Foreign Investment Protection Research Articles

RECONCILING INTERNATIONAL INVESTMENT LAW AND EUROPEAN UNION LAW IN THE WAKE OF ACHMEA

AbstractThe decision of the Court of Justice of the European Union in Slovak Republic v Achmea dealt a major blow to the predictability of the legal regime for the protection of foreign investments, whilst failing to offer a realistic, clear and sustainable solution for the protection of investments within the European single market. Commentators have mainly considered its implications from the perspective of the European Union or International Investment Law, and the potential conflict of regimes. This article offers a different approach, arguing that a reading of Achmea based on a moderate version of legal pluralism could adequately respond to the legitimate concerns about the case from both international and European legal perspectives. It is argued that the imprecision of the decision is in fact constructive ambiguity, allowing a sufficient margin of appreciation for all stakeholders and avoiding direct confrontation between the European and international legal orders. Recent developments, such as the innovative EU agreement for the termination of intra-EU BITs, point to new opportunities for ordering pluralism in the Achmea saga.

УРАХУВАННЯ ЗАРУБІЖНОГО ДОСВІДУ ЩОДО ГАРАНТІЙ ІНОЗЕМНИМ ІНВЕСТОРАМ В УКРАЇНІ В УМОВАХ СТАЛОГО РОЗВИТКУ

It is emphasized that recently in Ukraine there is a tendency to reduce the volume of foreign investment, but the effective implementation of economic, social and environmental components of sustainable development requires adequate investment. Among the main reasons holding back the inflow of foreign investment in Ukraine, in numerous studies of scientists, there is a failure to comply with the guarantees provided by the investment legislation of Ukraine. It is noted that today Ukraine has adopted a large number of regulations governing the activities of foreign investors and provide certain guarantees for the protection of foreign investors, but in the process of investing investors face problems related to the implementation of these guarantees. This is due to the fact, that the Ukrainian legislator is constantly changing the law on investment activities. That is why the authors chose the purpose of the article to study the positive experience of some European countries, which have chosen a course of sustainable development, to guarantee the protection of foreign investors. Emphasis is placed on the fact that the main strategic goal of the governments of these countries is to create great opportunities for the provision and implementation of such guarantees. Certain guarantees for the protection of foreign investors in some European countries that have chosen the course of sustainable development, namely: Great Britain, France, Germany, Hungary, Poland and the Czech Republic, have been studied. Based on this study, a number of guarantees for the protection of foreign investors have been identified, which make sense to introduce in Ukraine.

A Legal Analysis of the 2019 Dutch Model Bilateral Investment Treaty: Balancing the Investor's Rights and the Public Interest of the Host State

傳統上，國際投資協定被認為是維護投資法律環境與鼓勵外國直接投資的重要法律工具。因此，當今國家締結有為數眾多的雙邊投資條約，或是於自由貿易協定中訂定投資專章。與此同時，各國通過有雙邊投資條約範本，以作為建構其保護與促進外國投資活動之法律網絡的基礎。然而，由於近年來投資者權利與地主國公共利益兩者的衝突不斷增加，國際投資協定因此開始進行改革，以平衡投資者與地主國之間的權利義務關係，而此趨勢亦展現在各國對於雙邊投資條約範本的修正。荷蘭於2019年通過之《投資互惠促進及保護協定範本》為近年來國際間所通過的新雙邊投資條約範本，其目的在取代2004年之《投資鼓勵及互惠保護協定範本》，以作為日後荷蘭與其他非歐盟成員國締結或修改雙邊投資條約的基礎文件。本文擬探討2019年荷蘭雙邊投資條約範本於何種程度上展現出對於國際投資協定過去單方面保護投資者權利的修正，以及其是否有助於地主國規制權的行使以確保公共利益。International investment agreements (IIAs) are traditionally regarded as important instruments for creating a stable investment environment and promoting foreign direct investment (FDI). As a result, States conclude a number of bilateral investment treaties (BITs) and include free trade agreements (FTAs) with investment provisions. States also adopt Model BITs as the bases for developing their extensive networks for the protection and promotion of foreign investment. However, with the conflict between the protection of the investor's rights and the public interest of the host State arise, IIAs concluded in recent years not only narrow down the scope of protection the investor used to enjoy, but also seek to ensure the host State's regulatory space for the public interest. This trend has also reflected in the amendment of Model BITs.Investment adopted by the Netherlands in 2019 (the 2019 Dutch Model BIT) aims at replacing the 2004 Model Agreement on Encouragement and Reciprocal Protection of Investment and will become the basic instrument for the Dutch Government to conclude BITs with non-EU countries. This article explores the extent to which the 2019 Dutch Model BIT has reflected the growing trend mentioned above, thereby achieving a better balance between the investor's right and the public interest of the host State.

Tendencies in the transformation of the legal foundations of European integration of Ukraine at the present stage

The article presents and reveals the main tendencies of transformation of the legislative foundations of European integration of Ukraine at the present stage of state formation. While analyzing the problems of implementation of the Association Agreement between Ukraine and the European Union, the author highlights and reveals the content of three main tendencies that are characteristic for the development of the legislative basis of the European integration policy. In particular, the expanding of the current Constitution of Ukraine with the rules on the irreversibility of the European integration course, updating of normative documents regulating the planned character and gradual implementation of the provisions of the Association Agreement, amending the current version of the Association Agreement in order to update its provisions.
 The attention is drawn to the fact that the modification of the legislative foundations of Ukraine's European integration course is an important political and legal factor for the transformation of not only the system of the legal system of the state in the formal sense, but also of the legal consciousness of the broad masses of the population. This is explained by the phenomenon of the action of so-called «future law». In practical terms, such a phenomenon manifests itself in the fact that in the society on the mental level there is an increasing level of expectations from the state to activate pro-European policy, further reforming of the national law in the direction of implementation of European models of social regulation. Accordingly, there is an impact on the minds of people by "future norms of law", which are designed to regulate social relations, which are just beginning to emerge.
 Further priorities of expanding the legislative foundations of Ukraine's European integration are outlined. In particular, it is the optimization of the mechanism of substantial realization of European integration transformations in the practice of national state administration, as well as the preparation of legislative support to overcome the global political risks and economic threats that may occur in connection with the implementation of the Association Agreement. First of all, Ukraine should develop and accumulate the practice of applying the legislation in the sphere of increasing the investment attractiveness of Ukraine, guaranteeing the legal protection of foreign investments, adjusting the national manufacturing sector of Ukraine to the EU requirements, harmonizing the national model of legal regulation of the labor market with the EU, enhancing the institutional focus of the Ukrainian authorities to implement the EU Directives.

Judicial Activism in Pakistan is Challenging for Foreign Investor in the Context of China and Pakistan Econonic Corridor

The judiciary has an important role in Pakistan. If the judicial system of any state provides appropriate law and justice,it would not only benefit local investors, but also provide a favorable environment for foreign investors to enhance their business. The support of the judiciary system is crucial for foreign investors in order to enhance FDI. In the past few years foreign investors were facing challenges by the courts in Pakistan. Due to judicial activism not only Pakistan being a host state had to experience failure in investment projects, but also the foreign investors had to become a victim of massive loss.In the constitution of Pakistan the courts have the power to take action against any case in the interest of the public. Suo moto is a constitutional power and judiciary have the right to use this power in any case.China is initiating a huge investment in Pakistan, which will not only provide great scope to the investors in growing their businesses but also will promote job opportunities, technology transfer,economics and prosperity of Pakistan. The judiciary system of Pakistan is likely to impose great challenges to the Chinese investors.It has been observed in the past that the judiciary in Pakistan had played a role in creating issues in the development of foreign investment leading to termination of the investment agreement.Moreover in some cases foreign investors were compelled to leave the country. Due to judicial activism privatization of Steel mill had been halted which became a burden to the Government of Pakistan. The foreign investment in Rental Power Project had also been terminated due to judicial activism. Chinese investment in Orange train is a recent example of judicial activism in Pakistan, which led to huge loss to the Chinese investors on account of halting of its construction after the agreement. Keywords. Judiciary,Foreign investor protection,Judicial Activism,CPEC DOI: 10.7176/JLPG/95-13 Publication date: March 31 st 2020

Proportionality and Human Rights Protection in International Investment Arbitration: What’s Left Hanging in the Balance?

Abstract This article focuses on the proportionality analysis carried out by international investment tribunals when the protection of foreign investment adversely impacts the protection of human rights. International investment arbitrators are increasingly called to adjudicate awards which require a ‘balancing’ between the so-called rights of investors, protected as they are by relevant international investment agreements (iia), and the rights of third parties affected by foreign investment. Such balancing often entails, at its core, a controversial juxtaposition between investment protections and human rights protections. In this article, I argue that a balancing between investors’ rights and human rights is neither possible nor desirable. This argument is crucial to demystify existing assumptions surrounding the use of balancing and proportionality in international investment arbitration as a way of successfully reconciling competing interests as well as conflicting protection obligations vested upon a host State.

The Fate of EU Environmental and Investment Law after the Achmea Decision

In the landmark Slowakische Republik v. Achmea BV judgment, the ecj arguably took a resolute stance against the compatibility of International Investment Agreements between EU Member States and the inherent functioning of EU’s legal order. However, the issue as to whether the foreign investment protection regime is at odds with the sound application of EU law is far from being settled. Furthermore, the international investment protection regime as interpreted by investment tribunals may hamper EU Member States’ regulatory space, especially in the implementation of ambitious environmental and climate policies. The recent surge of litigation before international investment tribunals triggered by retrospective changes to supporting schemes for renewable energy sources and the phase-out of nuclear power plants in some European Member States is a telling example. The purpose of this article thus is to analyse the avenues currently available to ensure consistency between EU’s environmental and climate policies as implemented by EU Member States and the investment protection regime as applied by investment tribunals in the wake of the Achmea decision, with a view to devising a benchmark to prevent and avoid, rather than foster, policy conflicts.

Change of Regulatory Scheme: China’s New Foreign Investment Law and Reshaped Legal Landscape

Author(s): Zhang, Mo | Abstract: Protection of foreign investment has long been an issue facing China. The newly adopted Foreign Investment Law (FIL) and Implementation Regulations not only unify the foreign investment regulations but also reformulate the regulatory regime that governs foreign investment in the country. In response to the mounting criticism of the practices in China that damage the interests of foreign investors, including, among others, forced technology transfer and commercial theft, the FIL is purposed to build a better environment so that foreign investment will be more effectively protected.The FIL changes the main themes of China’s regulation of foreign investment and puts new market access rules and measures in place on the foreign investment horizon. The FIL Implementation Regulations intend to fill the gaps left in the FIL. Still, many questions remain unanswered. Both the broadness and vagueness of the FIL require further clarification and specific measures in different aspects. The Supreme People’s Court is expected to issue judicial interpretations on various practical matters.The FIL is charged with the mission to even the playing field by providing fair treatment to foreign investors in the country, but the challenges encountering foreign businesses seeking establishment in China remain. The clear rules of implementation aside, an effective enforcement mechanism is essential to the achievement of the intended goals of the FIL.

International investment arbitration: decisions 2017–2018 on the merits of the dispute

In the previous article, the author reviewed the decisions of international investment arbitration 2017–2018 on the jurisdiction and admissibility of claims. This article reviews the decisions of these arbitrations for the same period on the merits of the disputes. A special place among these decisions is taken by decisions on claims of foreign investors on violation by the host state of the regime (or standard) of fair and equitable treatment. This is quite natural: violation of this standard is the most common claim. In 2017–2018 in particular, many lawsuits in which such claims were made were related to the generation of electricity from renewable sources, mainly from solar energy. These claims were based on the 1994 Energy Charter Treaty. The article examines, in particular, cases of claims in which investors demanded compensation for damage caused by changes in the legislation of the host countries. The question before the arbitrators was: how strongly does the standard of fair and equitable treatment protect against legislative changes? The article also considers such aspects as: violation by the state of the national regime, the most favored nation regime and the standard of full protection and security of foreign investments; direct and indirect expropriation. The solutions in which the question arose about; the power of the arbitral tribunal to review its own preliminary decisions; the impact of environmental aspects on the behavior of the investor and the state; attempts by a party dissatisfied with the arbitration decision to have the decision annulled or overturned either by an ad hoc committee of ICSID or by national state courts. An analysis of the above decisions will reveal some trends in international investment law, which is important in the context of the fact that there cannot be truly uniform practice in investment arbitration due to the lack of a single source of law and a single dispute resolution body. Thus, only a careful analysis of the practice can tell which practice is well established and which is not.

Revisiting Vattel’s Law of Nations to Discern the Classical Principles of the International Investment Law

The present paper seeks to examine various issues of the contemporary International Investment Law within the classical international law framework found in Vattel’s Law of Nations written in the mid of the eighteenth century. On study it is found that Vattel’s work is an enriching source for the natural law principles contextually applicable to the contemporary international investment law. It is found that many of the contemporary international law institutions for protection of foreign investments like the scope and standards for protection of foreign investments, principles of reparation, exhaustion of local remedies, diplomatic protection, treaty based protection for foreign investments, measures for peaceful and coercive dispute resolution etc. can be traced in Vattel’s classical work. Contextualization of Vattel’s classical work to the contemporary issues of international investment law has the potential to enrich the contemporary literatures and jurisprudence on international investment law, particularly from the perspectives of pragmatic natural law philosophy.

International Law and Legal Regimes of Foreign Direct Investment in Selected African Countries

International Law and Legal Regimes of Foreign Direct Investment in Selected African Countries

The Growing Number Of Disputes Resolved Under The International Centre For Settlement Of Investment Disputes "ICSID" Rules, Has Contributed To Consider The ICSID As A Widely Established Legal System For The Protection Of Foreign Investment

The Growing Number Of Disputes Resolved Under The International Centre For Settlement Of Investment Disputes "ICSID" Rules, Has Contributed To Consider The ICSID As A Widely Established Legal System For The Protection Of Foreign Investment

Generality and specificity of protection of foreign investors: comparative study of Russian and Chinese laws on foreign investments

Generality and specificity of protection of foreign investors: comparative study of Russian and Chinese laws on foreign investments

When the international investment law and environmental law are in crossroads: how to protect investors and environment in tobacco control case

The focus of the research is to address question on the problem of how the chasm between international investment law and environmental law can be filled in, especially in tobacco control through enacting the Tobacco Plain Packaging Act 2011 adopted by Australia. Australia, as the first country to enact the Tobacco Plain Packaging Act 2011, was sued by many cigarette companies. They consider Australia does not protect their interests as investors. While one of the reasons why Australia enforces these rules is to protect the environment, in this matter is public health of the society, and both are closely correlate with climate change. From this case, there is difference views between international investment law and environmental law. On the one hand, the principles of international investment law require protection of foreign investors, while the principles of environmental law require the states to provide an adequate protection on its environment. This research is a normative legal research. Data is secondary ones consisting of primary, secondary, and tertiary legal materials. Data collection techniques uses library research, while data analysis technique uses legal interpretation. The result of this study show that it is needed to establish a new approach in balancing between economic interest and public health one that can contribute to the climate change through drafting provision relating to the environmental issues in bilateral investment treaty (BIT).

Authority of Regional Governments in Developing Investment in the Regional Investment

This research conducted with the aim of 1) To find and analyze the arrangements for the entry of foreign investors in investment in Indonesia, and 2) To find, analyze and develop the authority of the Regional Government in developing investments in regional investment. Legal research is a scientific activity, which is based on certain methods, systematics and thoughts that aim to learn something or some symptoms of a particular law, by analyzing it. In this case the research conducted by the author is research on legal protection of foreign investors in investment according to the Indonesian system.

Protection of Foreign Investment in Central Asia

Central Asia, with its abundance of natural resources and low labor costs, is often seen as an attractive destination for foreign investment. The inflow of foreign investment into Central Asia has significantly increased in recent decades, and this phenomenon supports the improvement of both national economies and the welfare of the region. Still, Central Asia is not classified as a low-risk destination for foreign investment because of inadequate protection of foreign investment – particularly a lack of transparency and predictability in Central Asia states’ FDI (Foreign Direct Investment) regimes. Furthermore, international organizations (such as the OECD) indicate that some countries in Central Asia do not have clear investment policies. These points pose problems for foreign investors who desire to invest in the region. From this perspective, this article analyzes the consistency of the general principles of foreign investment in Central Asia with international investment standards.

Legal perspectives on the protection of bilateral investment between China and Switzerland

ABSTRACTGiven the rapid increase of bilateral investments between China and Switzerland over the last decade, the legal framework applicable to foreign investment has become more and more sophisticated reflecting the various interests regarding foreign investment. These interests do not only include the protection and promotion of foreign investment in order to facilitate economic growth, but also the safeguard of the effective functioning of the markets as well as the protection of national security from undue influence by foreign actors. In light of this, this paper takes a comparative law perspective on the applicable legal framework for foreign investment flowing from China to Switzerland and vice versa. By doing so, it focuses on the rights of investors under the bilateral investment treaty concluded between the two countries as well as on two ex ante review mechanisms screening transactions involving foreign investment, this being merger control and national security review. Finally, it analyzes the possibilities of Chinese investors to enter the European Union market through investments made in Switzerland and draws lessons from the Swiss experience for a future bilateral investment agreement between China and the European Union. The paper finds that, with the exclusion of ‘letter-box’ companies, Chinese and Swiss investors can benefit from a high degree of protection provided in the bilateral investment treaty between the two countries, which can be enforced through investor-state arbitration. The merger review processes in the two countries are largely comparable, except for the fact that the Chinese merger review can potentially be based on non-competition factors. Regarding the safeguard of national security, the two countries adopt very different approaches. While China provides for a review mechanism for individual transactions, Switzerland has conducted a general risk assessment screening all potential transactions in the foreseeable future. The two approaches fit the respective circumstances of the two countries. With respect to access to the European Union market, Chinese investors in Switzerland can expect favorable conditions only regarding very specific sectors, this being civil aviation and insurance. In view of negotiations of a future bilateral investment agreement with the European Union, China could notably consider extending most-favored nation treatment to European Union investors with respect to market access.

Podmiotowość prawnomiędzynarodowa korporacji międzynarodowych wyzwaniem dla systemu ochrony inwestycji zagranicznych

This paper analyzes two issues: the current state of international investment law as to the question of the subjectivity of transnational corporations and whether this question contributes to changes in the system of protection of foreign investments. Transnational corporations have already some relevant attributes of the subjects of international law, although all we can say is that their international legal personality is incomplete, functional, relative and not independent. International legal personality of transnational corporations cannot be presumed and if it is for the purpose of assigning liability for infringements of the rules of jus cogens, this will not prejudge the subjectivity in the fi eld of the use of international investment law. If international legal subjectivity of a transnational corporation has been decided upon, the future of the already existing norms of international law regarding the protection of investments (including diplomatic protection, BIT provisions and multilateral international agreements) is not clear. In this system, the rights and obligations of states and transnational corporations are not balanced as this area of international law favours investors (and thus also transnational corporations). States and local communities are neither entitled to claim damages from the investor when such damages are caused by an investment or if they arise from violations of the vital interests of the local community, nor may they bring counterclaims against the complaint to arbitration tribunals. Common goals for the whole international community, for which the concept of international legal personality of transnational corporations could be developed, have not as yet been precisely articulated. Unlike it is the case of liability for the international law of jus cogens, there are no strong axiological reasons to develop this concept in international investment law.

FULL PROTECTION AND SECURITY STANDARD IN INTERNATIONAL INVESTMENT LAW

The subject of the study is the analysis of the application of the Standard of Full Protection and Security of Foreign Investments in international arbitral practice. It is an absolute standard that is contained in almost all international investment agreements and that has been established through arbitration practice, regardless of the variety of language expressions referred to in investment agreements. The objects of protection under this Standard can be both investors and investments and it establishes a dual obligation for the states. On the one hand, there is the obligation of active action to prevent and remedy a violation or to punish perpetrators, and on the other hand, there is the obligation to refrain from any activities that may hurt foreign investment. This paper deals in particular with the three issues that are decisive for the application of the Standard in practice. The first is the issue of the relationship between this Standard and other standards of protection of foreign investments, in particular the Standard of Fair and Equitable Treatment, as well as to the minimum standard of protection enjoyed by foreign investors and their investment under international customary law. The second is the issue of standard content, whether it applies only to physical protection and security, or includes wider, legal protection and regulatory protection, security and stability. The third question relates to the degree of protection and security, i.e. whether this Standard implies the objective liability of the host country or whether it has to deal with due diligence, depending on the circumstances of each case. The paper analyses all publicly available decisions of international arbitration tribunals as well as scientific literature dealing with this Standard and points out the prevailing attitudes about these three key issues as well as their implications for the protection of foreign investments.

Power market coupling: towards harmonised electricity policies in the East African Community

The ambitious plans of the East African Community (EAC) to provide adequate electricity in the region have continued to generate substantial interest among experts in academia, industry and government. The communal efforts to realise such targets are predicated on individual capacities and cooperative endeavour. This article focuses on a legal assessment of the EAC energy market coupling with a special emphasis on examining whether a harmonised approach is possible from two perspectives: first, practical industry concerns and, second, the legal framework within which those concerns should be addressed. This article argues that there is strong potential for a harmonised approach supported by legal convergence. One important index of success in this area would be the promotion and protection of foreign investment to ensure enough electricity supply.