Emerging International Law of Foreign Investments

1
Emerging International Law of Foreign Investments

• Omar E. Garcia-Bolivar

2
Issues of Foreign Investment (FI)

• Flow of capital
• -from one country to other
• -in search of economic objective
• Right of property
• Sovereignty
• -of Host State regulating
• -of Home State extraterritorial rule
• Diplomatic protection
• International Law
• Development/Dominance

3
Parties to F I

• Investor individual or corporation,
  Transnational Corporations (TNCs)
• Host State
• Home State
• International Organizations

4
TNCs
TNC
Country B
Country C
Country A
Country D
Sub A
Sub B
Sub C
What is the nationality of TNC?
5
Kind of FI

• Foreign Direct Investment (FDI)
• - Greenfield
• - Mergers and Acquisitions
• Portfolio Investment (PI)
• New forms of FI
• - BOO
• - Non incorporating forms.

6
Traditional Law of FI

• State Sovereignty
• Diplomatic Protection
• State Responsibility for injury to aliens
• UN Declaration on Permanent Sovereignty on
  Natural Resources
• Calvo Doctrine
• Charter Economic Rights and Duties of States
• TNCs a matter of domestic law

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New Reality of FI
Source UNCTAD World Investment Report 2001
8
New Reality of FI (II)
Source UNCTAD World Investment Report 2001
9
Regulatory changes on FI
Source UNCTAD World Investment Report 2001
10
Bilateral Investment Treaties (BITs)

• Bilateral lex speciali
• Protects and promotes FI
• Not only FDI
• Based on idea of economic liberalization
• More than 1300 signed as of 1996

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Non Binding

• UN draft Code of Conduct on TNCs
• OECD Guidelines to TNCs
• World Bank Guidelines

12
Multilateral

• ICSID Convention
• MIGA Convention
• WTO agreements GATS, TRIMs
• NAFTA Chapter 11
• Energy Charter Treaty
• Others (ASEAN, CARICOM, MERCOSUR, SADC, ANZCERTA)
• Failed OECD MAI
• Draft FTAA

13
International Law of FI
Multilateral
BITs
Regional
Specialized
Int law FI
FI
Admission
Treatment
Property
Dispute
Investor
14
Conclusions

• International law of FI enhances investment
  climate.
• Emerging law protects FI, not only FDI.
• TNCs nationality is determined.
• Admission.
• Treatment.
• Expropriation upon conditions.
• Investment dispute settlement mechanisms.

15
Omar E. Garcia-Bolivar

• omargarcia_at_bg-consulting.com
• [phone]