Investment Law | An Introduction

Summary

This lesson introduces International Investment Law, focusing on Foreign Direct Investment (FDI) as the primary form of investment within this field. It contrasts FDI with portfolio investments, emphasizing its lasting economic impact. The regulation of investment law is mostly bilateral through Bilateral Investment Treaties (BITs), with some emerging multilateral influences. The course will cover historical development, key legal doctrines such as non-discrimination and investment protections, and the Investor-State Dispute Settlement (ISDS) system. Future lessons will explore the challenges, legal evolution, and the potential for a more multilateral approach to investment law.

Takeaways

• 😀 The focus of the lesson is International Investment Law, which forms a major part of International Economic Law, alongside Trade Law and Financial Law.
• 😀 Foreign Direct Investment (FDI) is the key type of investment discussed, where investors establish lasting interests and significant influence over enterprises in another country, known as the host state.
• 😀 FDI differs from portfolio investments, which involve ownership in financial instruments like shares without requiring direct involvement in the management of the invested entity.
• 😀 Investment treaties primarily focus on FDI, although some legal instruments may also include portfolio investments within their scope.
• 😀 The definition of 'investment' in investment treaties is broad and non-exhaustive, including various assets but also leaving room for other types of investments.
• 😀 Unlike trade law, which operates in a multilateral setting, International Investment Law is mostly bilateral, with over 2,000 Bilateral Investment Treaties (BITs) regulating cross-border investments.
• 😀 Some multilateral agreements on investment exist, such as the Energy Charter Treaty, but these are usually narrow in scope and limited to specific sectors like energy.
• 😀 The historical development of International Investment Law will be explored, starting from colonial times and evolving through key events like the post-WWII era and the implementation of new economic order proposals in the 1970s.
• 😀 Key legal principles in Investment Law include non-discrimination, such as national treatment and most-favored-nation standards, which parallel similar principles in International Trade Law.
• 😀 The course will cover legal protections for investments, such as fair and equitable treatment, protection against expropriation, and dispute resolution mechanisms like Investor-State Dispute Settlement (ISDS).

Q & A

What is the focus of this lesson in International Investment Law?

The focus of this lesson is to provide an introduction to International Investment Law, specifically looking at Foreign Direct Investment (FDI), its scope, and its distinction from other forms of investment like portfolio investments.

How is Foreign Direct Investment (FDI) defined according to the OECD?

According to the OECD, Foreign Direct Investment (FDI) is a type of cross-border investment where an investor from one state establishes a lasting interest and significant influence over a business or enterprise in another country, known as the host state.

What is the key difference between FDI and portfolio investments?

FDI involves a long-term economic interest with direct influence over a business, while portfolio investments are short-term and typically involve buying financial instruments (like stocks or bonds) without directly influencing the company's operations.

What does 'host state' and 'home state' refer to in the context of FDI?

In the context of FDI, the 'host state' refers to the country receiving the investment, while the 'home state' is the country from which the investor originates.

Why is there no single, unified definition of 'investment' in International Investment Law?

There is no single, unified definition of 'investment' because treaties often include non-exhaustive lists of assets that can constitute an investment, leaving room for various types of assets to be recognized under different international agreements.

How does International Investment Law differ from International Trade Law in terms of regulation?

International Investment Law is primarily regulated bilaterally through bilateral investment treaties (BITs), whereas International Trade Law is regulated more multilaterally, through agreements like the World Trade Organization (WTO).

What is the current state of multilateral investment agreements?

Multilateral investment agreements are less common in comparison to bilateral agreements. There are some multilateral agreements covering specific investment areas, such as the energy sector, but they are often limited in scope and may involve only certain regions.

What role do regional agreements play in International Investment Law?

Regional agreements, such as the North American Free Trade Agreement (NAFTA), play a significant role in regulating investment within specific regions, often including provisions related to investment protection and dispute resolution.

What are some key topics that will be covered in future lessons on International Investment Law?

Future lessons will cover the historical development of International Investment Law, legal definitions of investors and investments, non-discrimination standards, protection against expropriation, and the Investor-State Dispute Settlement (ISDS) system.

What is Investor-State Dispute Settlement (ISDS)?

Investor-State Dispute Settlement (ISDS) is a legal mechanism that allows investors to bring claims against host states for alleged violations of investment protections, such as unfair treatment or expropriation, often through international arbitration.