Multilateral and Regional Instruments on Foreign Investment

If states were in agreement as to the norms that constitute the international law of foreign investment, it would have been possible to agree on a multilateral agreement on foreign investment stating the substantive rules which apply in the area. The fact that no such multilateral agreements exist is due to the existence of conflicting approaches to the problem of foreign investment protection and the existence of contending systems relating to the treatment of foreign investment. Several attempts have been made at bringing about a comprehensive code on foreign investment, but they have resulted in failure simply because of the ideological rifts and clashes of interests that attend this branch of international law. Most drafts have been made with the objective of providing as much protection as is possible to foreign investment. These have been rejected by capitalimporting states. The entry into the picture of non-governmental organisations (NGOs) further complicates the picture. They object to multilateral agreements which concentrate on investment protection exclusively without addressing issues relating to environmental degradation or the human rights violations associated with foreign investment. Some of these organisations take the view that the development interests of the poor are not addressed through such instruments, which seek only to protect the rights of rich multinational corporations. The entry of NGOs as major players in the area has further complicated the issue of making such agreements. It is relevant to note that NGOs which supported the rights of foreign investors have been active in the field for a longer period of time. But, voices against confining the drafting of investment treaties to investment protection alone have increased as a result of the growing strength of the environmental and human rights groups entering this sphere. They provide support to developing countries, which do not support multilateral codes which restrict their ability to regulate foreign investment significantly and which deny them the power to negotiate treaties bilaterally. The fear also is that, once a multilateral treaty is created, higher standards could be obtained through bilateral negotiations. Given that multilateral treaties cannot come about, effort has been made to create regional treaties that are led by a single state. The Trans Pacific Partnership (TPP), which was signed in January 2016 but is yet to be ratified, is a case in point. It contains an investment chapter along with international trade chapters.