions and policy preferences and ultimately generating policy norms prioritizing economic/trade over health objectives.ConclusionsExposing power in policymaking can expand our own ideational boundaries of what is required to promote transformative policy change. This work points to a number of potential strategies for challenging corporate power in nutrition and alcohol policymaking in the context of international trade and investment liberalization in South Africa.

Investor-state Dispute under International Investment Law

Since the last century international investment law has been developing along with the increasing number of international investment agreements such as bilateral investment treaties aiming at efficient protection for foreign direct investment. The idea to introduce comprehensive protection for foreign direct investment appeared with the States started to perceive that foreign direct investment is a must for the prosperity of economic development of the countries. Since the international investment regime has emerged it started to become universal and uniform in the international economy. The establishment of the International Centre for Settlement of Investment Disputes was a crucial step for the protection of foreign direct investment in the international investment regime. The investor-state dispute settlement system has been developing through innovations introduced by parties of the international investment regime. However, Investor-State arbitration has remained as one of the most efficient mechanisms in the investor-state dispute settlement system throughout the years.

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.

Tackling Biopiracy in International Investment Arbitration: Consideration of the Perspective(s) of Developing Countries

Abstract Biopiracy, defined as misappropriation of biological resources and associated knowledge, has been criticized by developing countries for exploiting their resources and knowledge without their consent. To tackle biopiracy, debates have been ongoing in various international regimes. This article focuses on the international investment regime. In most of the biopiracy cases, multinational corporations (MNCs) obtain and market intellectual property rights, which fall within the category of investment in most of the investment agreements. This enables MNCs to claim the protection of their rights based on resources and knowledge in the investment arbitration if developing countries take action to tackle biopiracy, although it is not always feasible. Therefore, this article aims to discuss how developing countries could protect their rights to resources and knowledge against MNCs in (potential) investment arbitrations.

International Investment and Indigenous Peoples' Environment: A Survey of ISDS Cases from 2000 to 2020.

Indigenous peoples’ environments can be easily disrupted by foreign investments, and disputes have occasionally occurred over the past few years. The objective of this research article is to examine if current international investment law, especially its investor-state dispute settlement (ISDS) mechanism, could provide necessary protection to Indigenous rights. We searched all publicly available ISDS cases from 2000 to 2020, and selected 10 typical ones for comprehensive case study by using various research methods such as doctrinal legal research and comparative analysis. Our research revealed that Indigenous peoples’ participation in the ISDS proceedings is legally restrained, time-consuming, and rarely favorably decided by the arbitral tribunals. Responsibility for such undesirable outcomes rests with all stakeholders involved in the process, while the consequences of post-arbitration tend to be “triple losing”. These findings highlight the quest for a more sustainable international investment regime that promotes Indigenous peoples’ wellbeing and environment protection. We argue that future reform could be promoted not only over ISDS procedural matters, but also by upgrading substantive rules in international investment agreements (IIAs), emphasizing free, prior, and informed consent (FPIC), and strengthening foreign investors’ corporate social responsibilities (CSR).