The Evolving International Investment Regime Expectations, Realities, Options

by Alvarez, Jose E.; Sauvant, Karl P.; Ahmed, Kamil Gerard; Vizcaino, Gabriela P.

• ISBN13: 9780199793624
• ISBN10: 019979362X
• Format: Hardcover
• Copyright: 2011-04-19
• Publisher: Oxford University Press

Summary

With the growth of the global economy over the past two decades, foreign direct investment (FDI) laws, at both the national and international levels, have undergone rapid development in order to strengthen the protection standards for foreign investors. In terms of international investment law, a network of international investment agreements has arisen as a way to address FDI growth. FDI backlash, reflective of more restrictive regulation, has also emerged. The Evolving International Investment Regime analyzes the existing challenges to the international investment regime, and addresses these challenges going forward. It also examines the dynamics of the international regime, as well as a broader view of the changing global economic reality both in the United States and in other countries. The content for the book is a compendium of articles by leading thinkers, originating from the International Investment Conference "What's New in International Investment Law and Policy?"

Author Biography

Jose E. Alvarez is the Herbert and Rose Rubin Professor of International Law at New York University Law School. At NYU he teaches courses on international law, foreign investment, and international organizations. He is also serving as special adviser to the Prosecutor of the International Criminal Court on a pro bono basis. Professor Alvarez was formerly the Hamilton Fish Professor of International Law and Diplomacy and the executive director of the Center on Global Legal Problems at Columbia Law School, a professor of law at the University of Michigan Law School, an associate professor at the George Washington University's National Law Center, and an adjunct professor at Georgetown Law Center. Prior to entering academia in 1989, Professor Alvarez was an attorney adviser with the Office of the Legal Adviser of the U.S. Department of State where he worked on cases before the Iran-U.S. Claims Tribunal, served on the negotiation teams for bilateral investment treaties and the Canada-U.S. Free Trade Agreement, and was legal adviser to the administration of justice program in Latin America coordinated by the Agency of International Development. Professor Alvarez has also been in private practice and was a judicial clerk to the late Hon. Thomas Gibbs Gee of the Fifth Circuit Court of Appeals. He served as President of the American Society of International Law from 2006-08. His recently concluded set of lectures at The Hague Academy of International Law, concerning the public international law governing international investment, are expected to be published in book form in late 2010. Prof. Alvarez's book, International Organizations as Law-Makers, was published in paperback in 2006. He was educated at Harvard College, Harvard Law School, and Oxford University.

Karl P. Sauvant is the Executive Director of the Columbia Program on International Investment, Lecturer in Law at Columbia Law School and Special Advisor to the UN Millennium Project. He is also Guest Professor at Nankai University, China.

Until July 2005, he was Director of UNCTAD's Division on Investment, Technology and Enterprise Development (DITE), the focal point in the UN system for matters related to foreign direct investment (FDI) and technology, as well as a major interface with the private sector. While at the UN, he created (in 1991) the prestigious annual United Nations publication the World Investment Report, of which he was the lead author until 2005, and (in 1992) the journal Transnational Corporations, serving as its editor. He provided intellectual leadership and guidance to a series of 25 monographs on key issues related to international investment agreements (which were published in 2004/05 in three volumes), and he edited (together with John Dunning) a 20-volume Library on Transnational Corporations (published by Routledge).

Dr. Sauvant joined the United Nations in 1973 and, as of 1975, has focused his work on matters related to FDI. Since 1988, he was responsible for the Organization's policy analysis work on FDI. In 2001, he became Director of DITE. His responsibilities included managing the Division; promoting international consensus-building in the areas of FDI, technology and enterprise development; providing intellectual leadership for policy-oriented research; and conceptualizing and supervising technical assistance activities in this field.

Apart from his work for the United Nations, he has published extensively on issues related to economic development, FDI and services. His name is associated with some 150 United Nations publications on FDI over the past three decades.

Dr. Sauvant received a Ph.D. degree from the University of Pennsylvania. He is a national of Germany.

Table of Contents

Foreword	p. xiii
Preface	p. xv
Acknowledgments	p. xxi
Editors and Contributors	p. xxiii
Introduction: International Investment Law in Transition	p. xxxi
The Context: Foreign Investment and the Changing Global Economic Reality	p. xliii
Introduction	p. xliii
Current and Future Trends in Foreign Investment	p. xliv
Economic Drivers of FDI	p. xlvii
The Decline of the "Superpower"	p. xlix
Looking Toward the Future	p. l
Concluding Remarks	p. lii
Stakeholder Expectations in the International Investment Regime
What Do Developing Countries Expect from the International Investment Regime?	p. 3
Introduction	p. 3
The International Investment Regime and the New Realities of Developing Countries: The Fallen Paradigm	p. 5
The Multiple Functions of a Rule-Oriented International Investment Regime for Developing Countries	p. 10
External Dimension	p. 10
Domestic Dimension	p. 12
"Lock-In" Effect of Domestic Reform	p. 13
Promotion of Greater Transparency and the Rule of Law	p. 13
Greater Coherence in Policy Implementation among National Agencies	p. 15
Is the International Investment Regime Fulfilling Its Functions?	p. 16
Conclusions and Way Forward	p. 19
Civil Society Perspectives: What Do Key Stakeholders Expect from the International Investment Regime?	p. 22
Introduction	p. 22
"Civil Society" for Present Purposes	p. 22
Two Major Directions in Civil Society Views	p. 23
The View Against the International Investment Law Regime	p. 23
The View for Reform of the International Investment Law Regime	p. 25
Make It a Proper Public International Law Regime	p. 25
The Purpose Must Change: Focus on Sustainable Development, Especially but not Only for Developing Countries	p. 27
The Content Must be Fixed	p. 27
The Arbitration Process Must be Revamped	p. 28
Conclusions	p. 29
Regulating Multinationals: Foreign Investment, Development, and the Balance of Corporate and Home Country Rights and Responsibilities in a Globalizing World	p. 30
Introduction	p. 30
Principal Actors and Interests	p. 32
The Current Regime of IIAs	p. 34
Mitigating the One-Sided Nature of IIAs	p. 37
UNCTAD and "Flexibility for Development"	p. 37
Introduction of Investor Responsibilities	p. 39
Putting Investor Obligations into Operation in IIAs	p. 43
Adapting Existing Provisions	p. 54
Extending IIAs to Home Country Responsibilities	p. 56
Conclusion	p. 58
On the Perceived Inconsistency in Investor-State Jurisprudence	p. 60
Introduction	p. 60
Variations in Facts	p. 60
Variation in Treaty Terms	p. 63
Overstated Conflicts	p. 64
A Place for Precedent?	p. 66
Conclusion	p. 69
Reforming the FDI Regime: Avenues to Consider
Considering Recalibration of International Investment Agreements: Empirical Insights	p. 73
Introduction	p. 73
The Impact of Procedural Rights: Integrity of the Dispute Resolution Process	p. 76
Adding Empiricism: Statistical Analysis to Assess Integrity of Procedural Investment Rights and Arbitration Outcomes	p. 78
The Empirical Research Questions	p. 78
Methodology	p. 78
Development Status and Winning Investment Treaty Cases	p. 78
Development Status and Amounts Awarded in Investment Treaty Arbitration	p. 79
Results of the Empirical Analyses	p. 80
Winning/Losing Investment Treaty Arbitration and Development Status	p. 81
OECD Status and Winning Treaty Cases	p. 81
World Bank Status and Winning Treaty Cases	p. 81
Amounts Awarded in Investment Treaty Arbitration and Development Status	p. 82
OECD Status and Amounts Awarded	p. 82
World Bank Status and Amounts Awarded	p. 83
Interpretation	p. 84
Overall Preliminary Results	p. 84
Potential Limitations	p. 85
Interpreting Development Status	p. 87
The Impact of OECD Status on the Outcome	p. 87
The Impact of World Bank Status on the Outcome	p. 87
Synthesis of Research Results and the Implications for Investment Agreements	p. 89
Conclusion	p. 92
All Clear on the Investment Front: A Plea for a Restatement	p. 95
Introductory Remarks	p. 95
Trade and Investment: Hand in Hand	p. 96
Some Groundwork that was Never Done (A Plea for a Restatement)	p. 101
Concluding Remarks	p. 103
Legal Developments in U.S. National Security Reviews of Foreign Direct Investment (2006-2008)	p. 104
Introduction	p. 104
U.S. Foreign Direct Investment Policy	p. 104
Concerns with the U.S. Investment Review Process	p. 107
Reforms to the U.S. Investment Review Process	p. 110
National Security	p. 116
Conclusion	p. 119
Challenges and Prospects Facing the International Centre for Settlement of Investment Disputes	p. 120
Introduction	p. 120
Overview	p. 120
Challenges in Regard to the Independence and Governance of ICSID	p. 121
Challenges in Regard to ICSID's Growing Caseload	p. 122
Challenges from the Institutional Perspective	p. 123
Challenges in Regard to a Growing Jurisprudence	p. 123
Concluding Remarks	p. 124
The Changing Political Economy of Foreign Investment: Finding a Balance Between Hard and Soft Forms of Regulation	p. 125
Introduction	p. 125
Sovereignty at Bay in the Digital Economy	p. 127
Regulating Foreign Investment	p. 131
Restrictions on FDI in Strategic Industries	p. 132
The Case of Extraterritoriality: How Might Home/Host Differences be Reconciled?	p. 135
Cross-Border Competition Issues	p. 136
Responsibility for Human Rights Violations	p. 138
Social Responsibility and Multinational Enterprises	p. 140
The Business Case for Social Responsibility	p. 140
Self-Regulation and Regulation	p. 142
Conclusions: Toward a New System of Multilateral Governance	p. 148
Multilateral Approaches to Investment: The Way Forward	p. 153
Introduction	p. 153
Lessons from the MAI	p. 157
What Was Achieved?	p. 158
What Went Wrong?	p. 158
What Remains?	p. 160
Considerations for a New Multilateral Approach	p. 160
Codification of International Investment Law	p. 161
Traditional Core Elements	p. 162
Entry and Establishment	p. 162
National Treatment/Most Favored Nation (MFN)	p. 162
Investment Protection	p. 163
Right to Regulate	p. 164
New Disciplines and Other Innovative Features	p. 164
Investor-State Dispute Settlement	p. 164
Procedural Approaches Toward Codification	p. 165
Creation of a Permanent Adjudicatory Body for Investment Disputes	p. 166
Advisory Facilities for Treaty Negotiations and Dispute Settlement	p. 170
Conclusions	p. 172
The Future of International Investment Law: A Balance Between the Protection of Investors and the States' Capacity to Regulate	p. 174
Introduction	p. 174
Is There a Crisis in the System of International Investment Arbitration?	p. 175
A Unilateral Act-a Law-of a State Has Been Found to Contain the State's Consent in Writing: The Pyramids Case (SPP v. Egypt)	p. 176
A Bilateral Treaty on the Protection of Investments Has Been Found to Contain the State's Consent in Writing: The AAPL v. Sri Lanka Case and the AMT v. Congo Case	p. 178
The Possible Backlash to the Success of Investment Arbitration	p. 181
The Respective Roles of the Different Actors of the International Investment Arbitration System	p. 186
The Role of Arbitrators	p. 186
The Role of NGOs	p. 187
The Necessity of a Balancing of Interests	p. 189
International Investment Rulemaking at the Beginning of the Twenty-First Century: Stocktaking and Options for the Way Forward	p. 193
Introduction	p. 193
Stocktaking of the Existing IIA Universe	p. 194
The Global IIA Network Continues to Grow	p. 194
The Increasing Complexity of the IIA Universe	p. 194
Investment Arbitration on the Rise	p. 196
The Stronger Role of Developing Countries	p. 196
The Evolving Policy Environment for Foreign Investment	p. 197
Challenges for Future International Investment Rulemaking	p. 198
Systemic Challenges	p. 199
Atomized Structure of the IIA Universe	p. 199
Coherence and Consistency	p. 199
Looking Beyond IIA-Related Matters	p. 200
Implications of Rising Investment Arbitration	p. 200
Challenges of Strengthening the Development Dimension	p. 201
Challenges of Capacity	p. 202
Challenges Resulting from a Changing Policy Environment for FDI	p. 203
Options for the Way Forward	p. 204
The Case for Renewed Multilateral Efforts	p. 204
Options for Multilateral IIA-Related Instruments	p. 205
Guidelines for Addressing the Development Dimension in IIAs	p. 206
A Set of Multilaterally Agreed Voluntary Principles on Investment	p. 207
A Model Agreement	p. 208
A Multilateral Framework for Investment	p. 208
The Need for a Multilateral Forum on IIA Matters	p. 208
Conclusion	p. 209
Report of the Rapporteur
Improving the International Investment Law and Policy System Report of the Rapporteur	p. 213
Second Columbia International Investment Conference: What's Next in International Investment Law and Policy?
Introduction	p. 213
Challenges to the "Legitimacy" of Investor-State Arbitration	p. 215
Investment Arbitration and Globalization	p. 216
A Crisis in Investment Arbitration?	p. 217
Challenges to the Legitimacy of Investment Arbitration	p. 218
Capture of the System by the North?	p. 218
Rejection of the System by the North?	p. 219
Transparency	p. 220
Divergent Decisions	p. 220
An Appellate Body?	p. 221
Specialized Demands on the Investment Arbitration Regime	p. 223
The Way Forward	p. 225
Goals	p. 225
Balancing Investors' Rights with Responsibilities	p. 229
Investments Are Not All Alike; Host Countries Are Not All Alike-Developing a More Nuanced Approach to Regulation of Investment	p. 231
Capacity Building	p. 233
Resource Centers for Disputants	p. 233
Education and Research	p. 235
An Evolving Regime with Revolving Actors	p. 236
Applicable Law	p. 238
Adding Sustainable Development Principles to Investment-Related Obligations	p. 238
Tribunal Development of Legal Principles	p. 239
Developing Soft-Law Instruments	p. 240
Adding New Perspectives	p. 242
Multilateralism	p. 242
Conclusion	p. 244
Index	p. 247
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