Int law on foreign investment

M. Sornarajah0521837138, 9780521837132, 9780511216695

This new edition of Sornarajah’s book, available for the first time in paperback, surveys the international law developed to protect foreign investment by multinational corporations. The area has always been one of controversy due to the different political and economic conflicts that exist in the field. The book assesses the role of multinational corporations in making foreign investments, and considers the ways in which misconduct on the part of such corporations in host states could be controlled. Sornarajah focuses on the protection of foreign investment and the problems associated with such protection. He explores treaty-based methods, and examines several bilateral and regional investment treaties. The failure to agree on a multilateral treaty system and the inability to incorporate a discipline on investment within the WTO are also considered. He takes account not only of the law, but also of the relevant literature in economics, political science and other associated disciplines.

---

Table of contents :
COVER……Page 1
HALF-TITLE……Page 3
TITLE……Page 5
COPYRIGHT……Page 6
DEDICATION……Page 7
CONTENTS……Page 9
PREFACE TO THE SECOND EDITION……Page 17
PREFACE TO THE FIRST EDITION……Page 18
TABLE OF CASES……Page 19
ABBREVIATIONS……Page 26
1 Introduction……Page 29
1.1. The distinction between portfolio investment and foreign direct investment……Page 35
1.3. The evolution of the meaning of the term ‘investment’……Page 37
2.1. The colonial period……Page 46
2.2. The post-colonial period……Page 50
3. An outline of the book……Page 58
2 The shaping factors……Page 62
1.1. State responsibility for injuries to aliens……Page 65
1.1.1. The natural resources sector……Page 68
1.1.3. The manufacturing sector……Page 72
1.1.5. Intellectual property……Page 74
2. Conflicting economic theories on foreign investment……Page 78
2.1. The classical theory on foreign investment……Page 79
2.2. The dependency theory……Page 85
2.3. The middle path……Page 87
3. Actors in the field of foreign investment……Page 93
3.1. The multinational corporation……Page 94
3.2. State corporations……Page 97
3.3. International institutions……Page 99
3.4. Non-governmental organisations……Page 102
4. Risks in foreign investment……Page 103
4.1. Ideological hostility……Page 105
4.2. Nationalism……Page 106
4.3. Ethnicity as a factor……Page 108
4.4. Changes in industry patterns……Page 109
4.5. Contracts made by previous regimes……Page 111
4.7. Regulation of the economy……Page 113
4.8. Human rights and environmental concerns……Page 114
5.1. Treaties……Page 115
5.2. Custom……Page 117
5.3. General principles of law……Page 121
5.4. Judicial decisions……Page 123
3 Controls by the host state……Page 125
1. Regulation of entry……Page 136
1.1. Guarantees against expropriation……Page 138
1.2. Guarantees relating to dispute settlement……Page 142
1.3. Tax and non-tax incentives to foreign investors……Page 143
1.4. Screening of foreign investment entry……Page 144
1.5. Requirements of local collaboration……Page 148
1.6. Capitalisation requirements……Page 150
1.7. Requirements relating to environmental protection……Page 152
1.8. Requirements relating to export targets……Page 154
1.9. Requirements relating to local equity……Page 156
1.11. Regulation and expropriation……Page 159
2. New forms of foreign investment……Page 160
2.1. The joint venture……Page 161
2.2. The production-sharing agreement……Page 162
3. Constraints on control: the customary international law……Page 163
3.1. State responsibility for injuries to aliens……Page 166
3.2. The conflict between the United States and Latin American states……Page 170
3.3. The content of the international minimum standard……Page 176
3.4. State responsibility and developing states……Page 179
3.5. The ‘noble synthesis’……Page 180
3.6. Damage to property in the course of civil disturbances……Page 184
3.7.1. Regulations on screening of foreign investments……Page 187
3.7.2. Local equity requirements……Page 189
3.7.3. Export requirements……Page 193
4. Conclusion……Page 195
4 The liability of multinational corporations and home state measures……Page 197
1. Obligations of multinational corporations……Page 199
1.1. The obligation not to interfere in domestic politics……Page 202
1.2. Obligations relating to human rights……Page 203
1.3. Liability for violations of environmental norms……Page 207
1.4. The obligation to promote economic development……Page 209
2. Extraterritorial control by home states……Page 210
2.2. The existing rules on state responsibility……Page 212
2.3. The duty to control nationals abroad……Page 222
2.4. State responsibility and the duty to provide remedies to victims……Page 229
3. Conclusion……Page 231
1. Introductory survey……Page 232
2. Treaties of friendship, commerce and navigation……Page 237
3. Reasons for bilateral investment treaties……Page 239
4. Features of bilateral investment treaties……Page 245
4.1. The statement of the purpose of the treaty……Page 246
4.2.1. Investments……Page 248
4.2.2. Limitation on the definition of investment……Page 253
4.2.3. Portfolio investments……Page 255
4.2.4. Corporate nationality and protection of shareholders……Page 256
4.3.1. National standard of treatment……Page 261
4.3.2. Fair and equitable standard……Page 263
4.3.3. Most-favoured-nation treatment……Page 264
4.4. Performance requirements……Page 265
4.5. Repatriation of profits……Page 266
4.6. Nationalisation and compensation……Page 267
4.6.1. Compensation for destruction during wars and national emergencies……Page 274
4.7. Protection of commitments……Page 276
4.8. Dispute resolution……Page 277
4.9. Arbitration and the exhaustion of local remedies……Page 281
4.9.1. Arbitration between states……Page 283
4.9.2. Subrogation……Page 284
4.10. Safeguard provisions and exceptions……Page 285
4.11. Succession of governments and bilateral investment treaties……Page 286
5. New concerns in bilateral investment treaties……Page 287
5.1. Environmental concerns……Page 288
5.2. Human rights……Page 289
5.3. Economic development……Page 290
5.4. International concerns……Page 291
5.5. Regulatory space and bilateral treaties……Page 293
6. Conclusion……Page 294
6 Multilateral instruments on foreign investment……Page 297
1. The international norms onmultinational corporations……Page 299
2. The UNCTC Draft Code on Multinational Corporations……Page 303
2.1.1. The preamble……Page 304
2.1.3. Respect for national sovereignty……Page 305
2.1.5. Non-interference in domestic affairs……Page 306
2.1.6. Abstention from corrupt practices……Page 308
2.1.7. Economic and other controls……Page 309
2.1.8. Disclosure of information……Page 310
3.1. The relevance of international law……Page 311
3.2. Non-interference in domestic affairs……Page 314
3.3. Permanent sovereignty and international obligations……Page 315
4.1. NAFTA……Page 316
4.2. The ASEAN Agreements……Page 318
5. The Multilateral Agreement on Investment……Page 319
6. The WTO and foreign investment……Page 325
6.2. GATS……Page 327
6.3. TRIPS……Page 329
7. An investment regime under the WTO……Page 331
7.1. The definition of investment……Page 332
7.2. Definition and the preservation of regulatory control……Page 333
7.4. Treatment standards……Page 334
7.4.1. Most-favoured-nation treatment……Page 336
7.6. Expropriation……Page 337
7.8. Dispute resolution……Page 338
8. The right to regulate foreign investment……Page 339
9. Conclusion……Page 341
7 Causes of action: breaches of treatment standards……Page 343
1. The customary international law standards……Page 346
2. The violation of national treatment standards……Page 347
2.1. Performance requirements and national treatment……Page 353
2.2. National treatment and infant industries……Page 354
2.5. Conclusion……Page 355
3. International minimum standard treatment……Page 356
4. Fair and equitable standard of treatment……Page 360
4.2. Due process and administrative irregularity……Page 368
6. Conclusion……Page 370
8 The taking of foreign property……Page 372
1. What constitutes taking?……Page 373
1.1. New forms of taking……Page 377
1.2. The ideas of property……Page 380
1.2.1. Forced sales of property……Page 387
1.2.2. Forced sales of shares……Page 389
1.3.1. Indigenisation measures……Page 392
1.3.2. Interference with property rights……Page 395
1.4. Changing US and European notions of property……Page 396
1.5. The impact on international law……Page 399
1.5.1. Survey of authorities……Page 403
2. The exercise of management control over the investment……Page 415
2.1. Cancellation of permits and licences……Page 417
2.2. Takings by agents and mobs……Page 419
2.3. Excessive taxation……Page 421
2.6. Exchange controls……Page 422
3.1. The taking must be for a public purpose……Page 423
3.2. Discriminatory taking……Page 426
3.3. Takings in violation of treaties……Page 427
4. Conclusion……Page 428
9 Takings in violation of foreign investment agreements……Page 430
1. Contractual devices for foreign investment protection……Page 432
1.1. The essential clauses……Page 434
1.1.1. The stabilisation clause……Page 435
1.1.2. Choice-of-law clause……Page 438
1.1.3. Arbitration clause……Page 441
2. The internationalisation of state contracts……Page 444
2.1. The origin of the theory of internationalisation……Page 445
2.2. The ICSID Convention and international law……Page 457
2.3. Lex mercatoria and state contracts……Page 459
3. Conclusion……Page 461
10 Compensation for nationalisation of foreign investments……Page 463
1.1. The claim that ‘prompt, adequate and effective’ compensation must be paid……Page 465
1.1.1. Treaties……Page 467
1.1.2. Customary practice……Page 469
1.1.3. General principles of law……Page 471
1.1.4. Unjust enrichment……Page 472
1.1.5. Acquired rights……Page 473
1.1.6. Right to property……Page 474
1.1.7. Foreign investment codes……Page 479
1.1.8. Decisions of courts and tribunals……Page 480
1.1.9. International courts……Page 481
1.1.10. Awards of arbitral tribunals……Page 485
1.1.11. National courts……Page 500
1.1.12. Writings of publicists……Page 502
2.1. The claim that it is permissible to deduct past excess profits from compensation……Page 505
2.2. The claim that the taking is a ‘revindication’ for which no compensation is necessary……Page 506
2.3. The claim that appropriate compensation should be paid……Page 507
2.3.1. Categories of takings for which damages rather than compensation must be paid……Page 510
2.3.3. Full compensation must be paid where there is a one-off taking of a small business……Page 511
2.3.4. Full compensation need not be paid as part of a full-scale nationalisation of a whole industry……Page 512
3. Valuation of nationalised property……Page 513
4. Conclusion……Page 515
Books……Page 517
Articles……Page 523
INDEX……Page 534