Investment Protection

The Convention on the Settlement of Investment Disputes between States and Nationals of Other States is a founding legal instrument for the management of investment arbitrations supervised by ICSID. The merit of ICSID arbitral tribunals is conditioned on the expression of the consent of the host State and the foreign investor. While a consensus has emerged on how to consent to these types of arbitrations, the issue of consent survival is gaining momentum and the ongoing debate does not offer a common understanding. The renewed interest, which puts this issue at the center of the debate, is fueled by denunciations of bilateral investment treaties while investors under their protection continue to conduct their economic operations in the denouncing country. This analysis is aimed to contribute to the ongoing debate by examining the effects of these denunciations on the survival or not of the host state consent on investment arbitration. More importantly, the consent constitutes a key element without which the protection due to the admitted investments in the host territory would be defeated. Before turning to this issue, we first examine the different ways parties to the investment arbitration express their consent to the ICSID investment arbitration. Résumé La Convention pour le règlement des différends relatifs aux investissements entre États et ressortissants d'autres États constitue un texte fondateur pour la gestion des arbitrages d'investissement supervisés par le CIRDI. La compétence CIRDI pour ces conflits d'investissement est conditionnée à l'expression du consentement de l'Etat d'accueil et de l'investisseur étranger. Pendant qu'un consensus a émergé sur la façon de

The Transatlantic Trade and Investment Partnership (TTIP) has caused a shift in the debate on international trade issues and is questioning the basic topdown strategy. Never before has such resistance occurred concerning trade issues. So far, hundreds of other FTAs have been negotiated by the EU and U.S. with economically weaker states and (before the ratification of the Treaty of Lisbon of 2009) by EU member states, without considerable resistance by the people at large. In this paper, using the argumentative discourse analysis, I will attempt to explain the intensive debate on the current negotiated TTIP
located against the contextual backdrop of trade policy and its key benchmarks.
While I will focus on the debate about the TTIP in Germany as one of the most influential countries in Europe, I argue that opponents have managed to make a
substantial influence on the path of negotiations and consequently on the topdown process of TTIP. Hence, I speak of an early failure of the top-downprolicy which has increasingly transformed into a bottom-up process, influenced by civil society organizations. Finally, it was the public which took
the leading role in the TTIP-debate by making demands for a forward-looking global policy that does not foster the destruction of environment and which is ultimately geared to accounting for and fulfilling the needs of the people.

For the past three decades we have witnessed the signing of multiple
bilateral investment treaties (BIT) and free trade agreements (FTA) with
investment provisions all over the world. The result of
the signing of these treaties has been the development of what Jagdish
Bhagwati called a “spaghetti bowl of treaties” that has created a phenomenon of lack of governance of global investment protection rules and a flourishing of ISDS cases against developed and non-developed states all over the world.
This chapter focuses on the debate that arose in 2012, which is on investment facilitation rules. The investment facilitation debate came to light in the multilateral forums, especially in the World Trade Organization (WTO) and G20. Also, UNCTAD and the Organization for Economic Cooperation and Development (OECD) have been working on different aspects of this new topic. However, first of all, it should be said that investment facilitation does not focus on protection rights for foreign investments but it sticks to facilitation rules. This difference has been presented by some of the proposing countries (like China) as a point that overcomes many of the investment protection system problems. This proposal is rather new, and thus, it still is very much unknown to the public, policymakers, and also to academia. The changes to the system are moving fast, and the analysis capacity is not yet keeping up with these variations.

As a point of departure for this contribution the general and intertwined principles of legality, the abuse of rights and good faith are examined, which have emerged repeatedly in the last
few years throughout the case law of the International Centre for the Settlement of Investment Disputes. The present article provides an analysis of the concept and application of these principles, which have entered into the investment protection domain mainly through public international law and which, as such, form a part of international public policy. The article examines the underlying concept of the principle of good faith in detail as it stems from public international law. The main focus is on ICSID case law where these principles were applied, with special attention given to the first Czech ICSID case, the Phoenix Action, which at the time of its initiation began the discussion on the extent of the jurisdiction concept under ICSID. The problematic aspects of the conclusion of this tribunal are discussed and solutions are suggested for future disputes of a similar nature.

From a development perspective, the signature of bilateral investment treaties (BITs) always limits the degrees of freedom for national policy. In spite of the generalization of the bilateral scheme, the governments' attitudes towards them are far from homogeneous, suggesting that a strategic stance toward BITs signature may be crucial. If the room for differentiation and strategic decisions before signing BITs is substantial, then we would expect a large variability in terms of commitments included in the clauses of the BITs signed and ratified. This is tested by comparing the BITs signed by Latin American and Asian countries.

Studies on the impact of international investment agreements (IIA), including bilateral invest- ment treaties (BITs), on foreign direct investment (FDI) inflows have been inconclusive. This paper contributes to the debate about the effectiveness of IIAs using an original database that differentiates between investment agreements according to the quality of investor protection, and which covers a wide variety of trade and investment agreements signed and ratified in the Americas. We find evidence that in the least-likely case of South-South FDI flows, high quality international investment treaties have a demonstrable effect on foreign direct invest- ment inflows. Moreover, international investment agreements appear to be most effective in a context of deeper economic integration. That is, they work better when they provide higher quality protection to investors and when they are combined with other preferential economic integration agreements, such as trade agreements.

The importance of foreign investment in maximising development in the oil and gas industry prompts resource-rich nation states to create an environment that encourages and promotes investment from companies with the requisite capital and expertise. There is a marked difference between countries, which have developed local infrastructure, industrial expertise and comprehensive, stable investment regimes and countries, which have not. A secure legal framework mitigates or reduces the occurrence of risks, which in turn promotes further investment. Furthermore, if the factor that is considered a risk materialises, the framework, serves to manage it so that the investment is protected and any resulting loss is diminished or compensated. Investment regimes of individual states are unique amalgams of national legislation, contractual provisions and international treaties. This dissertation attempts to comprehensively detail and assess the efficacy of individual elements of this framework through illustrative analysis of distinct regimes employed in Venezuela, Nigeria and the United Kingdom.

Disputed maritime areas are often sources of valuable natural resources, but they are also often sources of conflict. It is thus important for investors investing in such areas to know the array of investment protection mechanisms available to them. This article examines four such mechanisms (dispute settlement under international investment agreements (IIAs), dispute settlement under the United Nations Convention on the Law of the Sea (UNCLOS), dispute settlement under contracts, and political risk insurance) in the context of three scenarios of disputed maritime areas (unregulated areas, joint development areas, and provisionally delimited areas). It concludes that dispute settlement under IIAs and UNCLOS face significant obstacles not only on jurisdiction and admissibility, but also on the merits. As a result, the most practical solution for investors is to rely on dispute settlement under contracts or political risk insurance to protect their investments.

The text is devoted to the issues of international law and the role of investment to international organizations such as the WTO, the OECD and the IMF. Author discusses the issues remedies available to investors and methods of investment dispute resolution, e.g. claims for damages that can be submitted to arbitration, political (incentive) effect of BITs, other petitions and private-law aspect of Investment law. In the following section discusses the topic of international organizations in investment dispute resolution (alternatives to arbitration and arbitration). At the end from perspective of international investment law are described organizations, such as: ICSID, Energy Charter Treaty, EU.

Energy security and energy sovereignty have their national and international dimensions. In the EU Member States, these dimensions are further complemented by the EU perspective. The concept of raw materials and energy security, as currently proclaimed by a number of states, is probably too broad in terms of international practice. International law does not encroach on the legislative (regulatory) sovereignty of any state as long as the state observes its international obligations. Its obligations regarding the promotion and protection of foreign direct investments only allow the state to invoke energy security and sovereignty in certain specified cases, i.e., in a state of necessity and with respect to measures proportional to the relationship with the protected interests of the investor. In particular, the criterion of necessity is very narrowly interpreted by international practice and any measures targeted against the investor’s property interests must be an exceptional resolution and objectively indispensable. Furthermore, the situation which gave rise to the state of necessity must not have been caused by the state which invokes its right to regulate. Apart from the case law in the area of investment disputes, it is also possible to take into account a number of decisions rendered by the European Court of Human Rights.

Author provides a short essay concerning with the evergreen topic of the precedents in Investment Treaty Arbitration. Given by the specifics of the investment protection system standing on the small edge between private, public, national and international law including all sources of law of these systems, is the answer to the question: is there a factual doctrine of precedent in investment treaty arbitration, complicated. Author demonstrates on the case law of the most developed system for the dispute
resolution among the states and nationals of the other states (ICSID) the reasons for the non-existence of the precedential system. Simultaneously, author sketches the factual functioning of the referential framework of the previously published decision regularly exploited by the arbitrators.

The role and significance of foreign investment has grown in modern times in some major waves. This new outburst of foreign investment was accompanied by a number of bilateral treaties which grew from 500 in 1990 to about 2,000 in the year 2000.  Over 2,500 bilateral investment treaties have been concluded since the first such treaty in 1959. The result of the proliferation of investment treaties is that the investment arbitration system is now fairly elaborate and well entrenched, with a wide geographic scope. In the multilateral domain, the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) establishing the International Centre for Settlement of Investment Disputes (ICSID) was adopted in 1965. The current state of international investment law is shaped and characterized by the texts of investment treaties, by rulings of international investment tribunals, and by rules of general international law.  The international law of foreign investment has become a specialized area of the legal profession.

Overall, ICSID tribunals have found the project or transaction in question to qualify as an investment for purposes of the Convention where the project or transaction: (a) had a significant duration; (b) provided a measurable return to the investor; (c) involved an element of risk on both sides; (d) involved a substantial commitment on the part of the investor; and (e) was significant to the State’s development. However, as set out below, these conditions operate as general benchmarks rather than as strict jurisdictional requirements. Article 25 provided for a broad framework for the definition of investment. Nonetheless, these criteria have been restated clearly in Salini v. Morocco in 2001 and have also been applied in subsequent decisions. Once the first three criteria are met, some tribunals may require that a significant contribution to the host State’s development should be established. This criterion is the most controversial. In Mitchell v. Congo, an ICSID ad hoc committee went as far as annulling an award on the ground that the activities of a US law firm in the Congo did not contribute to the country’s development and hence were not an investment. However, this is a controversial requirement, as shown by the recent findings of the Phoenix Action v. Czech Republic: “It is the Tribunal’s view that the contribution of an international investment to the development of the host State is impossible to ascertain – the more so as there are highly diverging views on what constitutes development. A less ambitious approach should therefore be adopted, centered on the contribution of an international investment to the economy of the host State, which is indeed normally inherent in the mere concept of investment as shaped by the elements of contribution/duration/risk, and should therefore in principle be presumed.” This judgment presents obviously one of the major trends in investment arbitration regarding the contribution of the investor in favour of the host State, to may qualify it as an investment for the purposes of international protection.

Article 38 of the Fundamental Law of Hungary provides that ‘[t]he property of the State and of local governments shall be national assets’, which shall be regulated by cardinal act.  The Act No. CXCVI of 2011 on National Assets was accordingly adopted and entered into force on 1 January 2012, containing a prohibition for those who are entitled to dispose of national assets within the borders of Hungary to stipulate in civil law contracts records to arbitration in cases of disputes.  The Act No. LXXI of 1994 on Arbitration was amended by Act No. LXV of 2012 in conformity with this prohibition, precluding procedures before ad hoc or permanent arbitrary tribunals premised (seated) within or outside Hungary in cases where the subject-matter of the dispute is a national asset located in Hungary or any right, claim, demand pertaining thereto. A petition was received by the Constitutional Court on 18 December 2012, in which Máté Szabó then Commissioner for Fundamental Rights requested the review of conformity with the Fundamental Law and the examination of conflicts with international treaties of the aforementioned provisions of the Act on National Assets and the Act on Arbitration. The study seeks to analyse the Decision No. 14/2013 (VI.17) of the Constitutional Court and the nature of investment protection in the field of international law.

The author deals with the demonstrations of the investor autonomy of will from the perspective of its determining importance for the nature of the investment claim, whereas he confronts the basis of the classical theory of the derived rights stemming from the principles of the diplomatic protection with the concept of the directly vested rights.
Based on the analysis of the issues of the functional control over the claim, dispute resolution mechanisms, choice of forum clauses and applicable procedural law from the perspective of both of the aforementioned theories provide an evidence on the private nature of the investment claim.