The number of Bilateral Investment Treaties or BITs has grown dramatically during the last few decades. They are presented as an important tool of FDI and a key factor contributing to foster economic growth and development. As underlined in the paper, BITs have become the major tool for the protection of investors against any adverse host country behavior. From the standpoint of host countries, BITs therefore appear as a way of attracting potential investors.
[...] As it was clearly expressed in the readings pertaining to tensions over FDI, it seems that the notion of balance is the cornerstone that conditions the success of FDI mechanisms. Finding an adequate balance between the protection of the investor's rights and the host's country interests is delicate. Understanding the complex nature of FDI, of its advantages and potential dangers is certainly one of the conditions of this balance. The establishment of neutral dispute resolution mechanisms such as the ICSID is certainly another step contributing to this fragile balance. Bibliography Presidential Statement, White House, Dec K. J. Vandelvelde, Excerpts from United States Investment Treaties (1992) K. J. [...]
[...] These concessions are therefore counterproductive and diminish the gains produced by the investment. This situation can be worsened by the fact that developing countries tend to enter into competition in order to attract funds. By doing so, they try to offer more guarantees and concessions than their neighbours. As a consequence, they reduce their own profits from the potential investment and the potential investor appears as the sole winner of this situation of competition. Guzman suggests therefore that a collective action would be more beneficial to developing countries. [...]
[...] Vandelvelde, “Investment Liberalization and Economics Development: The Role of Bilateral Investment Treaties” Colum. J. Trans. L (1998) L. Reed, Guide to ICSID Arbitration T. Guzman, LDCs Sign Treaties that hurt them: explaining the popularity of bilateral investment treaties” Va. J. [...]
[...] In this context of focus on the protection of the investors' interests, one might wonder what was the price to pay for this state of things by the developing countries. Can we affirm that BITs have only positive effects? What was the price to be paid by developing countries that entered into these BITs? As demonstrated by Vandevelde in his article, BITs are mainly instruments of investment protection. They can only play a limited role in terms of economic liberalization. [...]
[...] The historical background and evolution towards the contemporary form of BITs, as developed by Vandelvelde and Guzman, allow a better understanding of the logic behind BITs. Indeed, BITs find their origins in FCN treaties. In their earliest form, FCNs were mainly trade agreements and were dealing with investment aspects only in a marginal way. Their main goal was to promote international trade and improve international relations. Nevertheless, they almost always contained provisions relating to expropriation and to protection of property. In the course of time, the scope of the protection they offered to investors expanded significantly. [...]
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