The Journal of

WORLD INVESTMENT & TRADE

ABSTRACTS 

The 10th Geneva Global Arbitration Forum: Settling Disputes on a Shrinking Planet

This issue publishes substantial parts of the proceedings of the 10th Geneva Global Arbitration Forum held on 3 and 4 December 2003, which was sponsored by The Journal of World Investment & Trade. Coming at a time when globalization of investment and the thousands of existing investment treaties are producing an always greater demand for investment services but also when this surge in demand lays bare the flaws of the system, the debates we reproduce here show how much room there is for improvement on the part of all concerned—the governments, the parties and, yes, the arbitrators.

Kálmán Kalotay: Will Foreign Direct Investment Take Off in the Russian Federation?

With its size and natural resources, the Russian Federation has the potential to attract all types of foreign direct investment (Fdi) but, up until recently, has attracted Fdi flows below that potential. This has been largely due to the influence of local capitalists (the “oligarchs”) blocking the sales of assets to foreign investors. Realizing the Russian Federation’s potential for attracting Fdi and sustaining investor interest will depend largely on whether or not foreign investors will be allowed to acquire equity shares in or even ownership of local firms. From this point of view, the recent weakening of the oligarchs has a double-edged impact: while it potentially removes one obstacle to inflows of Fdi, it raises questions about ownership rights and respect of the principle of pacta sunt servanda. This article therefore analyses how and to what degree bilateral investment agreements signed by the Russian Federation and the country’s entry into the World Trade Organization may provide the necessary guarantees for foreign investors.

Kálmán Kalotay is Economic Affairs Officer at the United Nations Conference on Trade and Development in Geneva, Switzerland. He is also the author of the following articles which have appeared in The Journal of World Investment: The Contribution of Foreign Direct Investment to Transition Revisited, Vol. 2, No. 2, June 2001; Outward Foreign Direct Investment and Governments in Central and Eastern Europe—The Cases of the Russian Federation, Hungary and Slovenia, Vol. 3, No. 2, April 2002; and Central and Eastern Europe—Export Platform for Investors?, Vol. 3, No. 6, December 2002.

Pia Acconci: Determining the Internationally Relevant Link between a State and a Corporate Investor—Recent Trends concerning the Application of the “Genuine Link” Test

In principle, international law does not determine the relevant link between a State and a corporation but refers to the domestic law of each country for this purpose. Consequently, more than one link may be relevant at an international level. As only one link can be relevant for purposes of international law, however, the problem arises as to how to decide which link should prevail and what criteria should be used to this end—either the criteria used in the various domestic legal systems or other criteria pertaining to international law. In the 1970 Barcelona Traction case, the International Court of Justice relied on two traditional formal criteria—place of incorporation and siège social—to determine the relevant link. This article assesses subsequent international practice to determine whether or not it is in line with the Court’s conclusion. Especial attention is paid to a relatively new development in international business practice: that foreign investments at present are made mainly by multinational enterprises operating as groups of companies.

Pia Acconci is Associate Professor of European Union Law and International Economic Law at the University of Teramo in Teramo, Italy. She is also the author of The Promotion of Responsible Business Conduct and the New Text of the Oecd Guidelines for Multinational Enterprises, which appeared in The Journal of World Investment, Vol. 2, No. 1, March 2001.

Guiguo Wang: The China–Hong Kong Closer Economic Partnership Arrangement Revisited

The China–Hong Kong Closer Economic Partnership Arrangement (Cepa) was entered into on 30 June 2003. One of its purposes was to resolve the economic difficulties that Hong Kong is currently facing. As it stands, the Cepa may not be able to accomplish such a goal. The Cepa provides for a number of mutually applicable concessions between the contracting parties. Among them is the non-application of antidumping, countervailing and safeguard measures, which is apparently inconsistent with the World Trade Organization’s most-favoured-nation and non-discrimination principles. This is so despite the fact that the Cepa itself is in compliance with Wto rules and principles. The legal status of the Cepa under Chinese law is also unclear. Together with the lack of a comprehensive and detailed arrangement for dispute settlement, implementation of the Cepa remains uncertain.

Guiguo Wang is Distinguished Professor of Law at Hunan Normal University, Changsha, China; Chairman of the Hong Kong Wto Research Institute; Professor (Chair) of Chinese and Comparative Law at the School of Law of City University of Hong Kong; and an Associate Editor of The Journal of World Investment & Trade. He is also the author of the following articles which have appeared in The Journal of World Investment: The New Neo-Confucianism and International Economic Law, Vol. 1, No. 1, July 2000; The Globalized Economy in Quest of Globalization of the Rule of Law—From the Perspective of the National Treatment Principle; Vol. 2, No. 1, March 2001.

Omar E. García-Bolívar: Foreign Investment Disputes under Icsid—A Review of its Decisions on Jurisdiction

This article deals with the jurisdiction of the International Centre for Settlement of Investment Disputes (Icsid) tribunals, an issue usually dealt with in the course of investment disputes submitted to the Icsid. The Icsid Convention sets the requirements for jurisdiction, but many concepts and criteria related to those requirements are not defined. The decisions on jurisdiction of Icsid arbitral tribunals have shed considerable light in this field. This has been the case with the definition of “investment”, the identification of when a dispute “arises directly from an investment”, the determination of when an investor is “an investor of another contracting State”—along with the issue of foreign control and continuity of nationality—the identification of when a private entity controlled by the State is considered “an organ of the State”, the holdings on “consent” and other relevant issues.

Omar E. García-Bolívar is a member of the panel of arbitrators of the Icsid and the World Intellectual Property Organization; an international consultant in public policies; and President of BG Consulting, Inc., a consulting firm based in Washington, D.C. specialized in development policies, business development and investment disputes.