Foreign Investment Protection Research Articles

Spatio-temporal evolution and influencing factors of high quality economic development: Case study of Guangdong-Hong Kong-Macao Greater Bay Area

With the increase in global economic integration, high-quality economic development (HQED) has become a common goal of all countries. Based on these five development concepts, this paper uses the Gini coefficient, trend surface analysis, geographically weighted regression (GWR), the entropy weighting method, and standard deviation ellipse analysis to study the spatio-temporal pattern and driving mechanism of HQED in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA). This paper examines the spatial and temporal patterns and driving mechanisms of HQED in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) based on five development concepts. The study revealed that (1) HQED is on the rise overall, but at the same time, it highlights the uneven development of multiple dimensions, especially in terms of significant differences in innovation, openness, and sharing. (2) HQED shows a clear center-periphery structure, with Guangzhou, Shenzhen, and Hong Kong as the core high-value areas; the growth rate of HQED capacity in the internal areas is significantly greater than that in the external areas, and HQED is prominent in the cities around Guangzhou, Shenzhen, and Hong Kong. (3) Factors such as agglomeration level, human capital, foreign investment, infrastructure development, financial and environmental protection expenditures, and financial inputs, and scientific, and technological inputs have a significant positive effect on HQED, and their interactions are further strengthened. This study reveals the importance of the realization of HQED in the GBA and the promotion of the overall development of the region.

The role and significance of International Commercial Arbitration in investment disputes

International commercial arbitration (ICA) is an important dispute resolution mechanism in the field of international trade and investment. In the conditions of constant globalization and the growing integration of the world economy, there is a need to effectively resolve conflicts arising in the sphere of commerce and investment relations. In recent decades, there has been a significant increase in investment disputes related to various aspects of business, from contractual obligations to the protection of foreign investments.
 Consideration of investment disputes in the ICA involves the use of the principles of the autonomy of the will of the parties, confidentiality, and finality of decisions, which makes this mechanism particularly attractive for businesses and investors. Scientific research in this area is of great importance for understanding the effectiveness and prospects of the development of the ICA as a tool for resolving investment disputes.
 In this context, the analysis of the role and significance of the ICA in investment disputes is of great practical and scientific importance. This article aims to consider the main aspects of International Commercial Arbitration in the context of solving investment conflicts, in particular, to analyze the principles and procedures, consider cases of successful use of the ICA, as well as determine the advantages of this mechanism compared to ordinary court procedures.
 This article analyzes the role and significance of International Commercial Arbitration in the context of investment dispute resolution. Important principles and procedures of the ICA that ensure effective and fair resolution of conflicts between business and investors are emphasized. An analysis of the advantages of the ICA compared to traditional court procedures is carried out, in particular its contribution to the investment climate and investor confidence. Based on the analysis of examples of successful dispute resolution through the ICA, recommendations are provided for the parties in resolving investment conflicts. This article has implications for practitioners, academic researchers, and anyone interested in international trade and investment.

Legal Protection for Foreign Investments Aligned with the Second Principle of Pancasila: A Scholarly Exploration

Foreign Direct Investment (FDI) plays a crucial role in a country's economic advancement. This research focuses on assessing the legal protection afforded to FDI, with a specific emphasis on applying the second principle of Pancasila, "Just and Civilized Humanity." The goal is to ensure sustainability, respect for human rights, and active participation in foreign investments in Indonesia. The research adopts a normative legal approach, analyzing key legal documents and regulations, including Law Number 25 of 2007. The evaluation encompasses procedures and policies aimed at preserving FDI in Indonesia. The research findings highlight the significant influence of the second principle of Pancasila in establishing a legal and moral framework for the protection of FDI. This principle underscores the importance of fair and dignified treatment for all individuals, including foreign investors. These principles are explicitly outlined in Law Number 25 of 2007, which delineates the rights and responsibilities of foreign investments, advocates for equal treatment, and supports sustainable and equitable economic growth. However, challenges in implementing legal protection for FDI persist, including discrepancies in legal interpretation, bureaucratic complexities, and shifts in government policies. Addressing these issues is crucial to fostering a conducive environment for foreign investments and aligning with the ideals of Pancasila for just and civilized humanity.

Protection of Foreign Investors in Foreign Investment Activities and its Implications to the Country

In the interest of increasing national and economic development, Indonesia needs various kinds of support from all aspects. One of them is the presence of foreign investors. However, Indonesia is considered to not fully support the presence of foreign investors, so there are many investment constraints that have not been addressed comprehensively. To fulfill these interests, the Indonesian government formulated policies regarding investment and legal protection provided to foreign investors through Law Number 25 of 2007 concerning Investment. This study aims to determine legal protection and the implications of foreign investment activities in Indonesia. This study uses a normative juridical approach. The primary source of legal material is Law Number 25 of 2007 concerning investment. The source of secondary legal materials uses relevant literature. Data collection were done using the library study method. Data analysis were done using deductive analysis techniques. The data presentation technique uses a qualitative descriptive technique. The results of the study stated that legal protection for foreign investment (PMA) in Indonesia according to Law Number 25 of 2007 concerning investment is the application of the principle of equality for foreign and foreign investors. Legal protection is also given for actions of nationalization, acquisition of ownership, transfer of assets, transfers, and repatriation. Foreign investment has an important role in Indonesia to increase economic growth and increase national development.
 Keywords: legal protection, investment, foreign, implication

Home market power and host market protection of foreign investment

How do multinational firms trapped in host markets suffering from political violence find security? Terrorism and conflict repel foreign investment and recent research has sought to understand heterogeneity across firms in their response to violence. When multinational firms are unable to move their investments in the face of violence, we argue that their home governments use diplomatic capacity and security and economic resources to secure protection from host governments. Multinational corporations from home markets with significant leverage over host markets are therefore less likely to curtail their operations or investments in the wake of violence. Examining dyadic data on foreign direct investment (FDI), we show that home market diplomatic missions, aid, and alliances substantially abate the negative effects of violence on FDI. Consistent with our argument, this effect is observed after violence begins and is not an artifact of host markets garnering security aid from great powers other than the home market. A strong diplomatic presence matched to both hard and soft power resources positively contributes to the defense of core foreign policy interests.

Problematika Investor State Dispute Settlement dalam Bilateral Investment Treaty Indonesia-Singapura 2018

The signing of the 2018 Indonesia-Singapore BIT is a new chapter for Indonesia in establishing international relations in the field of investment after in 2013 Indonesia stopped the 2005 Indonesia-Singapore BIT because it was more in favor of foreign investors. This alignment is contained in the Investor State Dispute Settlement (ISDS) mechanism where the dispute resolution mechanism is also regulated in the 2018 Indonesia-Singapore BIT even though it is known that the ISDS mechanism has many shortcomings and provides protection for foreign investors. Therefore, there is a need for a new alternative to perfect the ISDS mechanism. Normative juridical methods are used in this writing by qualitatively analyzing the data. The results of the study concluded that the ISDS mechanism in the Indonesia-Singapore BIT 2018 has not been able to protect Indonesia's interests in international investment cooperation and requires an Investment Court System (ICS) mechanism to perfect the ISDS mechanism.

‘These are my principles. If you don’t like them I have others.’ On justifications of foreign investment protection under international law

Abstract This article aims to show that the mainstream discourse of the international law of foreign investment protection has adjusted itself to changing historical circumstances in a way that brings to light its strategic and ideological character. It argues, in particular, that the justifications offered in defence of foreign investment protection under international law appear to have been pretextual rather than principled, having been offered to provide reasons capable of flying at a particular point in time in light of the attending circumstances rather than to serve as an analytically sound, empirically grounded, and diachronically consistent framework.

Legal Framework for the Promotion and Protection of Foreign Investment: A Case Study of Banana Plantation Issue in Laos

Legal Framework for the Promotion and Protection of Foreign Investment: A Case Study of Banana Plantation Issue in Laos

As inconsistências da solução investidor-Estado na proteção internacional do investidor estrangeiro: análise das principais cláusulas substantivas dos BITs a partir dos casos arbitrais ad hoc, sob a perspectiva dos países receptores de capital

International investment law is historically structured by the unilateral protection of the foreign investor. The dissemination of the Bilateral Investment Treaty (BIT) model dates back to the second half of the twentieth century, and its expansion occurred only after the 1980s. BITs consist of an international agreement comprising substantive and procedural rules, defining the protection of foreign investment and investors in a territory other than their nationality, as well as establishing a dispute resolution model, with the adoption of the Investor-State solution system via ad hoc arbitration. In the 21st century, after decades of prevalence of BITs, there have been numerous criticisms of this model, characterized by subjective and controversial decisions, incongruous interpretations and, above all, by blocking the legitimate exercise of the State to dispose of its public interest, such as environmental protection, health and economic measures. The article analyzes these substantive rules from ad hoc arbitration cases: (i) National Treatment (NT); (ii) Most-Favored-Nation Treatment (MFN); (iii) Minimum Standard of Treatment (MST) principle; (iv) Fair and Equitable Treatment (FET); (v) Full Protection and Security (FPS); (vi) Direct and Indirect Expropriations and Compensation; and (vii) Umbrella Clause. Finally, the article concludes that the arbitral awards are inconsistent and inflict serious damage to the exercise of the States, especially to host States, which is evidenced by the recent amendments of the BITs by more restrictive models of international investment protection.

ПРАВОВЫЕ ИНСТРУМЕНТЫ ЗАЩИТЫ ИНОСТРАННЫХ ИНВЕСТИЦИЙ В СООТВЕТСТВИИ С ПОЛОЖЕНИЯМИ ДВУХСТОРОННЕГО ИНВЕСТИЦИОННОГО ДОГОВОРА: ОПЫТ РЕСПУБЛИКИ УЗБЕКИСТАН

The author of the article analyzes the current state of bilateral investment agreements on mutual protection and promotion of investments to which the Republic of Uzbekistan is a signatory (previously adopted provisions, innovations, and analytical and scientific works are also mentioned). In particular, the author focused the Legislator’s attention on investment activities, ensuring proper protection of investments, the importance of investments in modern realities, the role of state bodies in regulating investment activities aimed at economic growth, and creating additional opportunities for foreign investors. At the same time, the author indicates that at a time when the procedure for implementing standard investment agreements has already been developed in many countries, such practice in Uzbekistan has not yet acquired so much importance, which is also determined by the lack of a legal and scientific basis, which in turn leads to gaps, ambiguities, and misunderstandings of the importance of legal regulation. Also, the paper reflects the main catalytic aspects of the application of the principles of international investment law and various mechanisms for the protection of foreign investments in order to prevent the further course of a foreign investor in arbitration. The article takes into account the role of international investment agreements, especially bilateral ones, which consist of guaranteeing the stability of the regime for foreign investors, providing them with appropriate incentives, and the common interests of both foreign investors in capital and the countries where investments are made. In order to further develop the direction of developing and implementing modern mechanisms for the protection of foreign investors and the state, the researcher studied foreign experience, scientific papers, and precedents and made appropriate proposals and recommendations on drafting or amending bilateral investment agreements to which the Republic of Uzbekistan is a party.

Penyelesaian Sengketa Investasi Asing Melalui Mekanisme Arbitrase Internasional (Studi Kasus: Rafat Ali Rizvi Melawan Republik Indonesia)

One of the goals of the state is to create fair and prosperous society by carrying out development in various fields including the fields of economy, education and infrastructure. The country's development certainly requires large amounts of funds, but not all countries have these funds. The lack of funds which needed by the state is an entry point for investors to invest their capital, which is through foreign investment. Besides the investment, foreign investment also brings expertise, technology transfer, and can increase the productivity of the host country. However, the implementation of foreign investment do not always go well, investment problems will arise and in the end it can become foreign investment dispute. Investment dispute settlement is an important part of foreign investment in Indonesia and that is the form of protection for foreign investors. Investment disputes settlement in Indonesia begins with deliberation and consensus. If the deliberation and consensus not achieved, then the parties can take investment dispute settlement through international arbitration. The most common international investment dispute settlement mechanism is Investor-State Dispute Settlement (ISDS). Beside that, there is State-State Dispute Settlement (SSDS) mechanism. Submission of international investment disputes can be submitted to international arbitration forums, through International Centre for Investment Dispute (ICSID). One of the cases of foreign investment disputes that involved Indonesia is between Rafat Ali Rizvi and Republic of Indonesia.

Protection of Foreign Investments in Türkiye under International Law: Alignments and Dissociations with International Tendencies

Protection of foreign investments under international law is treaty-based. Investment treaties are mostly bilateral, i.e. they are concluded between two states and provide the investors of each contracting party rights to a minimum standard of treatment in the territory of the other contracting party. Foreign investments in Türkiye, too, are protected by bilateral investment treaties. Türkiye has concluded a total of 132 bilateral investment treaties with 113 different states. As of today, 82 of these bilateral investment treaties are in force. We examined all bilateral investment treaties that Türkiye has been party to, including those that have not entered into force yet and those that have entered into force but that were subsequently terminated. We, thus, sought to determine how Türkiye established and developed its bilateral investment treaty network. In order to get a complete picture of the establishment and development of the Turkish network, we compared it with international tendencies of bilateral investment treaty network establishment programmes. As a result of this comparison, we determined that Türkiye’s bilateral investment treaty network mostly aligned with international tendencies, especially between 1960 and 2000. We observed that Türkiye behaved more like developing and transition economies in this time period; hence it first concluded investment treaties with investment exporting states. However, we remarked a dissociation from international tendencies in the 2010s. As a result of our examination of the Turkish bilateral investment treaty practice in the 2010s, we made the following findings: Türkiye did not align with the tendency to withdraw from the network of investment treaties, a tendency popular among developing and transition economies, and it mostly dissociated from the tendency to replace existing investment treaties with new generation treaties, a tendency pioneered by developed economies.

Foreign Investors of the World, Unite! The International Association for the Promotion and Protection of Private Foreign Investments (APPI) 1958–1968

Abstract This article studies lobbying efforts by the actors that investment treaties protect – namely, foreign investors. It uses a legal-historical approach to analyse the activities of the International Association for the Promotion and Protection of Private Foreign Investments (Association internationale pour la promotion et la protection des investissements privés en territoires étrangers or APPI), a transnational business interest association that lobbied for better protection of private foreign investment under international law. The article considers the role of this group in lobbying for three multilateral investment treaties (an investment code, investor-state arbitration and investment insurance) during the 1950s and 1960s, using unexplored archival sources. The article makes three substantive contributions to the literature. First, it shows that the key actors involved in APPI were a transnational advocacy network of businessmen and lawyers at multinational companies, mainly in the oil and banking sector. Second, it shows how these two types of actors (businessmen and lawyers) acted symbiotically. The businessmen provided access to policy-makers and introduced company lawyers into the policy-making cycle. The company lawyers provided expertise and specific legal texts with which civil servants could work. Third, it argues that, despite the group members’ common goal to improve foreign investment security, competing individual initiatives and institutional competition, next to state preferences, often impeded more effective lobbying.

The Impact of Bilateral Investment Agreements on Attracting Foreign Direct Investments

Abstract Foreign investors' fear of expropriation led to the emergence of the idea of new ways of protection and adequate treatment of foreign investments on the international level. Primarily, the home countries wanted to protect their interests and became the main proponents of the creation of bilateral investment agreements. Developing countries that aspire to become and remain part of international economic flows, had to provide additional protection to investors, as investment host countries. They saw bilateral investment agreements as an opportunity to attract foreign direct investment. They provide a certain standard in the treatment and protection of investments and thus influence the creation of an environment that favors the transfer of capital from one country to another. In modern economic conditions, there are almost no entities that are absolutely risk-averse. For this reason, bilateral investment agreements are counted on to play one of the key roles in minimizing the risks of investing in developing countries.

Le Mexique et l’arbitrage international d’investissement: un paysage pluraliste

This article examines Mexico’s experience with investment arbitration, focusing on its impressive evolution. Since the adoption of North American free trade agreement (NAFTA) in 1994, Mexico has signed several bilateral investment treaties (BITs) and free trade agreements (FTAs) containing investor-state dispute settlement (ISDS) arbitration clauses. An analysis of these various clauses reveals that Mexico has chosen the path of pluralism, adopting various investment arbitration options in its international investment agreements. This stance on arbitration reflects the lack of a regional standard for foreign investment protection and the difficulty of finding a genuine alternative path. In the absence of such an alternative, flexibility becomes the most pragmatic option. In this sense, unlike Brazil, which has its own model agreement and is an important political force in the balance of power in international investment law, Mexico is a rule taker state. Mexico; bilateral investment treaty; free trade agreement; Latin America; dispute settlement mechanism; international investment arbitration; pluralism; rule taker.

Prudential exceptions in international trade and investment agreements. Problems of interpretation and enforcement

This article is devoted to the problems of interpretation of “prudential exception” clauses in international trade and investment agreements. The author examines in what cases the relevant international norms can be applied by states in international disputes, as well as in what cases states can avoid international responsibility if the national measures aimed at preventing financial crisis led to violation of their commitments in the field of trade liberalization and protection of foreign investments. The purpose of the article is to study the scope of rights granted to states by such rules in terms of taking measures aimed at protecting consumers of financial services, ensuring the integrity and stability of the financial system, as well as identifying restrictions on the abuse of such rights. The author makes distinction between “measures taken for prudential reasons” and “prudential measures” and determined procedural and material terms for the application of such exceptions. Author also made recommendations on how to reform the prudential exceptions contained in the Treaty on the Eurasian Economic Union. The author proposes to improve the procedure of considering investment prudential disputes, by transferring the consideration of such disputes to a special commission, the members of which should be representatives of bodies authorized to introduce prudential measures, both from the state from which the investor originates, and from the state in whose territory the investments are made.

Counteracting the Risks of International Investment in the Conditions of War

The study aims to determine critical components of the protection of foreign investors in time of war by case of Ukraine and with account to various categories of investors. Foreign direct investment (FDI) is very volatile due to the sensitivity of foreign investors to information signals, caused by much higher riskiness of foreign markets than internal ones. Heavy FDI inflows in the past are not a guarantee of their similar inwards in the future and vice versa. The process of taking investment decisions depends on the investors’ aversion and the investment climate in a host country. The aversion of companies is dependent on size, organization and origin, which is a result of varying capabilities of counteracting international risks. The investment climate is conditional on the performance of democratic institutions, the formation of democratic society and the progress in a host country, especially in information technologies. The sensitivity to information signals essentially increases for investment projects in countries at war. The war risks feature much higher uncertainty than the risks of peacetime, being extreme by nature, which means that they may have devastating effects for an investor in spite of a low probability of the occurrence, i. e. cause abnormal losses, partial or total ruining of invested assets, or physical injuries, captivity, hostage-taking or death of company staff. This offers an argument for reasonability of the systemic approach to setting up the public policy on attracting foreign direct investment in time of war with accounting for various investor categories and special emphasis on the risk management tools that are capable to increase the level of investors’ protection and certainty. We believe that the key ones are information support for the process of taking investment decisions, formation of reserve capital by estimating value at risk and conditional value at risk, double diversification of invested assets, risk premium and international insurance of FDI. International insurance is the core component of a scheme for the protection of investors in time of war, and when the aggressor is a country with permanent membership in the UN Security Council, its guarantee will require initiatives collaborated with international partners

PERLINDUNGAN INVESTOR ASING DARI RISIKO SENGKETA MELALUI ARBITRASE SEBAGAI FORUM PENYELESAIAN SENGKETA INVESTASI

In terms of investing in a country, one of the considerations of investors is related to the risk of disputes. This consideration is crucial, considering that the main goal of investors investing in a country is to make a profit. Based on these facts, a legal issue was found regarding what Indonesian legal instruments were formed to provide legal protection to foreign investors from the risk of disputes and how Arbitration as an Investment Dispute Resolution Forum provides legal protection to investors from the risk of disputes. The purpose of this research is to find out Indonesian legal instruments related to legal protection for foreign investors from the risk of disputes, and to find out the efficiency and effectiveness of arbitration as an investment dispute resolution forum in providing legal protection for foreign investors from the risk of disputes. This research uses normative juridical research methods. The conclusion of this study is that there are several juridical factors underlying the statement that arbitration arrangements in Indonesia have not been able to fully provide legal protection for foreign investors, including Indonesia is considered a country that is not friendly to foreign arbitral awards because it is considered easy to refuse the implementation of foreign arbitral awards with applying the principles of the State Act Doctrine which places State Owned Enterprise as a state that cannot be sued, the problem of choosing a forum due to arrangements that tend to favor one party, and there is a legal vacuum related to the time period for registering international arbitration. Arbitration in providing legal protection for foreign investors from the risk of foreign investment disputes in Indonesia by prioritizing the main matters in the form of the superiority of arbitration in the system, implementation, effectiveness and efficiency of the arbitration process, and the final arbitral award.

Protection of foreign investments during economic crises.

Foreign investments play a crucial role in overcoming the economic crisis in individual States, especially if such a crisis is systemic in nature, and domestic entities lack resources that could be attracted to the economy. In this case, foreign investment is often the only way to restore the normal development of the socio-economic sphere. At the same time, in crisis situations, foreign investors themselves require special protection, which in this case are exposed not only to commercial risk (such risk is "normal", and no one is responsible to the investor for it), but also to "political" risk (which is usually inextricably linked with economic), if, for example, an economic crisis leads to a revolution, a coup, or simply a tightening of economic policy, within the framework of which enterprises are nationalized, including those created at the expense of foreign investment. The currently existing international legal mechanisms, primarily insurance of "political" risk, do not solve the problem due to the fact that it is difficult for insurance companies to receive compensation from sovereign states by way of subrogation. Thus, the importance of national legislation increases - the norms of which should form the investment attractiveness of the state and give foreign investors confidence in protecting their rights even in a situation of economic crisis, for example, in Russia tax benefits are provided for foreign investors in case of adverse changes in the tax burden (the institute of "tax stability") in accordance with Article 9 of the Federal Law "On foreign investments".

Balancing the Protection of Foreign Investors and States Responses in the Post-Pandemic World

The COVID-19 pandemic has had a shattering effect on the international economic ecosystem, severely hampering—if only temporarily—its much-needed effort for liberalization and ever-growing interconnection.2 In the wake of the pandemic, States have swiftly enacted drastic emergency measures to safeguard the health of their citizens, which among other things imposed limitations on the movement of people, suspended the production of non-essential activities, redirected economic endeavours towards life-saving products, disrupting the global supply chain. The ensuing economic shock suffered by national economies was promptly followed by a wide range of efforts to support domestic businesses, secure jobs, and protect crucial activities from foreign acquisition. The emergency measures were often adopted without a preliminary assessment of their compatibility with the State’s existing international commitments towards economic liberalization, raising the question whether their adoption would entail international responsibility for the State. Though the capacity of international economic regimes to unduly constrain the State’s ability to meet the need of its own people is a recurring theme in international economic law,3 it has emerged prominently with regard to the international investment regime.4 The international protection of foreign direct investment (FDI) has long been perceived as unbalanced in favour of foreign investors, triggering a widespread move to reform international investment agreements (IIAs) with the aim of granting States a greater ‘margin of manoeuvre’ in their sovereign action.5 Though the reform process is well under way, the lack of coordinated efforts has so far led to an extremely fragmented IIA framework, still dominated by old-generation treaties and in which new IIAs have often not yet entered into force.6