The Journal of

WORLD INVESTMENT & TRADE

ABSTRACTS 

Karl P. Sauvant: New Sources of Fdi: The Brics—Outward Fdi from Brazil, Russia, India and China

Foreign direct investment integrates production activities internationally through the corporate production systems established by transnational corporations. All countries are involved in this “deep integration” process.  Brazil, the Russian Federation, India, and China (the Brics), have participated in it primarily through inward investment.  But firms from these four countries are becoming sources of outward foreign direct investment (as part of the growth of such investment from emerging markets in general), to establish portfolios of locational assets as increasingly important sources of their international competitiveness.  While these countries are on the verge of becoming important outward investors, many of their firms still need to acquire the necessary know-how and their governments need to put in place an appropriate enabling framework.

Karl P. Sauvant is the former Director of the Division on Investment, Technology and Enterprise Development of the United Nations Conference on Trade and Development in Geneva, Switzerland, and the initiator and principal author of Unctad’s World Investment Reports, 1991–2005.  He is also Guest Professor at Nankai University in Nankai, China.

Nick Gallus: The Influence of the Host State’s Level of Development on International Investment Treaty Standards of Protection

A series of recent arbitral decisions interpreting investment treaties have come to conflicting conclusions on the effect of the level of development of the host country on the standard of protection that foreign investors can expect. Consequently, despite the language of the investment treaties, those investing in developing countries still do not know the level of protection they can expect. They do not know the risks to which they are exposing themselves and, therefore, their investment’s chances of success. This article examines these conflicting decisions in the light of the origins of the modern standard of protection and the purposes of investment protection treaties to determine whether parties to investment treaties should be held to the same standard of conduct regardless of their level of development.

Nick Gallus is an Associate of Appleton & Associates, International Lawyers, Toronto, Canada, which specializes in international investment treaty arbitration. He is also the author of Nationality Requirements in Investor–State Arbitration (with Robert Wisner), which appeared in the December 2004 issue of The Journal of World Investment & Trade, Vol. 5, No. 6.

Eliza Patterson: Rethinking the Enabling Clause

A recent Appellate Body decision interpreted the Wto provisions authorizing trade preferences in favor of developing nations (the Enabling Clause) as permitting discrimination between preference-receiving developing countries based on those countries’ domestic policies. This article argues that that interpretation is inconsistent with the letter and spirit of the Enabling Clause and the Wto. It further maintains that this interpretation will in fact deter, not enhance, development. Consequently, the article recommends a series of amendments to the Enabling Clause to ensure that it operates in a manner that maximizes the benefits to developing nations and minimizes the economic cost to the global economy. Key among the changes would be a requirement that tariff preference schemes cover all developing nations equally and that developed nations be required to extend bespoke technical assistance and capacity building to developing nations.

Eliza Patterson holds a Juris Dr. from Harvard.  She is Senior Analyst at Market Solutions Llp in Washington, D.C. and an Adjunct Professor of Law at Syracuse University, Columbia University, Washington & Lee School of Law, Johns Hopkins University and George Washington University School of Law.

Omar E. García-Bolívar: The Teleology of international Investment Law—The Role of Purpose in the Interpretation of International Investment Agreements

This article examines the effect that the purpose of international investment agreements has on their interpretation. By underlining the degree to which an agreement’s content pertaining to its objectives, rationale and purpose influence its interpretation, policy makers and negotiators of future agreements can make the stated purposes consistent with the agreement’s implicit objectives. While arbitrators are largely limited in the extent to which they are able to look beyond an agreement’s text, an understanding of the purposes of these agreements is useful in making the case against strictly formalistic arbitral interpretations and contributes to the case for a more holistic approach to interpretation.

Omar E. García-Bolívar is an international consultant in public policy and President of BG Consulting, Inc., a consulting firm based in Washington, D.C., specializing in development policies, business development and investment disputes. He is admitted to practice law in Venezuela, New York and Washington, D.C. and before the U.S. Court of International Trade and is a Member of the panel of arbitrators of Icsid and Wipo and listed as an arbitrator with the Icc.  He is also the author of Foreign Investment Disputes under Icsid—A Review of its Decisions on Jurisdiction, which appeared in the February 2004 issue of The Journal of World Investment & Trade, Vol. 5, No. 1

Olivia Bennaim-Selvi: Third Parties in International Investment Arbitrations—A Trend in Motion 

International investment arbitrations have brought changes to the field of international arbitrations. The presence of States as parties has raised several issues, amongst which is that of the public interest concern. The need for a lesser degree of confidentiality has thus been felt and, with it, the desire for non-parties’ participation in the disputes. This article examines the evolution towards increased transparency through the prism of third-party participation. On the background of international commercial arbitrations and the World Trade Organization’s dispute settlement rules and practice, the analysis bears on the recent trends in third-party participation in international investment arbitrations. The development is marked by new arbitration rules, the increased liberal interpretation by arbitral tribunals of existing rules of international investment arbitration, and State practice. In its final part, the study establishes the grounds for enabling third-party participation as well as the advantages and disadvantages such procedural evolution may yield.

Olivia Bennaim-Selvi is a Teaching assistant and Ph.D. candidate at the Department of Public International Law, Faculty of Law of the University of Geneva, Switzerland.

Marc Iynedjian: Reform of the Wto Appeal Process

Contrary to most other international procedural treaties, the World Trade Organization’s Dispute Settlement Understanding (Dsu) institutes a two-tier system. Trade disputes between Wto Members are adjudicated by panels, the decisions of which may be reviewed by its Appellate Body. The Dsu is currently being renegotiated. This article aims to provide suggestions for these renegotiations, focusing on the reform of the appellate procedure laid down in the Dsu. It especially considers whether the Wto’s two-tier dispute settlement system is really desirable and whether the move to a single-tier mechanism would not be preferable. It also deals with the most significant systemic flaw of the Wto dispute settlement system, namely the absence of any possibility of remand from the Appellate Body to the panels. The main conclusion of this article is that the Wto’s current two-tier dispute settlement system is not desirable. The removal of the Appellate Body, combined with the transfer of its human and financial resources to the panel process, would improve the efficiency of the Wto dispute settlement system.

Marc Iynedjian holds an LL.M. from Columbia University Law School (2005) and is currently Visiting Attorney with Chadbourne and Parke Llp in New York.