International Investment Law and the Global Financial Architecture
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International Investment Law and the Global Financial Architecture

Edited by Christian J. Tams, Stephan W. Schill and Rainer Hofmann

This book explores whether investment law should protect against such regulatory measures, including where these have the support of multilateral institutions. It considers where the line should be drawn between legitimate regulation and undue interference with investor rights and, equally importantly, who draws it.
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Chapter 11: Capital-flow management measures and international investment law: Never the twain shall meet?

Prabhash Ranjan


The focus of this chapter is on monetary transfer provision (MTPs) in bilateral investment treaties (BITs). MTPs in BITs regulate the transfer of funds related to investment in and out of the host country. This chapter tackles the question whether the imposition of capital-flow management measures (CFM measures) by a host State violates broad and unqualified MTPs in BITs that guarantee transfer of funds in and out of the country without any exceptions. The chapter addresses this question by introducing CFMs and the different ways by which international law regulates the freedom of States to impose them. It then analyses the relationship between the different approaches adopted under the IMF Articles on the one hand, and BITs on the other; this involves an inquiry into questions of norm conflict as well as systemic treaty interpretation. Having discussed rules specifically addressing CFM measures, the chapter moves on to discuss alternative options for host countries to respond on the basis of generally available defences. The chapter finally concludes by observing that the method for resolving the conflict is through the legislative route where countries enter into MTPs that recognise the right of countries to impose CFM measures. Keywords: BITs, capital flow management measures, IMF, monetary transfer provisions.

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