The Emerging Foreign Investment Regime: Implications for Host State Development Paths
Abstract: This paper examines the increasing use of bilateral investment treaties as instruments of foreign investment protection. The outcomes of treaty arbitrations are analysed to assess the extent to which treaties limit the economic policy choices available to host states. The disputes are also analysed to determine how such treaties may affect the development of legal institutions and the general application of a domestic rule of law. The paper uses a case study of Argentine treaty arbitrations at the International Centre for the Settlement of Investment Disputes. Argentina has been selected for its appearance in multiple disputes over the last decade. It is found that the awards from the disputes involving Argentina have for the most part severely restricted the host state from mobilising foreign-controlled resource sectors at a time of financial crisis. The disputes also show that the ratification of investment treaties appears to have played a part in diverting the development of effective regulatory mechanisms within the host-state’s legal framework.
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