Investment Agreements Research Articles

Indirect Expropriation Clause Clarified in Recent Colombian BITs

Over the past two decades, Caribbean states have been faced with a significant number of investment arbitration proceedings in which investors have claimed that public interest regulatory measures constitute indirect expropriations of foreign investment. As a result, arbitral tribunals have ordered host states to pay heavy compensation to foreign investors. To preserve its right to regulate in the public interest, Colombia has clarified the indirect expropriation clause in most of its recent international investment agreements, clarifying the extent to which a public interest regulation that affects foreign investment constitutes an indirect expropriation. This article seeks to determine to what extent the new clauses of the Colombian agreements contribute to preserving the state’s right to regulate in the public interest.

The rise and fall of the EU-China Comprehensive Agreement on Investment: ‘open strategic autonomy’ in action

ABSTRACT (Open) strategic autonomy (OSA) has quickly become the dominant concept in European Union (EU) trade policy strategy. This article aims to better understand how the concept plays out in policy practice by focusing on its discursive use in the rise and fall of the EU-China Comprehensive Investment Agreement (CAI). We start from the assumption that OSA as an ‘empty signifier’ is sufficiently malleable to account for diverging interpretations. Building on existing literature, we then construct an analytical framework that distinguishes between trade policy paradigms. Subsequently, we utilize Fairclough & Fairclough’s ‘scheme of practical argument’ to analyze how the three signifiers of OSA – openness, sustainability and assertiveness – are connected in EU trade policy debates for or against CAI between May 2020 and September 2021. Our findings reveal that the concept of OSA can be utilized in both economics and foreign policy oriented arguments. While the Trade instead of Foreign Policy’ (TiFP) paradigm was initially co-opted by the neoliberal paradigm, the Trade steered by Foreign Policy (TsFP) paradigm became gradually more dominant. These findings also contribute to explaining, respectively, the rise and fall of the CAI.

Enforcing Sustainability

After the Lisbon Treaty, the European Union (EU) has prioritized sustainable development as a key aspect of its external trade and investment policy. This emphasis on sustainability has been reinforced through treaty- making and has received support from the Court of Justice of the European Union (cjeu). However, there are notable variations and nuances in the understanding and implementation of sustainability in the EU’s treaties. Moreover, these treaties introduce innovative dispute resolution mechanisms, such as arbitration and alternative dispute resolution methods, which can significantly impact international dispute settlement practices. Opinion 2/ 15 on the EU- Singapore Free Trade Agreement marked a crucial moment in clarifying the scope and nature of sustainable development chapters within the EU’s trade and investment policy. Different agreements concluded after the Lisbon Treaty reflect diverse approaches to sustainability. In the context of environmental protection, these agreements encompass a range of provisions, from generic to more specific clauses addressing particular aspects. This article critically analyzes the effectiveness and scope of “green conditionality” within the Sustainable Development Chapters of EU-established Trade and Investment Agreements. It examines the incorporation of environmental provisions in these agreements, evaluates their role in promoting sustainable development objectives, and explores the implications of dispute settlement and international arbitration mechanisms. This analysis aims to provide a cutting- edge perspective on the topic.

The emergence of geo-economic institutions: observations on European and Chinese development cooperation in Ukraine, Georgia, and Moldova 2014 – 2020

The emergence of China as a major provider of development finance has garnered considerable scholarly debate. Chinese investments and their impact on recipient states have been extensively studied, mainly focusing on the Belt and Road Initiative (BRI). In response to the BRI, the European Commission recently announced its connectivity strategy, the Global Gateway initiative. In this context, and even before the announcement, little work has been done to map Chinese state capitalist development finance side by side with the European Union’s (EU) market-led, public-private partnership-oriented strategies, especially within Europe’s own neighborhood. Additionally, the literature insufficiently explains why development institutions (agents) would act geo-economically to enforce their most powerful member states’ (principals) international agendas. This lack of theoretical explanatory power poses a serious puzzle. Thus, we ask, how has EU and Chinese institutional investment cooperation developed (legally and financially) in the EU’s Eastern Partnership (EaP) region in the previous EU Multiannual Financial Framework (MFF) from 2014 to 2020? We argue that development institutions have acted in accordance with their principal’s policy goals by facilitating investment and institutional agreements and by offering beneficial cooperation conditions, so that the EU and China can direct investment in a geo-economic manner if they choose to do so. In the following, we find that European investment in the EaP countries Ukraine, Moldova, and Georgia, has been huge in absolute terms (amount invested) and strong in relative terms––through deeper economic cooperation––when compared to Chinese investment activity in the same countries. This development supports the EU’s aim of countering China’s increasing economic presence in the region. However, we find that this gap has been closing in total terms. Our study suggests that while China has not matched EU investment in the EaP region for the previous MFF, further research is needed to unpack individual sectors and their geo-economic implications for official development institutions and their respective states.

THE OPTIMIZATION OF BILATERAL INVESTMENT TREATY TO ENCOURAGE THE DEVELOPMENT OF MICRO SMALL AND MEDIUM ENTERPRISES IN INDONESIA AS HOST STATE IN INTERNATIONAL INVESTMENT ACTIVITIES

International investment can accelerate economic growth and accelerate development in Indonesia. The Bilateral Investment Treaty (BIT) is an international agreement between two countries on provisions for international investment. The BITs are intended to promote the development of micro, small and medium enterprises in the country. Again, Small and medium-sized enterprises (SMEs) in Indonesia need support in promotion and legal protection to develop and become more optimal, as SMEs are the backbone of the Indonesian economy and part of the implementation of the Pancasila economic system. SMEs development provisions can be addressed in international agreement such as BIT or Free Trade Agreements (FTA) to provise a forum for broader sectors that include SMEs. Therefore, to develop SMEs in Indonesia through international investment practices, it is necessary that related parties, i.e., the government to take measures for optimizing the development of SMEs in Indonesia and obtain comprehensive international investment support to strengthen through International Investment Agreements (IIA) and be competitive in the global market through strengthening and broadening the scope of SMEs in IIA.

African Economic Integration Initiatives and the Challenge of Responsible Business Conducts: Analysis of Corporate Social Responsibility Provisions in African Regional Trade and Investment Agreements

African Economic Integration Initiatives and the Challenge of Responsible Business Conducts: Analysis of Corporate Social Responsibility Provisions in African Regional Trade and Investment Agreements

Legal Protection for Foreign Investors in Investing Capital in the National Capital City

The relocation of Indonesia's national capital to East Kalimantan requires a lot of capital, including from foreign investors. To safeguard the success of this project, regulation and legal protection for foreign investors in IKN are important. This ensures legal certainty and trust for foreign investors participating in the project. This legal research is normative research with secondary data qualitative analysis using a statutory approach. Data sources involve primary, secondary, and non-legal materials. Data was collected through literature studies and online sources. The government has created a special regulation, namely Government Regulation (PP) No. 12 of 2023, which supports investment in the National Capital City (IKN). While it provides strong legal incentives and protection, it is important to regularly monitor the impact of this regulation, improve conformity with environmental standards, encourage partnerships with UMKM, and intensify international promotion. As well as engaging stakeholders and improving licensing transparency. Legal protection for foreign investors in IKN is well-regulated through the UU PM and bilateral investment agreements. In the face of global competition, the government needs to maintain investment policy stability, improve ease of doing business, consider sustainable practices, and create specific legal protection regulations to attract more foreign investment for sustainable economic growth.

The Regulation and Litigation of Cumulative Effects on Indigenous Rights Following the Yahey Decision and Blueberry River First Nation Settlement and the Potential Effects on the Energy Industry

The British Columbia Supreme Court issued a groundbreaking decision in Yahey v. British Columbia: the Crown had failed to uphold its treaty obligations due to the cumulative effects of over 100 years of development. In response to the 2021 decision, British Columbia and Blueberry River First Nation have reached a multi-million dollar investment agreement which includes joint decision-making powers regarding future development. Yahey’s novel reasoning has significant implications for energy and resource development, treaty relations, and litigation across Canada. Similar claims have now been filed in Alberta, Saskatchewan, and Ontario, including Duncan’s First Nation seeking to apply Yahey’s reasoning in northwest Alberta. If courts across Canada adopt Yahey, land management decision-making could fundamentally change across much of the country.

Science, technology, and innovation: the next frontier in Asia-Pacific’s legal framework

ABSTRACT The pivotal role of science, technology, and innovation (STI) in the global economic framework has brought the Asia-Pacific region into sharp focus, given its unique blend of burgeoning and mature economies. Historically, International Investment Agreements (IIAs) were designed to protect investors, but the rapid ascendancy of STI necessitates a recalibration of these accords. This article embarks on a detailed comparative analysis of IIAs in the Asia-Pacific, exploring the nuances of STI provisions therein. While some IIAs incorporate STI considerations, a holistic integration remains noticeably lacking. The Organization for Economic Cooperation and Development provides frameworks to quantify technological capabilities, emphasizing the transition to a ‘knowledge economy’. Meanwhile, Intellectual Property Rights emerge with dual roles: fostering innovation while potentially hindering technological proliferation. The discussion delves into the necessity for IIAs, especially Bilateral Investment Treaties, and Free Trade Agreements, to fully embrace STI for maximizing global investment potential. The article's structure sequentially examines the ‘New Economy’, typologies of STI in IIAs, and the need for their incorporation, concluding with insights on the challenges and prospects of such integration.

Analisis Yuridis Terhadap Keabsahan Perjanjian Investasi Dalam Transaksi Initial Coin Offering (ICO) Berdasarkan Pasal 1320 Kitab Undang-Undang Hukum Perdata

Initial coin offering (henceforth referred to as ICO) as one of the investment developments in the digital era has left legal loopholes over the execution of the ICO in Indonesia, coupled with the emergence of cryptocurrency. This research aims to analyze the validity of an investment agreement on the ICO using cryptocurrency as a payment method along with its legal consequences. With normative-juridical methods, the research results have found out the agreement of the ICO is deemed unlawful according to Article 1320 of the Civil Code due to the clause contravening the legislation, leading to the failure of the fulfillment of the halal clause. Thus, the agreement is deemed to be void ab initio or simply inexistent. Due to the absence of the regulatory provision regulating the ICO, the investors involved could file a lawsuit over the violation harming the parties running the ICO. Thus, it is important to formulate regulatory provisions concerning the ICO in Indonesia that set forth the measures taken to provide legal protection for the aggrieved inventors due to the void ab initio agreement. These regulatory provisions are expected to avert any ICO-related problems as stated above.

The ICS vs. the ICSID system: a possible compromise in the light of the sustainable development

The current inclination to direct investment efforts towards sustainable development, coupled with the 2030 Agenda for Sustainable Development, unveiled in 2015, which included the 16th goal of granting equal access to justice and reinforcing the rule of law on a universal level, has brought investor-state dispute settlement (ISDS) mechanisms to the forefront of global investment discussions. The ICSID has carried out a crucial role in overseeing the ISDS system, offering arbitration facilities for disputes between investors and states for over six decades. However, the ISDS system has faced criticism in recent years. In response, a new Investment Court System (ICS) implemented by the EU that aims to address these concerns by establishing a permanent court formed with judges who have been appointed by member states in advance and are distributed to disputes in a rotating and random manner. It also limits the parties’ freedom to opt the applicable law and considers that the substantive provisions in investment agreements are the applicable law to the raised disputes and inserts an appellate mechanism review for law and fact matters as well. The paper discusses the relationship between the ICS and the ICSID system in the light of sustainable development and examines a possible compromise between both systems by considering the ICS as inter se modification of the ICSID convention based on investigation of its compatibility with requirements of the VCLT. Ultimately, the paper finds that recognizing the ICS as an amendment between some parties to the ICSID convention does not conflict with the VCLT.

Enforcing Sustainability: Assessing the Effectiveness of the EU’s Trade and Investment Policy in Promoting and Implementing Sustainable Development Provisions

After the Lisbon Treaty, the European Union (EU) has prioritized sustainable development as a key aspect of its external trade and investment policy. This emphasis on sustainability has been reinforced through treaty- making and has received support from the Court of Justice of the European Union (cjeu). However, there are notable variations and nuances in the understanding and implementation of sustainability in the EU’s treaties. Moreover, these treaties introduce innovative dispute resolution mechanisms, such as arbitration and alternative dispute resolution methods, which can significantly impact international dispute settlement practices. Opinion 2/ 15 on the EU- Singapore Free Trade Agreement marked a crucial moment in clarifying the scope and nature of sustainable development chapters within the EU’s trade and investment policy. Different agreements concluded after the Lisbon Treaty reflect diverse approaches to sustainability. In the context of environmental protection, these agreements encompass a range of provisions, from generic to more specific clauses addressing particular aspects. This article critically analyzes the effectiveness and scope of “green conditionality” within the Sustainable Development Chapters of EUestablished Trade and Investment Agreements. It examines the incorporation of environmental provisions in these agreements, evaluates their role in promoting sustainable development objectives, and explores the implications of dispute settlement and international arbitration mechanisms. This analysis aims to provide a cutting- edge perspective on the topic.

The possibility of creating an ICSID protocol for the establishment of a multilateral investment tribunal: A flexible or complex process.

The 2030 Agenda for Sustainable Development was introduced in 2015 with its 16th goal which has targeted enhancing the concepts of the rule of law and universal access to justice. This goal, along with the current trend of directing investment projects towards sustainable development, has brought the mechanisms for investor-state dispute settlement (ISDS) into the spotlight in the realm of global investment.Recently, based on a different vision that was supported, especially by the European Union, a new approach to ISDS emerged that is characterized by fundamental differences from the well-known approach represented in the ICSID system. Whereas providing facilities to settle and arbitrate the investment disputes between a state member and investors belonging to another state member over several decades by the ICSID system made it a key player in the administration of the ISDS system. The fundamental differences adopted by the new EU’s model represent a serious challenge to the ICSID system. Especially if this new system proves to be effective and widely used and inserted in future international investment agreements (IIAs), the ICSID will be required to make adjustments that are compatible with this new system.Due to the complexity of the process of amendment to the ICSID convention, as it requires unanimous consent by all member states, the present paper, by analysing some historical stations of the functional and administrative context of the ICSID, examines the flexibility of the ICSID convention to establish a protocol that includes the features of the new system without resorting to amending the convention. The paper concludes that the ICSID enjoys the flexibility necessary to establish this protocol. Finally, the paper presents the motives and benefits envisioned for the establishment of this protocol.

Strategic Evolution: The Changing Face of US Development Finance in World Trade

This article presents a comprehensive analysis of the strategic transformation in US development finance, particularly highlighting the shift from the Overseas Private Investment Corporation (OPIC) to the Development Finance Corporation (DFC). It delves into the geopolitical and economic objectives driving this transition, reflecting the broader US strategy to counter China’s Belt and Road Initiative (BRI). The article employs a neo-realistic theoretical framework, supplemented by elements of development and legal theory, to provide a multifaceted understanding of these global trade and investment dynamics. It evaluates the DFC’s operational strategy and commitment to facilitating private investment in developing nations while averting potential debt traps and sovereignty risks. The study further examines the role of International Investment Agreements (IIAs) in safeguarding DFC-backed projects and reviews their substantive rules and dispute resolution methods. The article concludes by positing the DFC as a more sustainable and transparent alternative to the BRI, offering potential benefits for both developing nations and US geopolitical interests. Political risk insurance, financial development, investment financing, Investment Incentive Agreements, International Development Finance Corporation, Belt and Road Initiative, trade policy programs

Facilitating Access to Investor-State Dispute Settlement for Small and Medium-Sized Enterprises: Tracing the Path Forward

The costs of accessing investor-state dispute settlement (ISDS) are notoriously high. International investment treaties and investment dispute settlement in particular have been primarily designed with large investors in mind – those with the means to access an international tribunal –, while small and medium-sized enterprises (SMEs) and individual or vulnerable investors can face significant barriers to accessing ISDS. This article is the first in legal scholarship to identify and evaluate the diverse opportunities that exist for the establishment and operation of mechanisms allowing SMEs better and easier access to ISDS. Drawing on the wealth of comparative experience from the functioning of existing dispute settlement assistance mechanisms in international courts and tribunals, the article argues that legal assistance is a more efficient and cost-effective tool than financial assistance and presents concrete proposals for the funding and operation of such a mechanism for SMEs. Finally, the article examines the political cost involved in facilitating SMEs’ access to ISDS, in light of the fact that some states have been increasingly wary of ISDS, but it weighs this challengeagainst the imperative of ensuring effective access to justice. Small and medium-sized enterprises (SMEs), investor-state dispute settlement (ISDS), United Nations Commission on International Trade Law (UNCITRAL), access to justice, international investment agreements (IIAs), advisory centre on international investment law, procedural costs, legal assistance funds, expedited proceedings, UNCItRAL Working Group III

Environmental Provisions in ASEAN Investment Agreements: Reserving Member States’ Right to Regulate Environmental Issues

Environmental Provisions in ASEAN Investment Agreements: Reserving Member States’ Right to Regulate Environmental Issues

Pengaruh Klausula Fair And Equitable Treatment Pada Perjanjian Investasi Bilateral Sebagai Upaya Perlindungan Investasi Bagi Penanam Modal Asing

To protect and encourage foreign investment, bilateral investment treaties (BITs) are often an important tool. The focus of this research is the Fair and Equitable Treatment (FET) clause, which is one of the most debated and controversial BIT clauses. This study investigates how these clauses function as protective mechanisms for foreign investors in bilateral investment agreements. This study shows that the FET clause protects investors in many ways, such as regulatory stability, legal certainty and non-discriminatory treatment. However, the way these clauses are used and interpreted varies widely, and often leaves considerable latitude for arbitrators to judge, which can sometimes impact the host country's freedom of public policy. According to this research, the text should be further clarified and FET clauses should be implemented to balance the need for investor protection with the public interest.

CONSISTENCY OF INDONESIA'S INTERNATIONAL TREATY IMPLEMENTATION IN THE FIELD OF INVESTMENT IN THE NATIONAL LEGAL SYSTEM: A POLITICAL PERSPECTIVE OF LAW TO REALIZE COMMUNITY WELFARE

This research examines the issue of consistency in the implementation of Indonesia's international agreements in the field of investment in Indonesia's national legal system, with a focus on achieving public welfare. The political implementation of Indonesian International Treaties in the field of investment into national law is divided into two periods. The period before the Constitutional Court Decision Number 13/PUU-XVI/2018 and the subsequent period. The court decision mainly talks about how to ratify an international treaty. Article 2 of Law No. 24/2000 on International Agreements states that ratification of international agreements is done in two ways, namely ratification by passing a law by the Parliament and ratification by issuing a presidential regulation by the President. Ratification through parliament if an international agreement has a broad and fundamental impact on the livelihood of the people related to the financial burden of the state and or requires amendments to the law as stipulated in article 11 paragraph (2) of the 1945 Constitution. Meanwhile, the position of international agreements in the field of investment, based on Article 11 (2), the ratification of International Agreements is based on Presidential Regulations. At the same time, there are international investment agreements whose material can have a broad and fundamental impact on people's lives, so the absence of parliamentary control can lead to inequality and potential negative impacts on people's welfare. Through normative legal research methods, the findings show that foreign investment must provide the maximum benefit for economic development and public welfare, and the ratification of international investment agreements can be done either through presidential regulations or legislation by passing a law

Cluster Strategy: Features of Sectoral and Intersectoral Legal Institutions Implementation

The paper discusses the processes of creation and functioning of cluster structures. Cluster approaches are very promising today: they allow for both creating new development institutions and managing the existing ones. The economic entities included in the cluster are also participants in the investment agreement at the same time. The author shows which subjective rights, absolute duties they have when united in an industrial-type cluster. The implementation of investment projects is mediated by the renewal of fixed assets. The innovation cluster then promises self-sufficiency, self-financing, but the creation of loan capital seems to be an extremely costly procedure. The institutions of the contract system that are able to stem the risks arising in this regard are considered. Various aspects of substitution transactions, in general, the interaction of investment and management contracts are summarized. The author notes that within the cluster, its beneficiaries by their actions contribute to both the accumulation of profits and the accumulation of losses. The more chances they have to pay off accounts receivable, the sooner they will turn their assets into liquid ones at full value. The functionality of cluster objects is brought to the fore, which outlines the shortest path to monetization of their development. The development of the Arctic resource potential (due to the cluster presumption) in this regard seems significant. The interaction of legal institutions is considered according to the concept of the so-called Triple helix, as far as it simplifies the creation of property complexes.

Gender Equality Provisions in Trade and Investment Agreements: Are They Widening the Negotiation Capacity Gap?

AbstractIn the recent years, there has been an upsurge in the number of countries that are mainstreaming gender equality concerns in their trade and investment agreements. These recent developments challenge the long-standing assumption that trade, investment, and gender equality are not related. They also show that gender mainstreaming in trade and investment agreements is here to stay. However, very few countries – mostly developed countries – have led this mainstreaming approach and have made efforts to incentivize other countries to negotiate gender-responsive trade and investment agreements. The majority of developing countries are yet to take their first steps in negotiating such policy instruments with a gender lens, and their hesitation can be grounded in various reasons including fears of protectionism, lack of data, paucity of understanding and expertise, and, more broadly, constraints relating to their negotiation capacity. Moreover, the inclusion of gender-related concerns in the negotiation of such agreements has deepened and widened the negotiation capacity gap between developed and developing countries. In this article, the authors attempt to assess this widening negotiation capacity gap with the help of empirical research, and how this capacity gap can lead to disproportionate and negative repercussions for developing countries more than developed countries.