Book contents
- Frontmatter
- Dedication
- Acknowledgements
- Contents
- List of Cases
- List of Legislation
- List of Abbreviations
- The Changing Course of FDI: An Introduction
- Part I FDI and National Security: The Playing Field
- Chapter 1 The International Legal Framework for Foreign Investment
- Chapter 2 Foreign Direct Investment
- Chapter 3 National Security as a Limit to International Trade and Foreign Investment
- Part II The Traditional Approach: Ex Post Control
- Part III Towards Ex Ante Control: The Evolving Position
- Part IV Ex Ante Evaluation on National Security Grounds in Practice
- A Look to the Future
- Bibliography
- Index
- About the Author
Chapter 1 - The International Legal Framework for Foreign Investment
from Part I - FDI and National Security: The Playing Field
Published online by Cambridge University Press: 13 October 2018
- Frontmatter
- Dedication
- Acknowledgements
- Contents
- List of Cases
- List of Legislation
- List of Abbreviations
- The Changing Course of FDI: An Introduction
- Part I FDI and National Security: The Playing Field
- Chapter 1 The International Legal Framework for Foreign Investment
- Chapter 2 Foreign Direct Investment
- Chapter 3 National Security as a Limit to International Trade and Foreign Investment
- Part II The Traditional Approach: Ex Post Control
- Part III Towards Ex Ante Control: The Evolving Position
- Part IV Ex Ante Evaluation on National Security Grounds in Practice
- A Look to the Future
- Bibliography
- Index
- About the Author
Summary
ABSENCE OF COMPREHENSIVE REGULATION OR ANY INSTITUTIONAL STRUCTURE
Because of its scope and importance, FDI deserves global regulation. However, there is still no comprehensive, clear and overwhelming international legal framework or developed institutional structure for it. In the aftermath of World War II, a need to liberalise and protect international trade was identified and this led to the creation of the General Agreement on Tariffs and Trade (GATT). However, no similar need was felt for investment. One only emerged in the postcolonial period when the separation of the regulation of international trade and international investment was already a reality.
The GATT Panel's report of 7 February 1984 on Canada – Administration of the Foreign Investment Review Act clearly recognised this ‘divorce’ when discussing the principle of the national treatment embodied in Article 4:3 GATT 1947:
The purpose of Article III:4 is not to protect the interests of the foreign investor but to ensure that goods originating in any other contracting party benefit from treatment no less favourable than domestic (Canadian) goods, in respect of the requirements that affect their purchase (in Canada).
Consequently, as to
the extent to which purchase requirements reflect plans of the investors, the Panel does not consider it relevant nor does it feel competent to judge how the foreign investors are affected by the purchase requirements, as the national treatment obligations of Article III of the General Agreement do not apply to foreign persons or firms but to imported products and serve to protect the interests of producers and exporters established on the territory of any contracting party.
International investment law constitutes a fragmented and multisource field, with a decentralised composition and a hybrid nature. In contrast to international trade law, its development is linked to the shortcomings of traditional public international law as regards the protection of the interests of private economic actors. Traditional means of protection, like diplomatic protection, have been considered unsuitable for enforcing commercial contracts even when one of the contracting parties is a state. International investment law has mostly evolved in relation to disputes between investors, usually from developed capital-exporting countries, and the governments of developing capital-importing nations.
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- Publisher: IntersentiaPrint publication year: 2018