Originally from International Arbitration Checklists - 3rd Edition

International Investment Treaties

The field of investment arbitration has grown exponentially over the past twenty years.  Once a rare occurrence attracting the attention of a limited number of scholars, investment arbitration has expanded tremendously since the mid-1990s.  

A significant factor in this development has been the signature of over 3,000 Bilateral Investment Treaties (“BITs”), involving virtually every country, that grant substantive protections to foreign investors that can be enforced through arbitration.   Arbitration of investment disputes is also provided for in multilateral international treaties (“MITs”), such as the Energy Charter Treaty (“ECT”),  the North American Free Trade Agreement (“NAFTA”),  and other Free Trade Agreements, and sometimes in the host state’s domestic law regarding foreign investment.  Arbitration of investment disputes remains a major topic in the context of negotiations of multilateral treaties between the Americas and the Asia Pacific (the Trans-Pacific Partnership (“TPP”) ) and between the United States and the European Union (the Transatlantic Trade and Investment Partnership (“T-TIP”)).   

Rights and responsibilities under investment protection guarantees include the right to fair and equitable treatment, national and most-favored nation treatment, prohibition of arbitrary or discriminatory treatment, mandatory compensation for expropriation, and the right to freely transfer funds across the host state’s borders.  These obligations are relevant from the very first stages of the investment process and should be considered by counsel long before any potential dispute arises.