Principles of International Investment Law RUDOLF DOLZER AND CHRISTOPH SCHREUER OXFORDOXFORD, onal curonmanstepennscasOR Dednsegnelaeee) ‘hrm a a hi Foreword The cunt st of tration avant i shaped and characte by she ens of inventmen retin by ruling necator buna sa by les genera iteration i: Gln the beak key andar hw ia eae sach rand etal ete mess eqiaen 0 ‘expropriation’ ts natural hare ntespretationandsplicion ofthese, ‘el be cen fr he ndentanding ofthese tuadarde in pti a fr te ‘elt of sheen gee Aste urine on ches clas has oly ‘ole inthe shore period of abou decade within 2 onsen sem, lenentsofketerogecy so deere tention, In this curren seing ofthe a, the suchas have chose, tel wdy ad ssrangoment ofthe ld ceo prove sm actcpin of he subject ‘matralongeheneofs Europeans a or mes open ase sete inthe sy af common aw csebok. The tm of he book aly 0 thud the meaning che ene principles thr oven carne frien set ‘nex lw. These pines om the ergata bos ofthe bok, But thei ‘postion in del entes more onthe ease bese are ofthe cling th prudence anon a ompcheuive systematic ama “The Deger Foundation, Lib, Germany be gener ppt sty a Yale Law School during which Rodel Daler workdonthe manuscript. At Boon Univer, Ande von Wale and Jan Wer provided vale earch. Doi Gas and Tega Dessrdoranized the mamas At Vea Unvesiy, (Clas Renerblped wh he protesting adolf Des Be Cisoph cheerSummary of Contents TibrofCo Tablof Tati, Conention Reson end Rl Lise Abbrcons 1, Nature, Evolution, and Content of neato! avetnet Law Tezeatonl loves Law aa ld of Srady 2 The Basins Neuro orig vesemen Long-Term Risk 3. Hose State Soneeigaty and che Ras of Foseig lvestment 4 Gustoraty Inenatnal Lvs The Eoergence of Minit Sandard 5. Treaty Lave Flt sed Purpose 6. Gurren Trendin Tesy Practice 7, Reon Agiements: Energy Care, NAFTA, 1, laterpretation snd Applicaton oflavestmen Ticats, 1, Toeprtingievestnen Tees 2. Appt of Investment Tees in Tine IL, vento and avetmnts 1 Investors India Companies, National. and ‘Sharchokes| 2. tnvesment 16 Investment Contec 1. Typesofteveemene Contacts 2 Apple aw 5, Sablon Clases 4 Rengoion/Adepation . Admision and Exabishment 1. The Move towards Economic Literal 2. Treaty ModklsofAdmison 3. Perfomance Requlenents 4 Nom Campine by Inesor with Ho Sete Law sandemaional Pali Plcy W v 4 ” 3 3 38 46 ‘6 n n By s n 7wu Samar of Caner: VI Expropriation 1. The Right to Expopie 2. The hie Branher the Law 5. The Lei ofthe Expropriation 4 Ditetand Inder Expropion 5 xgopiatin of Coneactal Rights VI. Standards of Protection Flrand Equitable Terese Full restos and Ss The UnbelaClase Acceso tic, ar Poca, and Denia of sie Emergency Newsy. Armed Conf, snd Fore Magee Preration of Right [Mbitay or Discriminatory Measures ‘athnal Trermese Most Favoured Nason Trent 10, Tener Funds VIL. Sate Respnstily and Acibrion 1, Organs, Prorinces ad Maniplitie 2. See Encies 5, Die Stat for Conmen: Subdivisions or Agence under she ICSID Convention 1, Poll Risk Isurance X, Setting Investment Disputes 1, Sater State Digpes 2 Inverory State Daptes 1. Comenion onthe Settemen af Invest Disp beeween tater at Nationals of Orr Snes {ACSI Conveoton) (March 1965) 2, Enewgy Charter Treaty (Parts tl V) (December 1994) 3. North American Fre Trade Agee (NAFTA), Cheer XI (Deter 1992) 4, Ageament becwee he People’s Repu of Cine and Government of. Jon the romodon nad Protection oflavests Chinese Model BIT) 2003) ns wt 5 195 98 205 201 21 a 30 332 ny Indes Seman of Caner Acca enrele Gavernemen dela Republi rnc. leGoovernement de. tl Encoargenent ta Proton [Recgeogues der nveniserent (Trench Model BIT) (2006) Treaty brmeen he Fede Republic of Germany ad. CConcting the Ecouragemen and Repo Postod flovrmnes (German Med BIT) 2003) Draft greener ernen the Goverment och Unied Kingdom of Gres Bruin and Nrthern rand andthe Goreme forte Proton {nd Proton oflavesccts (UK Model BIT) 2008) “Trentyberween the Goernear ofthe Und Sats sf America andthe Government af. oncerting ‘he Encouragement and Reciprocal Potton ‘of lnvestmen (US Model BUT) 2004) 360 368 6 35Contents Tableof Cae Tabla Tat, Conenons Relation nd aes Lvef Abbreation 1. Nature, raation, and Comet of letesnatina Insestment Law 1, eration lvetment Law aa Fie f Sey 2, The Busine Nau of Foreign vermen ALongTerm Re os Sie Soveigny andthe Rue of Forig nvemene ‘4, Cason Inertial Lawes The Emergence ‘faMinimute Sadar Treaty La: Evolution and Purpose Cen Tends ia Treaty Pace Regonal Arena: Energy Chase, NAFTA, 1 Imerprtation and Applicaton of Iavestmen Treaties 1-Inerpecnglsestent Tes (a) etd Tey ere (Thence {© Imerpreave Sateen @) TheAthry of Prec {© Towra Gree Un of nexpeaon 2. Applicaon of vesmeat Tees in Tine (menor pono Tete in General (0) Diet ie Teor Rainn snd Subse (©. TheDae Reape Dwi arieton (8) Relea te SID Conver (© lneosTenporl Relea Othe Tees W Irvexorand lnvestments 1. vez: India, Compan, Nana sn Shareholders (Pre orig enon, (Nasi {0 Nanay of Coportone m7 46vn, i) Arle 22)9 af he CSID Comenton Agere Tees {ocd Company fac Neon becuse of arg Cnr (0 Nena Maningand Desi Bees (8 Shuchlea oeas 2, lexan (The Conca avermene (0 Det lveiene rin Treat @ Cele Iesment Contacte 1. Typesol ventas Conte 2. Applicable Law 3, Sulason Clases 4, RensgoiationAdapeation Admission and Eble 1. The Move tomar eam Libel 2. Tiety ModelsofAdminion 3 Peformance Requirements 46 Non-Compliance byvetr with Hos Sate ‘nd Isemaconl Pu Pley Expropriation 1. The Right Expeope 2. The hee Branches ofthe Law 3, The Legals of the Expropraon 4 Dimsrand lic Expropeaton (0) Bed Ferme Thr Siberian Eatin (0 Jacl an Arlo Se Hate Ca (9 corinne? (6 Lepine Expection (0 Telnet Cena ari spon? (9 Gener Regatney Meares {g) Duntion fs enue 1h) Coping popinoe 5, Expropriation of Conrail Rights Standards of Proton 1. Fairand Equitable Teamene (0 Hye he Cnet, (0 Hewsogenety ony Langage °0 0 1 his (© Newreant Farin (a) Faand Equal Tenmencand Cason arnional Lam (@ The Boton ofte arand Euibe rmen Sandu (9 Avenpe x Dein FuirandEoueable Temct {@) Meola iuez (8 Spc Appeatin fhe Fl and Eq Teen Sand 1h Caplnce wih Coen Ogio. eral Pps Dae Pcs, ‘Prin rom Corn ed arena @ Conan Full Potion and Secay © Concept (© Prato sie cal Vidence and Harsmet (0 LeplPrancion 4 Rebnaip go Ceo Inemasoa Law The Umbrella Clase Acces Joie, Flr Produ and Denil of Janice Enmergency. Newsy, Armed Cols and Fore Majere (0) Canora lta Lew © Kewl (@ Tell. Arlen Sta Repo 1h owe Maju Presraton of Rishi Arbitrary or Discriminatory Measres (9) The easing of Airy Menus (t RekiombiproFaiand Equa Tenant (Camarines ew (@ TheMeoningof Darina Meats National Tstment (9) Gena Newsing (b Arps Theat Camparton Sk the inonsots Dison lee scion the Dini? (© The Rdeneef WTOC Moss Faneured Nation Teatnent (a Indus (8) Vatoest MEN Cass i)(Ms oreo (avin (0) Gurnee Law 10, Tranter Funds VII, Sete Responsibly aad Atibatin ‘Organs Provinces, and Mulia, () Sac Onan (8) Prva ad Muncie State Ene (9) Thelen (8 Src Fein pd Conta (0 Jacl Pactceon Abate (Sate Repay fr Fre Pott Party Stata Gor Continent Sabon Agee tander the CSID Convention 1X, Poli Rik Insurance X, Seng lnvestment Disputes 1 Sate State Disputes 1) DipoatiePrve 1b) Die pus betcen Ses Investor Site Disputes 0) TheRaleef Domest Cour t= Thine Une of Deen Covet Hh TheRequtemetto Renee Domes Cours te Theft in te Rond AL SSosinf Domenic Cousin Cons (t) Arkon and Calin (Aron one ond Regine Si UNCTTRAT Rule 7 Thee Unie res Cie Tidal * he Romany Cour fron (4) TheScbjrs Maver athe Dap rion Ratio Mari he Dine SK eaga Narof eh Diane = TheDicemnfthe Dupin Relaona the nent I as 24 215 25 2» Ames: Comins lo TBetaneredhe Dagueh AL Thuan af oe Abily (0 Case oben ‘a Coect Diet Agreent SS Comenetroue Ham rae epan .Comenhough ll ene Tees (4. Come hough Muller Tres The Scopeaf Consent (Beagles of MEN Cone Dgte Senemen {8 Pecele (8 Prvionl Mewsues {0 AplealeLaw (Damaged Compenon (0 Gow {n)Chlngeand Reso fDesson: ‘a. Reewin no ICSD Aton 1 Anoln nerte OSID Coeson "Ecce ttiwen i Sei Departre oe Fundam Rae cate ce. Suplnereion nd Resin ter SREICSID Coton aren use te CID Coen te Reon und fe CSD Comers (0) Parente Aves Convention on the Seement flexes Digs ‘between Sater and Nana of Other Ses AICSID Consenso) (Mare 1965) Eeigy Charter Treaty Pare, V) (December 1994) [Nor American Fe Tad Agreement (NAFTA), (Ghaper XI (December 1992) ‘Agrees betwee he Pope’ Republic China rt ‘heGoremmnrof [onthe Promotion a Pron ‘flasesmens (Chinese Model BIT) 2003) 23 ae ey 2 3M 30 a2Inder Content Acco ent le Gomsernement dels République Fang JeGowerncent de su Encouragement ls roscson Rants des nvesinemene (French Model BIT) (2006) “Teaty basen the Feral Repblc of Germany an. CConcening he Encoaraeren and Reciprocal Pet tlnetnets (German Medel BIT) 2003) Dra Agsoomen bermen the Gavernmene of he Unie Kingdom of Gres Brain and Norhers eld sue Govern of forte Promotion {al Protection of investments (UK Medel BIT) 2005) “ret berwoen he Goverment ofthe United ets sf Ameri andthe Gover.) eancening ‘he Encouragement ond Reciprocal Preston ‘lavesanen(US Mode! 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International Investment Law asa Field of Stady Gener speaking, th role and gaan orig vent hs grown in tod nen eo major waves In he iter pra Hernen 170 sod DH, 1 new dimension of inenaonal nana moby led to an eon {pom in frig invest? rom seal poi of ews hie change wat ‘complied by way of nana! laws which opened up ecnomi fons in ‘heabene of inenanal ene peal sme at ules gern ts invermnent. Howeve, ew ireratonal als on tection aed ‘anspor fale this fe change of yeas in the wlationip beeen ‘ol economies. Thi fast modsn pred of sm cranial ecnoey frat hake in 1914 by Wend War bythe uieguen oe como a ons the 1920s, and by Wodd Wa ‘ee 1955, the pace of growth fogs invent acl ow ier = petod of construction, bar came wo ie pak inte 190s when ore investneaquadrpled beeen 1990 spd 2000, agin pred by ecologies innovations nd rece eon fr tanepor. Thi new outers of foegn inte ‘ment wau accompanied bys eurb filaerlreae,which grew fom 500 ie 1990 wo abou 2.00 in she year 2000 A special treo hs ptiod ws tha about 80 per cet offer investment dereoping cutee wert ‘nbs done sae ray anand eat inven in Aes wer down In 2005, he welder of foreign drs inverts rosea a ior peskaf916 Ulin USS andthe namberofsgned imeement protection ens 2S IRCTAD. Wulf ect2 Nene of remain scent Ls ped the 2500 mak The nasi volume offi invested ely gush an invelved in fori ade oeilto the goth of facign inesment, the principle governing fa sign nsec av over detleped eee ovm dint etre wihin he ‘cde on inssonlecanomic law. Thi ere even tah they hare te embeldeIv Both the fabric of general inernational lw ad in pe Sle which ae, fo some extent como ro oh sien of neato onomi aw sachas tae law, Toy errno ana of sine wher ictrappopiae to speak ofthe exience of urate cen opines ferigninvesemen aw ge thio inks tert cari ain fer. The no dob, however that the crn ete of the awe chare "eed by she fc thar he inertial aw of eg invest has bce = speciale sea ofthe legal pasion and tha pei outs ae feed oo ‘henabjecr mater in universe worldwide, Th common we and pane in ‘he terinloy of nernational lw har alway ben single tad wo desi ‘ane din elds sch ate lw of wo the ofthe whenever he by ora in anyone of ich res as conc exten and dear naught jn spec aceon and ey "To decades go te stat ofthe ules of incnatina lw perenne cigninestment anoryet ache sich gop and poeional pct Sno, Uni ee cat 1990s, ou ate scattered yi et rales of enc interacial law and by turber of eral ea, which Ul thon dl notin practic lead toa sigan gleich orm of res fof euse Inthe matter! domain the ICSID Convention, nei mechanism for dipuesecement, had lend ben doped a 196, bak Female dormant unt the ecy 1990s, with only handful of cate decided. Sce 1990, howe, the fll of frig inven law ha expanded dani ical. Thishecomesappuca in the eanoad oF CSID wih wel oer 100 es Pending 2006 and sigaican amber rhe before other ora SIR eet et fe ‘Pincaltrbe balcony petheinirtemens oe Smusteecae Suabngaoy neh Seconarinstaconst alee tm eS irc ceioriaetaeragr ce ld: mabe pedo tb lag he mule we cep a te ecru ile ‘Seiad acpsspidiscacscth ate ec compe Once ehe e ‘myomenof ped washers oer onset [ | | | sin Narrf og semen 3 Foreign investment la const of layers of general international av of ener standard fatal economic ado atic ues pai fo ts domain, The study othe Geld muse take int account and tar all of ‘hes the lel of the law, Meco ih ng bec ved tat heres fon foreign imestent by neces ab incorporteapecerf the ar ote hast face, Depending upon the sting ofan nda head ne he nea berwen feleant domestic role af the hos nate and apical aes of inte ‘aoa law may Become central othe required snap of cae fo insane, thedometc deiniion ofan aster dometc oles aesing the rei tion of imeratol ebro che deniers on natant may dete tine th nature andthe ntcnne of pei ae, Not ony isthe dsineion beween international lav and domestic law becoming blued by the modern rexime of foreign invent ln? the lasal separation beeween pubic an private ln ar emphases ply In Concent European lea ret, alo cannot be secommadatd a nest catgut in ths Be. The Broad queso at whe he ety of in atta economic wi generale Fors wal tino between ve law abd publica silrated pecially by the consideration of forgive ‘eat lst The ues governing contac Derween am investor a tse Ara on both rete and pba I fic, these rls eval ink ewe Aomesticlawand public iteraational law To cen exer the uke dome Uelew are bing confronted snd super by rls of puch aw, din slevan ieratonl case the deionised Updawanding of domestic lm poly sccmpanie by poss of tev Of domesie lew under te iterntonl saad conte ta eats tin ‘enerlirneratonl aw Ara rele of thse pecllaris,contenprsy inte elonal imvertmene law ie acquis characteris the undentanding sfc equiped 2. The Business Nature ofa Foreign Investment: ‘ALong’Term Rise Making orga inseranis dior in os fe engaging a trae eas seton, Wheres wade deal ypc cons in one-ne echang of goods 2d mney, he dein one oe coy iia long ere tionship horween the iver andthe os coun. Ofte, che busines plan ‘he iver en sink subs resutes in the poet tthe ease oe investment, withthe cxpecaion oecop this aun plan scepable te seRSE Ianto nn ed Mae 0A ak4 Natrona nce Lae of exw duving se subsequent period of ivesmen, sometime unaing up 30 yeas or more "Akey rae ia he design fc arin inveument ia youn adeace ‘het iseat insuh lang er lationship ar rm Busines penne: ‘ivan ror tbe pole of le and then dey Bsns eneepe end {earch suble nc only othe implementation of depos fener bras toriinz hs that yardage period of ines. [ema cae thi an nial or ee ves, athe money sink a the jer 2 the out ply canot be used openly at another lcaon etn the machinery and stalls fee proj ar spel designed did vo putas ofthe poet and it oat, “The dynamite inthe ration betes the st ate and sever ae la dite in acre beled fete lett + made Larger psec: ‘reoppalyocmade under the general lwsoftbeot county instead the owt ‘tne and he egy fave nage dela veer greene, wich may aloadapethepenrleal egimeaf the hase county wo the prospec edsand percents ath es, During these egriins, the vest thy roar the gland err gurantee that are dered esa tn vw of ‘he natureand the drain of the project taking int account itr or mk Taree conelaed bythe bast state whic wil provide garates on the lee of ineratonl aw. Depend n the poet teaver may De a the divers sat uring cere negrcons in cave the hose tate been wo ata he investor The iver wil eormaly bear the commerce itret in poste hangs inthe maser of the proj, for example, ne” competes peg ‘oles, achange to changes afstng che ancl ating In eras ‘einsictons, rovsion willbe made oradapeason or eegoestion nase af ‘hangin the ecoomie nancial content of the poet The ola ike “hk nr in tre interven ofthe howe te athe egal ig of che roc wll ply be adrened uring these ial negoinon unis hee {ke at appoplely added nan apple overtone ety the eso {ay ako oosson on amber of pots such asthe api eo che ‘Garcpne on poisons dclingorth nfo, on day ofthe hs sare {cortin volume ofthe produc especialy in he el of egy production oo the Ture ping of he invest proton casos elon for ster [ns xed for ee poder and, epi on ay agrerment on fare dipate seinen ‘Once ches pions ae canal and the imetor resources ae suk in he poet, the dynamis of influence and power tend sie in vor of theo state Ti esl pla aha ais othe frig nese in {Chango pono the ow government tht mo aker he chee of bur ‘Sa sand bench which the cos have ad dow when hey neo Sia he deal and which formed he Bass of he inva snes pla ad the Busnes Nar ofe org iscement 5 legate expeceaions embodied in hit pla, Such change fpsion on the pat of the hs country becomes more ey wit every subaeguet change of Eovernmetinthe oe ate during the pec five “Tisaareofan inverter mes neil ha the cre, ace and pues ffi ivesement law stands oral dint reader ‘elm of eraional am epi in compatinn o ae ter of eal ‘holy the deen ews the wo i cil fr auton sn asaming ommonaies bere feign inven a and ade iw, Whenever ata Tog popes or asain transfered rr one se othe be mr be tained in detail whether hei dif nates aonb oa sesapion ‘of commonly: Of, conc tha pts bein sommes [ave difereeahade ad hance upon moe dsl snaps king ino count he pci snes nat olin sgn inesmon projecs| “he testy based rules vest abe ued ad epee like al seats, the cme of the general els of inertial This Inches nor only cstomaty ay bu ve general pice flaw within the ‘messing Arle 380 lc the IC} Satta? heater wl ace impr {ncn the comet of invesinent ules der een cameances rpc 8 he cae of lacus inthe tet of testis and ince feerptetaron of nil ‘erm snd phrase “Among the general principles with Broad spe af aplication, the rule mene observe te ul good ih pecly perineal of fg Invetent and investment eburals have ad eure to hip” kn a this ernphas on god Fah relat the Fundamental snc of he oncep forthe undewanding fal eligaons in nrontaol a Me spe Stal hone, the sujet mae ofthe el cl may dice una {pp the pla vew fhe longterm elaonship which the ver Provides most the rauied resures athe ote ofthe post expecting to recevea i eur na abe atop within the gal odo the at fate hereafter, The final lng er ik ofthe invest ds seal earl lary inthe precio of good Fath without which insstmen Rowe weld be ampere me ee sme ee a ade eae mare edn in band aie panache eg een Sinton gach an of Ta Ah Ay ‘heey nt coment andin cg kfc prpne ™ et lh Epo Po