The Regulation of International Capital Doctrine - Dissertation Example

Proposed Topic: The Regulation of International Capital movement under Bilateral Investment Treaties: A Critical Analysis Introduction In recent years there have been thousands of bilateral investment treaties (BITs).1 A parallel development is the perception that BITs have or will create a special limb of international customary law.2 It has been argued for the most part that BITs have evolved to such an extent that they have their own unique regulatory laws within the wider scope of international commercial laws.3 Sornarajah raises an interesting point warranting further exploration and research. According to Sornarajah, the mere fact that there has been such an increase in BITs, is a manifestation of the fact that BITs have not been able to create “customary principles of international law” for protecting the movement of foreign capital.4 The doctrine of fair and equitable treatment is particularly important as, scholars have consistently argued that his doctrine has evolved as the core strength of the legal discourse underlying BITs and is the standard by which investor/state disputes are settled.5 The doctrine of fair and equitable treatment is the standard used to assess the behaviour of host governments in relation to their treatment of foreign investors.6 Even so, a working paper by the Organization for Economic Cooperation and Development on International Investment immediately raises the question of standardization and the uniform application of the doctrine of fair and equitable treatment. The fact is, the doctrine of fair and equitable treatment is not a specific law and does not have universal application. As a result it is open to a number of different interpretations.7 When all is said and done, an adjudicator faced with the task of ascertaining whether or not a host government contravened the protection attending the doctrine of fair and equitable treatment relative to foreign investment under a BIT will have to choose between opposing tactics. 8 Specifically, the adjudicator must decide whether to treat the doctrine of fair and equitable treatment as a separate arm of customary law or whether or not it is incidental to or an expansion of the minimum treatment standard under customary international law.9 With the choice of two opposing approaches to interpreting the doctrine of fair and equitable treatment, it is difficult to imagine how BITs are capable of creating a cohesive branch of customary international law.10 There is support for the view that the evolving standard of fair and equitable treatment is living up to its predictions and expectations.11 It can therefore be argued that contrary to popular belief in the literature, the standard for fair and equitable treatment in international investment treaties has evolved around a lot of uncertainty and inconsistencies.12 The uncertainty attending the application and interpretation of the doctrine of fair and equitable treatment is further compromised by whether or not there is a universally accepted standard relative to the minimum standard of treatment under customary international law.13 Aims and Objectives. This research study proposes to rebut the argument that the doctrine of fair and equitable treatment standard has the potential to create a cohesive body of customary international law relative to the movement of foreign investment via BITs. This research study essentially aims to provide a critical analysis of the literature relative to existence and interpretation of the minimum standard treatment under customary international law, its consequences for the evolving concept of fair and equitable treatment standard as well as its development. It is argued that the number of treaties, the lack of a uniform standard under customary law, the need for protecting foreign investors and the need for resolving disputes give way to two opposing factors. First, a standard is necessary for sustaining the movement of capital across borders in an increasingly interconnected, but diverse world. Secondly, there is a lot of room for confusion in reconciling or failing to reconcile the minimum standard doctrine with the fair and equitable treatment standard doctrine. This lack of cohesion compromises the need to sustain the movement of capital across borders. Research Questions The primary research question is: Is there a clear and cohesive body of customary international law regulating the moving of capital under BITs? The secondary research questions are: What is the doctrine of fair and equitable treatment? What is the minimum standard of treatment? How are the minimum standard of treatment and the doctrine of fair and equitable treatment related under foreign investment BITs? Is there a clear connection? How are both standards treated by adjudicators? Is there a clear and evolving standard of investment treaty law in customary law? Research Methodology This rebuttal will be supported by theoretical analysis espoused in the literature by virtue of the United Nations Conference on Trade and Development relative to the doctrine of fair and equitable treatment.14 Case law will be analyzed to demonstrate the practical difficulty of establishing a clear and cohesive body of customary international law relative to the doctrine of fair and equitable treatment. United Mexican States v Metalclad Corporation 2001 BCSC 664, The Loewen Group, Inc and Raymond L. Loewen v United States of America Case No. ARB(AF)/98/3 Washington, (2003), S.D. Myers Inc. v Canada 2000-2002 NAFTA, Pope and Talbot Inc and The Government of Canada Award on the Merits of Phase 2, Noble Ventures, Inc v Romania ISCID Case No. Arb/01/11 [2005], and Neer Claim United States v Mexico General Claims Commission (1926) 4 R.I. A.A. 60. This research study also proposes to look at critical evaluations of the doctrine of fair and equitable treatment and its connection to the standard of minimum treatment in customary international law. The proposed evaluations will be drawn from textbooks such as McLachlan, Shore, and Weiniger, International Investment Arbitration: Substantive Principles and Subedi’s International Investment Law: Reconciling Policy and Principle. A number of articles and journals will be used including Tudor’s, The Fair and Equitable Treatment Standard in the International Law of Foreign Investment and Weiler’s NAFTA Article 1105 and the Principles of International Law among others already cited and yet to be researched. A number of investment treaty models will also be examined, for example the Treaty Between the United States of America and the Argentine Republic Concerning the Reciprocal Encouragement and Protection of Investment. Proposed Bibliography Dolzer, R. and Schreuer, C. Principles of International Investment Law. (Oxford, 2008). Escarcena, S.‘The Elements of Fair and Equitable Treatment in International Investment Law.’ (April 2010) Leuven Centre for Global Governance Studies, Policy Brief No. 14, 1-9. Kill, T. ‘Note: Don’t Cross the Streams: Past and Present Overstatement of Customary International Law in Connection with Conventional Fair and Equitable Treatment Obligations.’ (2008)106 Michigan Law Review 853-880. McLachlan, C.; Shore, L. and Weiniger, M. International Investment Arbitration: Substantive Principles. (Oxford 2007) . Mutchlinkski, P. ‘Caveat Investor? The Relevance of the Conduct of the Investor Under Fair and Equitable Treatment Standard.’ (2006) 55 International and Comparative Law Quarterly 527-558. Neer Claim United States v Mexico General Claims Commission (1926) 4 R.I. A.A. 60 Newcombe, A. and Paradell, L. Law and Practice of Investment Treaties: Standards of Treatment. (Kluwer Law International 2009). Noble Ventures, Inc v Romania ISCID Case No. Arb/01/11 [2005]. OECD. “Fair and Equitable Treatment Standard in International Investment Law.” (2004)3 Working Papers on International Investment No. 2004/3. Pinto-Leon, I.‘Fair and Equitable Treatment Under International Law: Analyzing the Interpretation of NAFTA Article 1105.1 by NAFTA Chapter II Tribunals.’ (Winter 2006) XV(2) Currents International Trade Law Journal, 3-72. Pope and Talbot Inc and The Government of Canada Award on the Merits of Phase 2. Sauvant, Karl, and Sachs, Lisa. ‘The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties and Investment Flows’, (2009) 20(3) European Journal of International Law, 935-938. Schill, S. “Fair and Equitable Treatment under Investment Treaties as an Embodiment of Rule of Law.” (2006)6 International Law and Justice Working Papers, New University School of Law, IILJ Working Paper 2006/6. S.D. Myers Inc. v Canada 2000-2002 NAFTA. Schill, S. ‘The Fair and Equitable Treatment Standard in the International Law of Foreign Investment.’ (2009) 20(1) European Journal of International Law, 236-239. Sornarajah, M. The International Law on Foreign Investment. (Cambridge University Press 2010). Subedi, S. International Investment Law: Reconciling Policy and Principle. (Oxford, 2008). The Loewen Group, Inc and Raymond L. Loewen v United States of America Case No. ARB(AF)/98/3 Washington, (2003). Treaty Between the United States of America and the Argentine Republic Concerning the Reciprocal Encouragement and Protection of Investment. Tudor, I. ‘The Fair and Equitable Treatment Standard in the International Law of Foreign Iinvestment.’ (2009) 20 EJIL 229-239. United Nations Conference on Trade and Development. ‘Fair and Equitable Treatment’. (1999) UNCTAD/ITE/IIT/11 Vol. III, United Nations: New York and Geneva. United National Conference on Trade and Development. ‘Latest Developments in Investor-State Dispute Settlement.’ (2008) International Investment Agreements Monitor No. 1, Geneva. United Mexican States v Metalclad Corporation 2001 BCSC 664. Weiler, T. ‘NAFTA Article 1105 and the Principles of International Law.’ (2003) 42 Columbia Journal of Transnational Law, 35-85. Read More