VI Admission and Establishment

Abstract

This chapter assesses the admission and establishment of foreign investors. Admission concerns the right of entry of the investment in principle, whereas establishment pertains to the conditions under which the investor is allowed to carry out its business during the period of the investment. From the perspective of general international law, States are in no way compelled to admit foreign investments. The economic dimension of territorial sovereignty leaves it to each government to decide whether to close the national economy to foreign investors or to open it up, fully or with respect to certain sectors. This includes the right to determine the modalities for the admission and establishment of foreign investors. Views differ on whether it is useful to conclude treaties providing for guarantees towards liberalization or whether the flexibility inherent in domestic legislation subject to continuous review provides more benefits for the host State's national economy. The policy decision of the host State whether to grant a right of admission is fundamental for all parties to investment treaties. The chapter also looks at the provisions on investment promotion and performance requirements.