{"id":539,"date":"2021-11-24T19:48:37","date_gmt":"2021-11-25T02:48:37","guid":{"rendered":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/?p=539"},"modified":"2021-11-24T19:52:23","modified_gmt":"2021-11-25T02:52:23","slug":"consequential-shifts-in-adherence-to-international-investment-law-commitments","status":"publish","type":"post","link":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/consequential-shifts-in-adherence-to-international-investment-law-commitments\/","title":{"rendered":"Consequential Shifts in Adherence to International Investment Law Commitments"},"content":{"rendered":"\t\t
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By BethEl Nager<\/em><\/strong>
Law Student Editor<\/p>

Aaron Fellmeth<\/strong><\/em>
Faculty Co-Editor<\/p>

Victoria Sahani<\/em><\/strong>
Faculty Co-Editor<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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The Convention establishing the International Centre for Settlement of Investment Disputes (ICSID) in 1966 (the \u201cICSID Convention\u201d) added a dispute resolution forum to the World Bank Group.\u00a0 Specifically, ICSID provides arbitration and concilliation services for resolving foreign direct investment (FDI) disputes between a host state and a foreign investor when the host state provides for ICSID arbitration in a treaty with the investor\u2019s state of origin.\u00a0 These treaties are typically bilateral investment treaties (BITs), free trade agreements, or investment protection agreements.\u00a0 The advantage of the ICSID Convention touted by the World Bank Group is that, by providing a mandatory form of neutral dispute settlement, ICSID arbitration and concilliation reassure foreign investors that the host state cannot use sovereign immuity to avoid lawsuits or avoid paying judgments if it expropriates an FDI \u00a0or treats the investor unfairly.\u00a0 Some investment treaties first require the investor to \u201cexhaust local remedies\u201d by purusing the dispute in the host state\u2019s courts first before filing an ICSID case.\u00a0 The disadvantage for a foreign investor is that the host state\u2019s courts may side with the host state government due to political pressure or control.. ICSID provides an alternative, neutral, fair forum, and this stability \u00a0is expected to increase FDI.\u00a0 Historically, developing countries with a history of political and economic instability were the targets for FDI, but now FDI flows to and from both capital-importing and capital-exporting countries.\u00a0 Currently, there are 164 state parties to the ICSID Convention.<\/p>

Only three state parties to the Convention have ever withdrawn from it, all in South America.\u00a0 In 2007, Bolivia denounced the Convention, followed by Ecuador in 2009 and Venezuela in 2012.\u00a0 In some cases, including that of Ecuador, denunciation of the Washington Convention was accompanied by withdrawals from many BITs between the host state and the investors\u2019 home states that set international legal standards for the protection of FDI projects.\u00a0 Withdrawal from a BIT may leave new foreign investors without international treaty protection, while denunciation of the ICSID Convention may remove the ability of foreign investors to initiate new arbitrations using the ICSID procedures against the denouncing state, although ICISD does promulgate \u201cAdditional Facility\u201d arbitration rules that can be used in cases in which the host state is not a party to the ICSID Convention.\u00a0 At the same time, the host state loses its voice in the ICSID Administrative Council regarding debates on the future of dispute resolution in international investment law.<\/p>

Recently, Ecuador shifted back to a policy favoring foreign investment.\u00a0 As a result, it signed the Washington Convention anew on June 20, 2021, and ratified it on August 4, 2021. One reason for this reversal of policy may have been slowed growth in the Ecuadorian economy caused by the global pandemic.<\/p>

The pandemic has not inspired a pro-foreign investment policy everywhere, however. Also in 2021, Pakistan resolved to terminate 23 of the country\u2019s 48 BITs, and further announced a decision not to ratify sixteen more BITs that the Pakistani government has signed. Pakistan had already begun to sour on BITs in 2013, announcing plans to review its existing BITs.\u00a0 Recent losses in several major ICSID arbitrations brought by foreign investors, including a $5.8 billion claim by an Australian mining company, exacerbated Pakistan\u2019s negative view.\u00a0 Notably, Pakistan was the first state to sign a BIT in the modern era (with Germany in 1959), and it has a network of BITs remaining, some of which cannot be denounced at present by their terms.<\/p>

These developments do not change the general substance of international investment law, including its facilities and procedures for dispute resolution, in any way.\u00a0 However, they do illustrate how each state\u2019s individual circumstances and experiences with international investment law and arbitration create a protean environment for foreign investors, who must be prepared to shift investment plans to respond to new geopolitical developments.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

By BethEl NagerLaw Student Editor Aaron FellmethFaculty Co-Editor Victoria SahaniFaculty Co-Editor The Convention establishing the International Centre for Settlement of Investment Disputes (ICSID) in 1966 (the \u201cICSID Convention\u201d) added a dispute resolution forum to the World Bank Group.\u00a0 Specifically, ICSID provides arbitration and concilliation services for resolving foreign direct investment (FDI) disputes between a host […]<\/p>\n","protected":false},"author":106,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[8,10,3],"tags":[37,35,78,79,82,40,81],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/posts\/539"}],"collection":[{"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/users\/106"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/comments?post=539"}],"version-history":[{"count":4,"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/posts\/539\/revisions"}],"predecessor-version":[{"id":543,"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/posts\/539\/revisions\/543"}],"wp:attachment":[{"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/media?parent=539"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/categories?post=539"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.asucollegeoflaw.com\/ibt\/wp-json\/wp\/v2\/tags?post=539"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}