Investment Law and Policy

International investment agreements (IIAs) pose significant governance challenges to states. First, states must determine whether to enter into such agreements as a matter of policy. Second, states must consider how to negotiate and draft such treaties. Third, states must consider how to take such treaties into account in governmental decision making and exercises of regulatory power. Fourth, states must consider how to take IIAs into account in addressing investor concerns and complaints vis-à-vis the state and its organs. Fifth, in the event of formal claims arising under IIAs, states must respond to such complaints pursuant to the legal procedures set out therein.

Investment treaties are often said to have two principal effects for the states that enter into them. First, it is asserted that investment treaties act to increase levels of foreign investment in host states. Second, it is said that investment treaties have a positive effect on governance. Out of their desire to avoid liability for breaches of investment treaties, the argument is made, states will internalise their international legal obligations, reform their governmental decision-making processes and thereby improve the rule of law.

Although a significant amount of research examines the relationship between investment treaties and foreign investment flows, there is a lack of empirical research on the effects of investment treaties on domestic governance. Moreover, the premise regarding changes in governance rests on questionable assumptions about state behavior, especially in the developing world, where regulatory capacity is often limited.

This project investigates the position of IIAs in the governance of states that enter into them. The central goal of study is to develop a qualitative, empirical base for understanding the formal and informal processes of governance in different states with respect to four different lines of inquiry:

1. the level of awareness and the dissemination of information about international investment obligations at various levels of government;
2. the internalisation of IIA obligations in regulatory decision making and the role of intragovernmental legal advice;
3. the proactive avoidance and management of foreign investment-related disputes; and
4. methods and procedures for addressing disputes under IIAs once they have become formalised through the invocation of treaty-based procedures of investor-state dispute settlement (ISDS).

The study looks at multiple jurisdictions. It uses both qualitative empirical techniques, eg, interviews and fieldwork, as well as library-based techniques, to address the empirical deficit in knowledge about the interplay between investment treaty disciplines and governmental conduct.