The Trouble with Foreign Investor Protection

2020 ◽  
Author(s):  
Gus Van Harten
Keyword(s):  
International Law ◽  
Dispute Settlement ◽  
Foreign Investor ◽  
Foreign Investors ◽  
Global Context ◽  
Cross Border ◽  
Massive Growth ◽  
Main Effect ◽  
History Of ◽  
Legal Foundations

Governments are rightly discussing reform of investment treaties, and of the powerful system of ‘investor–state dispute settlement’ (ISDS) upon which they rest. It is therefore important to be clear about the crux of the problem. ISDS treaties are flawed fundamentally because they firmly institute wealth-based inequality under international law. That is, they use cross-border ownership of assets, mostly by multinationals and billionaires, as the gateway to extraordinary protections, while denying equivalent safeguards to those who lack the wealth required to qualify as foreign investors. The treaties thus have the main effect of safeguarding an awe-inspiring set of rights and privileges for the ultra-wealthy at the expense of countries and their populations. This book shows how ISDS came to explode in a global context of extreme concentration of wealth and of widespread poverty. The history of early ISDS treaties is highlighted to show their ties to decolonization and, sometimes, extreme violence and authoritarianism. Focusing on early ISDS lawsuits and rulings reveals how a small group of lawyers and arbitrators worked to create the legal foundations for massive growth of ISDS since 2000. ISDS-based protections are examined in detail to demonstrate how they give exceptional advantages to the wealthy. Examples are offered of how the protections have been used to reconfigure state decision making and shift sovereign minds in favour of foreign investors. Finally, the ongoing efforts of governments to reform ISDS are surveyed, with a call to go further or, even better, to withdraw from the treaties.

Investor-State dispute settlement (ISDS) cases and India: affronting regulatory autonomy or indicting capricious state behaviour?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Prabhash Ranjan
Keyword(s):  
Public Interest ◽  
Dispute Settlement ◽  
Due Process ◽  
International Investment ◽  
Public Power ◽  
Foreign Investors ◽  
Content Type ◽  
International Investment Law ◽  
Global Context ◽  
State Behaviour

Purpose The dominant narrative in the investor-State dispute settlement (ISDS) system is that it enables powerful corporations to encroach upon the regulatory power of developing countries aimed at pursuing compelling public interest objectives. The example of Phillip Morris, the tobacco giant, suing Uruguay’s public health measures is cited as the most significant example to prove this thesis. The other side of the story that States abuse their public power to undermine the protected rights of foreign investors does not get much attention. Design/methodology/approach This paper reviews all the ISDS cases that India has lost to ascertain the reason why these claims were brought against India in the first place. The approach of the paper is to study these ISDS cases to find out whether these cases arose due to abuse of the State’s public power or affronted India’s regulatory autonomy. Findings Against this global context, this paper studies the ISDS claims brought against India, one of the highest respondent-State in ISDS, to show that they arose due to India’s capricious behaviour. Analysis of these cases reveals that India acted in bad faith and abused its public power by either amending laws retroactively or by scrapping licences without following due process or going back on specific and written assurances that induced investors to invest. In none of these cases, the foreign investors challenged India’s regulatory measures aimed at advancing the genuine public interest. The absence of a “Phillip Morris moment” in India’s ISDS story is a stark reminder that one should give due weight to the equally compelling narrative that ISDS claims are also a result of abuse of public power by States. Originality/value The originality value of this paper arises from the fact that this is the first comprehensive study of ISDS cases brought against India and provides full documentation within the larger global context of rising ISDS cases. The paper contributes to the debate on international investment law by showing that in the case of India most of the ISDS cases brought were due to India abusing its public power and was not an affront on India’s regulatory autonomy.

4 A History of International Investment Treaties

2021 ◽  
Author(s):  
Salacuse Jeswald W
Keyword(s):  
International Law ◽  
International Investment ◽  
International Treaties ◽  
Host Countries ◽  
Colonial Era ◽  
Foreign Investors ◽  
Post Colonial ◽  
International Investment Law ◽  
History Of ◽  
Investment Treaties

This chapter traces the history and considers the purposes and consequences of the movement by states to negotiate investment treaties. In the post-colonial era of nationalizations and contract renegotiations, the economic facts of life in host countries struggled against the form of various legal commitments made to foreign investors. To change the dynamics of this struggle so as to protect the interests of their companies and investors, capital-exporting countries began a process of negotiating international investment treaties that, to the extent possible, would be: (1) complete; (2) clear and specific; (3) uncontestable; and (4) enforceable. These treaty efforts took place at both the bilateral and multilateral levels, which, though separate, tended to inform and reinforce each other. As a result of this process, a widespread treatification of international investment law took place in a relatively short time. By the end of the second decade of the twenty-first century, foreign investors in many parts of the world were protected primarily by international treaties rather than as previously by customary international law alone. For all practical purposes, treaties have become the fundamental source of international law in the area of foreign investment.

4 A History of International Investment Treaties

2015 ◽  
Author(s):  
Salacuse Jeswald W
Keyword(s):  
International Law ◽  
International Investment ◽  
Negotiation Process ◽  
Historical Background ◽  
Foreign Investments ◽  
Foreign Investors ◽  
Customary International Law ◽  
History Of ◽  
Investment Treaties

Since the inception of international investment, foreign investors have sought assurances from the sovereigns in whose territory they invest that their interests will be protected from negative actions by the sovereign and local individuals. This chapter begins with a historical background of the treatification process, which came about due to the perceived weaknesses of customary international law applying to foreign investments. It then discusses the objectives of the movement to negotiate investment treaties; the primary and secondary objectives of investment treaties; long-term goals of investment treaties; the treaty negotiation process; and the consequences of investment treaties, including the growth in investor–state arbitration cases to settle investment disputes.

The Oxford Handbook of International Law in Asia and the Pacific

2019 ◽  
Keyword(s):  
International Law ◽  
Dispute Settlement ◽  
International Order ◽  
Asia Pacific ◽  
Asia Pacific Region ◽  
Post Colonial ◽  
The Pacific ◽  
Colonial Theory ◽  
History Of ◽  
History Of International Law

The growing economic and political significance of Asia has exposed a tension in the modern international order. Despite expanding power and influence, Asian states have played a minimal role in creating the norms and institutions of international law; today they are the least likely to be parties to international agreements or to be represented in international organizations. That is changing. There is widespread scholarly and practitioner interest in international law at present in the Asia-Pacific region, as well as developments in the practice of states. The change has been driven by threats as well as opportunities. Transnational issues such as climate change and occasional flashpoints like the territorial disputes of the South China and the East China Seas pose challenges while economic integration and the proliferation of specialised branches of law and dispute settlement mechanisms have also encouraged greater domestic implementation of international norms across Asia. These evolutions join the long-standing interest in parts of Asia (notably South Asia) in post-colonial theory and the history of international law. This book analyses the approach to, and influence of, key states of the region, as well as whether truly ‘Asian’ trends can be identified and what this might mean for international order.

Introduction: The South China Sea: An International Law Perspective

2017 ◽  
Vol 32 (2) ◽  
pp. 193-197 ◽  
Author(s):  
Erik Franckx ◽  
Marco Benatar
Keyword(s):  
South China Sea ◽  
International Law ◽  
South China ◽  
Dispute Settlement ◽  
The South China Sea ◽  
Special Issue ◽  
The South ◽  
China Sea ◽  
International Dispute ◽  
History Of

This piece offers the Guest Editors’ Introduction to this Special Issue of The International Journal of Marine and Coastal Law—dedicated to the South China Sea. It outlines the history of the 2015 Brussels Conference at which the papers in the Special Issue were first presented, notes the key presentations and introduces the authors. Four subject matters are addressed: fisheries, navigation, the regime of islands, and international dispute settlement.

scholarly journals Modern International Law of the Sea: Role, Challenges and Proposals

2021 ◽  
Vol 37 (1) ◽  
Author(s):  
Nguyen Ba Dien
Keyword(s):  
International Law ◽  
Dispute Settlement ◽  
Law Of The Sea ◽  
Dispute Settlement Mechanism ◽  
Legal Principles ◽  
History Of Development ◽  
History Of ◽  
Legal Document ◽  
Settlement Mechanism ◽  
The Unclos

Following the tendency of “moving forward to the sea, controlling the sea”, together with the development of science, technology, the birth of the 1982 United Nations Convention on the Law of the Sea (UNCLOS 1982) marked an important turning point in the history of development of the Modern International Law of the Sea. As a textual, multilateral legal document, consisting of 320 articles and 09 Appendices, with more than 1000 legal principles, the UNCLOS 1982 is considered as a “constitution on the sea and ocean for mankind”. This paper clearly focuses on the basic problems of the UNCLOS 1982, reviews the major contribution of this convention to the development process of International Law as well as the process of being an useful tool for sea and ocean governance in peace, creating an effective dispute settlement mechanism. In addition, the paper also states challenges from the climate change, environmental security, and sovereign claims of countries to the UNCLOS 1982 and the modern International Law of the Sea, on that basis, points out issues that need to be considered, amended and supplemented in order to complement the UNCLOS 1982.

scholarly journals Dispute Settlement in Investment-Related Matters: South Africa and the BRICS

AJIL Unbound ◽  
2018 ◽  
Vol 112 ◽  
pp. 212-216
Author(s):  
Engela C. Schlemmer
Keyword(s):  
South Africa ◽  
International Law ◽  
South African ◽  
Dispute Settlement ◽  
Foreign Investors ◽  
Domestic Legislation ◽  
Domestic Courts ◽  
Investment Treaties ◽  
South African Constitution ◽  
Domestic Law

Many states use investment treaties to spur economic development by granting legal protections to foreign investors and providing for direct enforcement before international arbitral tribunals. Yet South Africa has taken a different course. As explained below, South Africa originally signed onto a number of investment treaties despite barely considering how the resulting obligations would affect its constitutional commitments and the authority of its domestic courts. After the shock of losing its first two treaty-based investment disputes, the country shifted from avidly entering into bilateral investment treaties (BITs) to opposing BITs absent compelling economic and political reasons to conclude them. Today South Africa seeks to replace investment treaties and investor-state arbitration with protections under domestic legislation, along with mediation and dispute resolution before domestic courts. In this essay, I describe this shift and explore three difficult and yet-to-be-resolved questions that it presents: (1) Will foreign investors still be able to rely on protections under international law when bringing domestic cases? (2) If so, will the South African Constitution, as a matter of domestic law, displace any relevant commitments under international law? And (3) is the new South African approach consistent with international law?

Investment Arbitration in the Energy Sector

2020 ◽  
pp. 814-842
Author(s):  
Elena Cima
Keyword(s):  
Dispute Settlement ◽  
Energy Sector ◽  
Foreign Company ◽  
Foreign Investor ◽  
Energy Investment ◽  
Foreign Investors ◽  
Significant Percentage ◽  
Investment Arbitration ◽  
The World

This chapter studies the role of investment arbitration in the energy sector, which has received increasing attention over the last decade. International energy investment accounts for a significant percentage of all global investments and makes up the largest portfolio of international arbitrations in the world today. Energy-related disputes can take many forms. They may occur between two states, two private parties, or a private party and a state—in which case they may relate either to an investment by a foreign company in a state or to a commercial contract between a foreign company and a state. The chapter considers only one type of energy-related dispute, namely investment disputes between a foreign investor and a state. It particularly focuses on arbitration, which represents ‘the most widely used form of dispute settlement between foreign investors and host States’.

scholarly journals Legal Analysis of Supporting Methods of Foreign Investors in Nationalization and Property Confiscation

2020 ◽  
Vol 7 (10) ◽  
pp. 469
Author(s):  
Javad Sabih Maleki ◽  
Siamak Karamzadeh
Keyword(s):  
International Law ◽  
Foreign Investment ◽  
Economic Security ◽  
Foreign Investor ◽  
Legal Analysis ◽  
Foreign Investors ◽  
Customary International Law ◽  
Effective Manner ◽  
Property Confiscation ◽  
The Right

Nationalization of foreign investor assets does not serve the interests of countries because it disrupts the economic security of states and ultimately leads to a reduction in foreign investment. Governments have sought to minimize investor nationalization and property confiscation in order to attract foreign investment. In the event of expropriation of a foreign investor, governments are required to compensate the investor. The position of customary international law on how to pay compensation and methods of assessing damages includes procedures based on national law, treaties and judicial decisions or arbitration. In order to support investors, it is necessary that the right to nationalize property and expropriation of investors should be very limited. Further, in case of nationalization, the damage must be compensated in a desirable and effective manner. The foreign investor must enjoy the same rights as domestic investors and at the same time have the right to transfer their capital and profits abroad. Appropriate measures should also be taken to amend national laws in order to consolidate and guarantee the ownership of foreign investors.

scholarly journals Is Investor-State Arbitration Unfair? A Freedom-Based Perspective

2017 ◽  
Vol 10 (1) ◽  
Author(s):  
Ayelet Banai
Keyword(s):  
Distributive Justice ◽  
International Law ◽  
Dispute Settlement ◽  
International Justice ◽  
Self Determination ◽  
Private International Law ◽  
Political Resistance ◽  
Public Concern ◽  
Technical Issue ◽  
Foreign Investors

Investor-state-dispute-settlement (ISDS) is an arbitration mechanism to settle disputes between foreign investors and host-states. Seemingly a technical issue in private international law, ISDS procedures have recently become a matter of public concern and the target of political resistance, due to the power they grant to foreign investors in matters of public policies in the countries they invest in. This article examines the practice of ISDS through the lenses of liberal-statist theories of international justice, which value self-determination. It argues that the investor-state arbitration system illustrates how liberal-statist theories of international distributive justice ought to care about relative socioeconomic disadvantage, contra the sufficiency principle that they typically defend. The sufficiency principle draws on a questionable conception of the freedom that self-determination consists in.

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