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International Investment Law

Arnaud de Nanteuil

This comprehensive book provides a complete overview of the international legal system of foreign investment protection, synthesising material from treaties, general international law, contracts and case law to demonstrate a coherent system of investment protection. Through this systematic approach, the book considers all aspects of the discipline, providing a thorough and accessible analysis.
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EXTENDED CONTENTS

Arnaud de Nanteuil

Preface

List of abbreviations

Table of cases

Table of legislation

1.    THE EMERGENCE OF INTERNATIONAL INVESTMENT LAW: FROM STATE CONTRACTS TO BILATERAL INVESTMENT TREATIES

A. PROTECTING FOREIGNERS’ RIGHTS THROUGH TRADITIONAL RULES AND MECHANISMS 1.003

1. Diplomatic protection 1.004

(a) Diplomatic protection as a protection for investors 1.005

(i) A brief description of the mechanism 1.005

(ii) Conditions for the exercise of diplomatic protection 1.009

(b) The weaknesses of diplomatic protection for the purposes of foreign investors’ protection 1.015

2. On Mixed Commissions and the protection of foreign economic operators 1.020

(a) The origin and development of Mixed Commissions 1.021

(b) The legacy of the Mixed Commissions 1.026

3. The development of arbitration 1.030

(a) Resorting to arbitration 1.031

(b) The evolution of arbitration 1.036

(i) The Permanent Court of Arbitration 1.037

(ii) The institutional development of arbitration since 1945 1.040

B. THE EMERGENCE OF STATE CONTRACTS 1.046

1. Appearance and development of State contracts 1.047

(a) The existence of contracts between foreign private persons and States 1.048

(b) The application of international law and the emergence of State contracts 1.052

(i) The issue of determining the applicable law 1.052

(ii) The internationalization of State contracts through contractual practices 1.055

(iii) The internationalization of State contracts through arbitral practice 1.069

2. Identifying which international law norms are applicable to State contracts: a general overview 1.078

C. BILATERAL INVESTMENT TREATIES AND THE BIRTH AND RISE OF INTERNATIONAL INVESTMENT LAW 1.083

1. The emergence and development of investment protection treaties 1.084

2. The AAPL Award and the emergence of contemporary investment law 1.092

(a) A new consent to arbitration 1.093

(b) The development of international investment law since 1990 1.097

2.    DOMESTIC SOURCES OF INTERNATIONAL INVESTMENT LAW

A. DOMESTIC LEGISLATION AND ‘INVESTMENT CODES’ 2.04

1. The concept of ‘investment code’ 2.05

2. The content of domestic legislations 2.07

(a) Standards imposing a reporting obligation 2.09

(b) Standards providing for an administrative authorization 2.15

(c) The issue raised by the acquisition of property by foreigners 2.20

(d) Incentive standards 2.23

3. The institutional dimension of domestic legislations on foreign investments 2.26

B. DOMESTIC MECHANISMS OF PUBLIC LIABILITY 2.32

1. French law 2.35

(a) Fault-based liability 2.36

(b) Liability without fault 2.38

(c) Contractual liability 2.43

2. United States law 2.47

(a) The general liability for action or omission 2.48

(b) State liability stemming from legislative activity 2.52

(c) Contractual liability 2.54

3. United Kingdom law 2.56

(a) The review of administrative acts 2.58

(b) General rules on tortious liability 2.60

4. German law 2.63

(a) Fault-based liability 2.64

(b) Strict liability 2.65

C. THE APPLICATION OF DOMESTIC LAW BY ARBITRAL TRIBUNALS 2.68

1. The application of domestic law by reference to international law 2.70

2. The application of domestic law as a reflection of international law 2.73

3.    INTERNATIONAL SOURCES OF INVESTMENT LAW

A. TREATIES 3.03

1. Treaties designed to protect investments 3.04

(a) Bilateral investment protection and promotion treaties 3.05

(i) Terminological clarifications 3.06

(ii) Overview of the BITs that are in force today 3.08

(b) Multilateral treaties 3.12

(i) The Multilateral Agreement on Investment and its failure 3.13

(ii) Multilateral treaties currently in force 3.20

2. Treaties which do not have investment protection as their main object 3.34

(a) Treaties with an economic purpose 3.35

(i) World Trade Organization law 3.36

(ii) European Union law 3.42

(b) Treaties of general international law 3.45

(i) The European Convention on Human Rights 3.46

(ii) Other instruments unrelated to investment law 3.49

B. CUSTOMARY LAW 3.51

1. Customary rules in investment law 3.52

(a) Rules providing for substantive protection 3.53

(b) On procedural rules 3.58

2. Relevant general international law rules 3.61

(a) Customary rules as a means of interpretation of treaties’ rules 3.62

(b) Customary rules applicable as such 3.66

(i) International rules on State responsibility 3.67

(ii) International rules on State immunities 3.70

C. GENERAL PRINCIPLES OF INTERNATIONAL LAW 3.72

D. CASE-LAW 3.77

1. The absence of a rule of precedent in international law 3.78

2. The importance of case-law in investment law 3.83

(a) Arbitral case-law 3.84

(b) The case-law from other jurisdictions 3.87

(i) The case-law of universal courts (ICJ, PCIJ) 3.88

(ii) European courts 3.89

(iii) The Iran-United States Claims Tribunal 3.91

E. OTHER SOURCES 3.94

4.    INTERNATIONAL LAW, DOMESTIC LAW AND CONTRACTS: ARTICULATING DIFFERENT SETS OF RELEVANT RULES

A. THE RELATIONSHIP BETWEEN INTERNATIONAL AND DOMESTIC LAW 4.03

1. The complementary or corrective role of international law 4.04

2. Applying domestic and international law simultaneously 4.08

B. TREATY AND CONTRACT: THE QUESTION OF TREATY CLAIMS AND CONTRACT CLAIMS 4.12

1. Presentation of the legal issue 4.12

2. Possible solutions 4.15

(a) The ‘electa una via’/fork-in-the-road provision 4.16

(b) The umbrella clauses 4.23

(i) Presentation of the umbrella clauses 4.23

(ii) The refusal to transform contractual claims into conventional ones: SGS v. Pakistan 4.29

(iii) The expanded effect conferred on the clause: SGS v. Philippines 4.31

(iv) Approaches involving an additional parameter 4.34

(c) Solutions provided by general international law 4.43

5.    IDENTIFYING THE STAKEHOLDERS: THE INVESTOR AND THE STATE

A. THE INVESTOR 5.002

1. The notion of investment 5.003

(a) Initial question: the ‘double test’ in the ICSID context 5.006

(b) Identifying investment in BITs: general trends 5.010

(i) Trends in treaty practice 5.011

(ii) Trends in case-law: the ‘Salini criteria’ and their sustainability 5.032

(iii) Specific problems 5.044

(iv) Compliance with the host State law 5.054

2. Identifying the investor 5.062

(a) Who can qualify as an ‘investor’? 5.063

(b) The nationality of the investor 5.069

(i) The nationality of natural persons 5.070

(ii) The nationality of the investor as a legal person 5.077

(c) The link between investor and investment 5.094

(i) The nature and evidence of the link between investor and investment 5.096

(ii) Corrective mechanism: the denial of benefits clause 5.098

B. THE STATE 5.107

1. The consent to arbitration 5.108

2. The question of attribution 5.111

(a) General principle of attribution 5.112

(b) The responsibility of the State for the conduct of its organs (Art. 4) 5.114

(i) The notion of State organs 5.115

(ii) A systematic attribution? 5.118

(c) The conduct of entities that are separate from the State (Arts 5, 8 and 11) 5.123

6.    SETTLEMENT OF DISPUTES

A. INSTITUTIONAL ASPECTS 6.003

1. The International Centre for Settlement of Investment Disputes (ICSID) 6.004

(a) The ICSID Institutional structure 6.006

(b) Dispute resolution under ICSID 6.009

(i) The general mechanism of the ICSID 6.010

(ii) The additional facility rule 6.013

2. Other arbitration mechanisms 6.016

(a) The Permanent Court of Arbitration (PCA) 6.017

(b) The Arbitration Institute of the Stockholm Chamber of Commerce (SCC) 6.021

(c) The Arbitration Court of the International Chamber of Commerce (ICC) 6.024

(d) The London Court of International Arbitration (LCIA) 6.026

(e) Ad hoc arbitration 6.029

B. PROCEDURAL ASPECTS 6.030

1. Inter-State disputes in investment law 6.031

2. Filing a claim before an arbitral tribunal 6.036

(a) Preliminary requirements before filing a case 6.037

(i) The obligation to negotiate 6.038

(ii) The waiting period 6.042

(iii) Resorting to domestic courts 6.049

(b) Resorting to the arbitral tribunal 6.054

(i) Formal conditions 6.055

(ii) The allocation of the case to the tribunal and the conditions for the exercise of jurisdiction: the example of Art. 41(5) of the ICSID Arbitration Rules 6.059

3. The judicial proceedings 6.063

(a) Preliminary issues: admissibility and jurisdiction 6.064

(i) The admissibility of the claim 6.065

(ii) Jurisdiction of the arbitral tribunal 6.071

(iii) Defining the scope of the jurisdiction 6.081

(b) The arbitral proceedings 6.088

(i) Procedural issues 6.089

(ii) Provisional measures 6.098

(iii) The organization of the proceedings 6.101

(iv) Counterclaims 6.107

4. After the award is issued: recognition, annulment and enforcement 6.111

(a) Existing appeals against arbitral awards 6.112

(i) The action for annulment 6.114

(ii) The appeals for interpretation and review 6.130

(b) The enforcement process 6.132

(i) Exequatur 6.133

(ii) State immunity 6.138

(iii) ICSID Special rules 6.145

7.    SUBSTANTIVE PROTECTION (1): PRELIMINARY ISSUES

A. MAJOR TREND: THE APPLICATION OF THE TREATY AFTER THE ADMISSION OF THE INVESTMENT 7.06

B. THE (RARE) RECOGNITION OF A RIGHT OF ESTABLISHMENT 7.09

8.    SUBSTANTIVE PROTECTION (2): NON-DISCRIMINATION STANDARDS

A. NATIONAL TREATMENT 8.03

1. The origins of the national treatment standard 8.05

2. Scope of the national treatment: the question of same circumstances 8.08

(a) Disparity in the wording of treaties 8.10

(b) Identification of ‘like circumstances’ 8.13

3. The content of national treatment: no less favourable treatment 8.18

(a) General hypothesis 8.19

(b) The hypothesis of a federal state 8.25

4. Exceptions to national treatment 8.26

B. THE MOST-FAVOURED-NATION CLAUSE 8.30

1. The scope of the most-favoured nation clause 8.31

(a) Application of MFN clauses to dispute settlement provisions 8.32

(i) The controversial solution: Maffezini v. Spain 8.32

(ii) The consequences of Maffezini and the risks 8.34

(b) Can an MFN clause modify the scope of the Treaty 8.41

(c) Application of the MFN clause to substantive provisions 8.45

2. Exceptions to the application of the MFN clause 8.49

9.    SUBSTANTIVE PROTECTION (3): ABSOLUTE STANDARDS OF PROTECTION

A. FAIR AND EQUITABLE TREATMENT 9.004

1. The relationship between fair and equitable treatment and the minimum standard of treatment 9.006

(a) The two options: assimilation v. autonomy 9.007

(b) An overview of the minimum standard included in the fair and equitable treatment 9.011

(i) In the context of NAFTA/USMCA 9.012

(ii) Other protection treaties 9.015

2. The content of the Fair and Equitable Treatment 9.018

(a) The ‘traditional’ components of the Fair and Equitable Treatment standard 9.019

(i) Prohibition of denial of justice 9.020

(ii) The prohibition of arbitrary or discriminatory measures 9.029

(iii) Good faith and legal procedures 9.031

(iv) Prohibition of harassment 9.034

(b) The ‘new’ components of the FET standard 9.035

(i) The respect for transparency 9.035

(ii) The preservation of the legitimate expectations of the investor 9.039

3. The methods of assessing a violation of FET 9.046

B. PROTECTION AGAINST EXPROPRIATION 9.051

1. Terminology issues: expropriation, indirect expropriation and nationalization 9.053

(a) Expropriation and indirect expropriation 9.054

(b) Expropriation and nationalization 9.059

2. Conditions for international lawfulness of expropriation 9.062

(a) Public interest 9.063

(b) Non-discrimination 9.066

(c) Due process of law 9.069

(d) Financial compensation 9.073

(i) Compensation as a condition of lawfulness 9.074

(ii) The compensation standard 9.076

3. The specific issue of indirect expropriation 9.080

(a) General problem 9.080

(b) Criteria for identifying indirect expropriation 9.083

(i) Taking into account the impact of the measure on investment 9.085

(ii) The purpose of the State’s measure 9.099

(iii) The effect of the measure and its impact on the investment 9.103

4. The compensation for expropriation 9.108

C. FULL PROTECTION AND SECURITY 9.113

1. A protection against passivity 9.115

2. A protection predominantly limited to physical damage 9.122

D. THE FREE TRANSFER GUARANTEE 9.126

1. General issues raised by the clause 9.127

2. The scope of the free transfer clause 9.129

(a) Covered transfers 9.130

(b) Currency convertibility 9.135

3. The exceptions to the free transfer guarantee 9.139

E. PROHIBITION OF PERFORMANCE REQUIREMENTS 9.143

1. The rationale for the prohibition of performance requirements 9.144

2. The scope of the prohibition of performance requirements 9.147

(a) Prohibited requirements 9.147

(b) Tolerated or authorized requirements 9.150

F. COMPENSATION FOR LOSSES 9.153

10.  THE GUARANTEE OF INVESTMENTS THROUGH INSURANCE MECHANISMS

A. THE DEVELOPMENT OF INSURANCE MECHANISMS 10.02

B. MAIN RISKS COVERED BY INSURANCE MECHANISMS 10.04

11.  GENERAL EXCEPTIONS TO INVESTMENT PROTECTION

A. RESTRICTING THE SCOPE OF THE TREATY 11.04

1. Excluded investments 11.05

2. Excluded State measures 11.06

(a) General exceptions 11.07

(b) Specific exceptions 11.13

(i) The exclusion of specific State measures 11.14

(ii) Exclusions relating to a clause of the treaty: expropriation 11.18

B. CIRCUMSTANCES PRECLUDING WRONGFULNESS 11.21

1. The state of necessity 11.22

2. Force majeure 11.29

3. Countermeasures 11.32

4. Acquiescence 11.34

12.  INTERACTIONS (1): INVESTMENT LAW, HUMAN RIGHTS AND ENVIRONMENTAL LAW

A. THE INTRODUCTION OF NON-ECONOMIC CONSIDERATIONS INTO INVESTMENT TREATIES 12.05

1. References within the preambles 12.06

2. Gradual references in operative parts 12.12

(a) References intended to guarantee the State’s right to regulate 12.13

(b) Non-lowering clauses 12.17

(c) Institutional aspects: establishment of dedicated structures 12.19

B. THE INCLUSION OF SOCIAL AND ENVIRONMENTAL CONSIDERATIONS IN ARBITRAL CASE LAW 12.22

1. Human rights in investment disputes 12.23

(a) Human rights as a support for investors’ rights 12.24

(b) Human rights as a support to State rights 12.29

2. The singularity of the environmental issue in investment law 12.34

13.  INTERACTIONS (2): INTERNATIONAL INVESTMENT LAW AND EUROPEAN UNION LAW

A. INVESTMENT LAW WITHIN THE EUROPEAN UNION 13.02

1. Survival of intra-EU BIT? 13.03

2. Articulation between BIT and EU law 13.05

(a) Substantive provisions 13.05

(b) Jurisdictional provisions 13.11

B. EU EXTERNAL INVESTMENT POLICY 13.14

1. Incompatibility between EU law and BIT with third countries 13.15

2. Towards a European investment protection policy? 13.18

(a) Substantial protection 13.19

(b) Dispute settlement 13.22

General bibliography

Index