The International Law on Foreign Investment

Half-title......Page 3
Title......Page 5
Copyright......Page 6
Dedication......Page 7
Contents......Page 9
Preface to the third edition......Page 17
Preface to the second edition......Page 19
Preface to the first edition......Page 20
Table of cases......Page 21
Abbreviations......Page 32
1 Introduction......Page 33
1.1 The distinction between portfolio investment and foreign direct investment......Page 40
1.2 Definition of foreign investment in investment treaties......Page 42
1.3 The evolution of the meaning of the term ‘investment’......Page 43
2.1 The colonial period......Page 51
2.2 The post-colonial period......Page 53
3. An outline of the book......Page 61
2 The shaping factors......Page 65
1.1 State responsibility for injuries to aliens......Page 68
1.1.1 The natural resources sector......Page 70
1.1.2 The plantation sector......Page 73
1.1.3 The manufacturing sector......Page 74
1.1.5 Intellectual property......Page 76
2. Conflicting economic theories on foreign investment......Page 79
2.1 The classical theory on foreign investment......Page 80
2.2 The dependency theory......Page 85
2.3 The middle path......Page 87
3. Actors in the field of foreign investment......Page 92
3.1 The multinational corporation......Page 93
3.2 State corporations......Page 95
3.3 International institutions......Page 97
3.4 Nonovernmental organisations......Page 99
3.6 Sovereign wealth funds......Page 100
4. Risks in foreign investment......Page 101
4.2 Nationalism......Page 103
4.3 Ethnicity as a factor......Page 105
4.4 Changes in industry patterns......Page 106
4.5 Contracts made by previous regimes......Page 107
4.6 Onerous contracts......Page 108
4.8 Human rights and environmental concerns......Page 109
5.1 Treaties......Page 111
5.2 Custom......Page 114
5.3 General principles of law......Page 117
5.4 Judicial decisions......Page 119
3 Controls by the host state......Page 120
1. Regulation of entry......Page 129
1.1 Guarantees against expropriation......Page 131
1.2 Guarantees relating to dispute settlement......Page 134
1.3 Tax and non-tax incentives to foreign investors......Page 135
1.4 Screening of foreign investment entry......Page 136
1.5 Requirements of local collaboration......Page 138
1.6 Capitalisation requirements......Page 140
1.7 Requirements relating to environmental protection......Page 141
1.8 Requirements relating to export targets......Page 143
1.9 Requirements relating to local equity......Page 144
1.11 Regulation and expropriation......Page 147
2.1 The joint venture......Page 148
2.2 The production-sharing agreement......Page 150
3. Constraints on control: customary international law......Page 151
3.1 State responsibility for injuries to aliens......Page 152
3.2 The conflict between the United States and Latin American states......Page 156
3.3 The content of the international minimum standard......Page 160
3.4 State responsibility and developing states......Page 162
3.5 The ‘noble synthesis’......Page 163
3.6 Damage to property in the course of civil disturbances......Page 166
3.7 Validity of conditions on foreign investment......Page 168
3.7.1 Regulations on screening of foreign investments......Page 169
3.7.2 Local equity requirements......Page 170
3.7.3 Export requirements......Page 173
4. Conclusion......Page 174
4 The liability of multinational corporations and home state measures......Page 176
1. Obligations of multinational corporations......Page 177
1.1 The obligation not to interfere in domestic politics......Page 180
1.2 Obligations relating to human rights......Page 181
1.3 Liability for violations of environmental norms......Page 184
1.4 The obligation to promote economic development......Page 186
2. Extraterritorial control by home states......Page 187
2.2 The existing rules on state responsibility......Page 189
2.3 The duty to control nationals abroad......Page 196
2.4 State responsibility and the duty to provide remedies to victims......Page 201
3. Conclusion......Page 202
5 Bilateral investment treaties......Page 204
1. Introductory survey......Page 207
2. Treaties of friendship, commerce and navigation......Page 212
3. Reasons for making bilateral investment treaties......Page 215
4. Features of bilateral investment treaties......Page 219
4.1 The statement of the purpose of the treaty......Page 220
4.2.1 Investments......Page 222
4.2.2 Limitation on the definition of investment......Page 226
4.2.3 Portfolio investments......Page 228
4.2.4 Corporate nationality and the protection of shareholders......Page 229
4.3.1 National standard of treatment......Page 233
4.3.3 Most-favoured-nation treatment......Page 236
4.4 Performance requirements......Page 237
4.5 Repatriation of profits......Page 238
4.6 Nationalisation and compensation......Page 239
4.6.1 Compensation for destruction during wars and national emergencies......Page 245
4.7 Protection of commitments......Page 247
4.8 Dispute resolution......Page 248
4.9 Arbitration and the exhaustion of local remedies......Page 251
4.9.1 Arbitration between states......Page 253
4.10 Safeguard provisions and exceptions......Page 254
5. New concerns in bilateral investment treaties......Page 256
5.1 Environmental concerns......Page 257
5.2 Human rights......Page 259
5.3 Economic development......Page 261
5.4 International concerns......Page 262
5.5 Regulatory space and bilateral treaties......Page 263
5.6 Bilateral investment treaties and customary international law......Page 264
6. Conclusion......Page 266
6 Multilateral instruments on foreign investment......Page 268
1. The international norms on multinational corporations......Page 270
2.1 Description of the UNCTC Draft Code......Page 274
2.1.3 Respect for national sovereignty......Page 275
2.1.5 Non-interference in domestic affairs......Page 276
2.1.6 Abstention from corrupt practices......Page 278
2.1.7 Economic and other controls......Page 279
2.1.9 Treatment of transnational corporations......Page 280
3.1 The relevance of international law......Page 281
3.2 Non-interference in domestic affairs......Page 282
3.3 Permanent sovereignty and international obligations......Page 284
4.1 NAFTA......Page 285
4.2 The ASEAN agreements......Page 286
5. The Multilateral Agreement on Investment......Page 289
6. The WTO and foreign investment......Page 294
6.2 GATS......Page 295
6.3 TRIPS......Page 297
6.4 TRIMS......Page 298
7.1 The definition of investment......Page 299
7.2 Definition and preservation of regulatory control......Page 300
7.4 Treatment standards......Page 301
7.4.1 Most-favoured-nation treatment......Page 302
7.6 Expropriation......Page 303
7.8 Dispute resolution......Page 304
8. The right to regulate foreign investment......Page 305
9. Conclusion......Page 307
7 Settlement of investment disputes: contract-based arbitration......Page 308
1. Contractual devices for foreign investment protection......Page 311
1.1.1 The stabilisation clause......Page 313
1.1.2 Choice-of-law clause......Page 316
1.1.3 Arbitration clause......Page 318
2.1 The origin of the theory of internationalisation......Page 321
2.2 The ICSID Convention and international law......Page 331
2.3 The continued relevance of contractased arbitration......Page 332
2.4 Lex mercatoria and state contracts......Page 334
2.6 Arbitration based on investment legislation......Page 336
3. Conclusion......Page 337
8 Treaty-based investment arbitration: jurisdictional issues......Page 338
1.1 The definition of investment......Page 340
1.2 Economic development as a characteristic of investment......Page 345
1.3 Does portfolio investment qualify as investment?......Page 346
1.4 Pre-contractual expenses as investment......Page 348
1.5 The qualification of investment as subject to local laws and regulations......Page 349
1.6 Good faith limitations......Page 350
1.8 The time factor......Page 351
1.10 The ‘fork in the road’ and waiver......Page 352
1.12 Exhaustion of local remedies......Page 354
2.2 Juridical person: corporate nationality......Page 355
2.3 Locally incorporated company......Page 356
2.5 The migration of companies......Page 357
2.6 Shopping for jurisdiction......Page 359
2.7 Round-tripping and corporate nationality......Page 360
2.9 Protection of minority shareholders......Page 361
3. Conclusion......Page 362
9 Causes of action: breaches of treatment standards......Page 364
1. The customary international law standards......Page 366
2. The violation of national treatment standards......Page 367
2.1 Performance requirements and national treatment......Page 374
2.2 National treatment and infant industries......Page 375
2.5 Conclusion......Page 376
3. International minimum standard treatment......Page 377
4. Fair and equitable standard of treatment......Page 381
4.1 Violation of legitimate expectations......Page 386
4.2 Denial of justice......Page 389
4.3 Due process and administrative irregularity......Page 390
5. Full protection and security......Page 391
6. Conclusion......Page 392
10 The taking of foreign property......Page 395
1. What constitutes taking?......Page 396
1.1 New forms of taking......Page 399
1.2 The ideas of property......Page 401
1.2.1 Forced sales of property......Page 408
1.2.2 Forced sales of shares......Page 409
1.3.1 Indigenisation measures......Page 412
1.3.2 Interference with property rights......Page 414
1.4 Evolving US and European notions of property......Page 415
1.5 The impact on international law......Page 418
1.6 Survey of authorities......Page 421
2. The exercise of management control over the investment......Page 432
2.1 Cancellation of permits and licences......Page 434
2.2 Takings by agents and mobs......Page 436
2.4 Expulsion of the foreign investor......Page 437
3. Illegal takings......Page 438
3.1 The taking must be for a public purpose......Page 439
3.2 Discriminatory taking......Page 441
4. Conclusion......Page 442
11 Compensation for nationalisation of foreign investments......Page 444
1. The competing norms: the views of the capitalxporting states......Page 445
1.1 The claim that ‘prompt, adequate and effective’ compensation must be paid......Page 446
1.1.1 Treaties......Page 447
1.1.2 Customary practice......Page 449
1.1.4 Unjust enrichment......Page 450
1.1.5 Acquired rights......Page 451
1.1.6 Right to property......Page 452
1.1.7 Foreign investment codes......Page 456
1.1.9 International courts......Page 457
1.1.10 Awards of arbitral tribunals......Page 461
1.1.11 National courts......Page 472
1.1.12 Writings of publicists......Page 473
2.1 The claim that it is permissible to deduct past excess profits from compensation......Page 475
2.2 The claim that the taking is a ‘revindication’ for which no compensation is necessary......Page 476
2.3 The claim that appropriate compensation should be paid......Page 477
2.3.2 Categories of lawful takings for which full compensation must be paid......Page 479
2.3.4 Full compensation need not be paid as part of a full-scale nationalisation of a whole industry......Page 480
2.3.5 Partial compensation......Page 481
3. Valuation of nationalised property......Page 482
4. Conclusion......Page 483
12 Defences to responsibility......Page 485
1. Treaty-based defences......Page 487
1.1 National security......Page 489
1.2 Economic crises and national security......Page 490
1.3 Necessity......Page 493
1.4 Force majeure......Page 497
2. Violation of the fair and equitable standard by the foreign investor......Page 498
3. Ius cogens, competing obligations and liability......Page 501
3.1 Transactions with undemocratic governments......Page 502
3.3 Cultural property and foreign investment......Page 503
3.5 Human rights considerations......Page 504
4. Conclusion......Page 505
Books......Page 506
Articles......Page 512
Index......Page 526