Investment whether the alleged problems of the current

Investment is any activity engaged in with the intent to make a profit or at least, avoid loss. Investments may be made by individuals, companies (and other legal entities such as partnerships) or by countries i.e. nation states. The investor(s) may be nationals of the home country or may come from countries other than the country in which the investiment is being made. In the case of the later, the home countries are referred to as the capital exporting countries or the Global North. The host country or the country in which the investment is being made is referred to as the capital importing country or the Global South.Sometimes, there are conflicts between countries of the global north and the global south as to exact rules for investment. Historically, the development of international norms for the protection of international investment follows the expansion of transnational business from Western Europe and the United States to Latin America, Asia, and Africa. These norms were pre-occupied with the protection of person and property of aliens in distant land. They provided very little, if at all, for the interests of the host states. the international investment regime was thus as  a result of tensions between  the global north and the global south. The rest of this essay will discuss international investment protection doctrines from the perspective of the global north and the global south and will explore the case for the establishement of a permanent investment court. Particulary, the essay will  critically discuss the extent to which a permanent investment court would be the solution to issues within the international investment protection regime – this discussion will consider the alleged issues with the current system and will put this issues in the context of problems raise by the global north, problems raised by the global south, and problems raised by emerging economies. It will then examine arguments for the creation of an international permanent court and arguments against its creation. Finally, the essay will consider whether the alleged problems of the current regime could effectively be dealt with through a permanent investment court. The law of responsibility for injury to aliens.According to this doctrine, host states are enjoined by international law to observe an international minimum standard in the treatment of alien and alien property. This duty, according to this doctrine, is not discharged by according alien and alien property same treatment as is accorded nationals. Where national standards fall below the international minimum standard, the international minimum standard prevails.A breach of the minimum standard engages the responsibility of global south countries and provides legitimate grounds for global north countries to exercise the right of diplomatic protection for their citizens and their properties in foreign countries. Thus, the law of state responsibility which was originally conceived for the protection of individual aliens abroad was extended to foreign companies and business concerns.  Some of the important elements of this approach are the doctrine of acquired rights, particularly as regards expropriation of foreign property, the rules governing state contract such as pacta sunt servanda and the prescription of non-discriminatory treatment for aliens and alien property. This doctine has been challenged by Latin American officials and jurists and in general by the global south. The substantive basis of the objection is the Calvo Doctrine.The Calvo Doctrine.The Global South  embraced the Calvo doctrine. According to the Calvo doctrine, a sovereign independent state is entitled, by reason of the principle of equality to freedom from interference of any sort, whether by diplomacy or by force form interference from other states. Second, the Calvo doctrine states that aliens were entitled to no greater rights or privileges than those available to nationals. Thus, the national courts of the host state, and not interntional tribunals, have exclusive jurisdiction over disputes involving aliens and aliens could seek redress in only in such national courts. The Foreign Investment Code promulgated under the Andrea Pact reinforces the position of the Clavo Doctrine. Article 50 of the Code forbids members to give preferential treatment to foreign investors and article 51 prohibits any provision on international adjudiation of investment disputes.The Position of Socialist States of Eastern Europe. The traditional minimum standard for the protection of foreign investment was also challenged by the socialist states of Eastern Europe. The extensive nationalisation of private property challenged the philosophical assumptions of the doctrine of state responsibility. Initially Eastern European countries resisted any payment of compensation for nationalised Western economic interests. Although these countries subsequently accepted to pay compensation, they rejected any requirements of minimum standard. They maintained that the regulation of alien property was exclusively within the province of national law.  To them, the principle of non-discriminatory treatment, for example, reflects the desire of the rulers of the main capitalist powers to take advantage of international law to protect their foreign investments and the privileges enjoyed by their nationals. The current form of doctrine on protection of foreign investment.The modern formulation of the doctrine of acquired rights concedes the sovereign right of the host state to expropriate foreign property, but requires that the expropriation must be for the public purpose, non-discriminatory in form, affected with due process of law and accompanied by prompt, adequate and effective compensation. This is referred to as the Hull Formula. This formula emerged during the 20th century, and has become an important feature of the current investment regime.Additionally,investment treaties, the doctrine on permanent sovereignty on national resources, and the International Centre for Settlement of Investment Disputes ICSID emerged. The current regime of international investment protection has both critics and proponents, all with differing views,. Asha Kaushal in his article, Revisiting History: How the Past Matters for the Present Backlash against the Foreign Investment Regime posited that “there was a rising backlash against the international investment regime, which was characterized by revaluation on the part of both developed and developing countries (Global North and Global South). The source of this backlash could be broken down into into two causes: 1. substantively, the expansive interpretationof foreign investor protections by tribunals; and2. procedurally, the broad rendering of the arbitrability of disputes by arbitrators. The result has been a growing critique of substantive bias, procedural shortcomings,and political consequences.” . With regards to developing countries concerns had been raised particularly by the Latin American states who, as already mentioned, argue that the spread of bilateral treaties forms a threat to their countries’ sovereignty. This view has been  evident in a number of high-profile investment disputes involving social issues implicated by investment .  Some examples of such cases are;Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A. v Argentine Republic, ICSID Case No. ARB/03/19.; CMS Gas Transmission Company v The Republic of Argentina, ICSID Case No. ARB/01/8; Enron Corporation and Ponderosa Assets, L.P. v Argentine Republic, ICSID Case No. ARB/01/. A by-product of this is that that some Latin American countries as part of the global south view capital-exporting countries (global north) as a collective hegemon that has put in place a system of international investment rules designed to preserve their dominance in the global economy in relation to developing countries . However, this view is somewhat flawed in its logic due to the fact that developed countries themselves face issues in relation to the current regime. Example of these being the case of Philip Morris Asia Limited v The Commonwealth of Australia, UNCITRAL, PCA Case No. 2012-12; and  Vattenfall AB, Vattenfall Europe AG, Vattenfall Europe Generation AG v Federal Republic of Germany, ICSID Case No. ARB/09/6. These cases can be viewed as the current regime failing to acknowledge and weigh the countervailing social concerns of host states, and the affected human rights and other social values implicated in many investment disputes.The Phillip Morris case, involves a claim against Australia a major developed country for a significant piece of social welfare legislation. In2011, the Australian Parliament passed a bill mandating plain uniform packaging forall cigarette brands and prohibiting companies from printing logos and bright imageson cigarette packets, in an effort to protect the health of Australian citizens by makingsmoking less appealing. Philip Morris, one of the world’s largest tobacco companies,challenged the legislation as a taking under Australian law, claiming that theeffect of the bill amounted to an expropriation of its intangible property and goodwillassociated with its cigarette brand in Australia. PhillipMorris initiated investment arbitration proceedings against Australia. In this case, it meant filing under the 1993 Hong Kong–Australia BIT, to do this Phillip Morris shifted its corporate ownership to Hong Kong. The Australian Government responded to this by challenging jurisdiction on the basis of the ownership shift. It must be noted that such forum shopping is a common occurrence in investor–state arbitration, and arbitration tribunals have done little more than to acknowledge the issue. Though in this case the tribunal dismissed the claim on grounds that the commencement of the arbitration by PM Asia constituted an abuse of rights.The Phillip Morris case also illustrates how the challenges facing international investment law are symptoms of a larger systemic problem: a structural inability to adequately or consistently address both the investment risks and the social risks involved in foreign investment. These inadequacies have deep roots in the structure of investment treaties and in the dynamics of investment treaty negotiation , and in the rule of law deficits of the investment arbitration system itself, particularly when deployed to address disputes such as these involving regulatory challenges with social welfare implications. The disputes, for the most part, in their recent trend of awards not only reflect the issues with the current regime but also show how the balance is tipped in favour of investors with investor–state arbitrations. Thissuggests to many that BITs have overcompensated, empowering investors to effectively override legitimate state concerns. A number of attempts have been made to govern the area of foreign investment in the forms the Havana Charter, the OECD Draft Convention, and the ICSID Convention, which created the International Centre for Settlement of Investment Disputes. It’s aim was to resolve disputes between host countries and foreign private investors, and required the specific consent of the parties for an ICSID tribunal to exercise jurisdiction over an investor-state dispute. ICSID is the closest example of an International Permanent Investment Court. However, ICSID has failed to address a number of the aforementioned issues with the current regime but rather created other specific to itself as shown in the earlier paragraphs. The International Trade Organization (ITO) was initially envisaged In Havana in 1948, the UN Conference on Trade and Employment concluded a draft charter for the ITO, known as the Havana Charter, which would have created extensive rules governing trade, investment, services, and business and employment practices. However, the United States failed to ratify the agreementThe Convention on the Organisation for Economic Co-operation and Development  is the 1960 treaty that transitioned the Organisation for European Economic Co-operation into the Organisation for Economic Co-operation and Development (the OECD). The treaty states that the OECD decisions are binding on members that vote for those decisions once those decisions are approved in accordance with those members constitutional processes. When a state is invited to join the OECD, it must ratify the convention to join. As of 2013 only  34 states have ratified the convention and thereby joined the OECD, as compared to ICSID which has 161 member states. The limited number of member states as compared to ICSIDA permanent investment court?A permanent Investment court would require the replacement of the current system of ad hoc arbitration tribunals with a standing international investment court, which would have an appeals chamber. The court would consist of judges either appointed or elected by States on a permanent basis, or for a fixed term. The court could address some of the problems outlined above.A permanent investment court would most likely be the most appropriate mechanism to assess the validity of  States’ actions, particularly when they involve public policy issues, thus giving it more legitimacy. Also, where the dispute involves matters of public interest the case being heard in court would allow for much greater transparency . The existence of the permanent court could also do away with investors and companies channelling an investment through a company established in an intermediary country with the sole purpose of benefitting from an international investment agreement concluded by that country with the host State, as happened in the Philips Morrison case. There have been incidents of inconsistent findings by arbitral tribunals that have resulted in divergent legal interpretations of identical or similar treaty provisions as well as differences in the assessment of the merits of cases involving the same facts. Inconsistent interpretations have led to uncertainty about the meaning of key treaty obligations and lack of predictability as to how they would be read in future cases. A permanent investment court would likely do away with this this issue as it would be the same panel of judges sitting on every matter thus ensuring consistency in the findings. Also, substantive mistakes of arbitral tribunals, if they arise, cannot be corrected effectively through existing review mechanisms . However, a permanent court would have all the needed appeal and review mechanisms as part of its formation. A number of challenges to arbitrators suggests that disputing parties perceive them as biased or predisposed. Particular concerns have arisen from a perceived tendency of disputing parties to appoint individuals sympathetic to their case . This can be seen in the fact that as per ICSID rules the parties should refer to the contract, treaty or law containing the consent to ICSID arbitration. This instrument may set forth a prior agreement between the parties on the number of arbitrators and/or the method of their appointment. Absent a prior agreement, ICSID invites the parties to agree on the number of arbitrators and the method of their appointment when ICSID registers the request for arbitration.Under ICSID the most common agreements for three-member Tribunals are:• Each party appoints one co-arbitrator, and the parties attempt to agree on the third arbitrator, the President of the Tribunal. If the parties fail to agree, the Secretary-General (or the Chairman of the Administrative Council) of ICSID appoints the President.• Each party appoints one co-arbitrator, and the co-arbitrators attempt to agree on the third arbitrator, the President of the Tribunal. If the co-arbitrators fail to agree, the Secretary-General (or the Chairman of the Administrative Council) of ICSID appoints the President.In the creation of the the permanent court there would be, as as to maintain the impartiality no means by which the parties would be able to choose adjudicator who may be somewhat smpathetic to their case. Furthermore this would likely deal with the views of Latin American countries that the global north put in place a system of international investment rules designed to preserve their dominance in the global economy in relation to developing countrie  However this does create a downside in that though the adjudicators may be well versed in international investment law they are likely not going to be experts in all areas brought before them. Furthermore the creation of the court would not in anyway provide a solution to the is of soverignty, which is a massive issue for most countries in the Global South.As per the  alleged problems of the current international investment regime outlined in this essay, a permanent international court would  likely solve some of the issues associated with the current regime, such as inconsistent finding, and could address issues such as the imbalance in favour of investors as against states. However it would would still not adress the issues of soverignty which is extremely important to countries in the Global South 


I'm Mary!

Would you like to get a custom essay? How about receiving a customized one?

Check it out