The Journal of

WORLD INVESTMENT & TRADE

ABSTRACTS 

Guiguo Wang: The Across-the-Strait Relations against the Background of Globalization

Economic globalization is the main trend of the world today.  As part of this economic integration, regional arrangements and free trade agreements (Ftas) have mushroomed after the establishment of the World Trade Organization, with the purpose of giving and maintaining special treatment to the traditional allies of the parties concerned.  The relationship between the Mainland of China and Taiwan cannot avoid this trend, even though both sides belong to the same country, China.  Over the last two decades, the economic exchanges across the Taiwan Strait have grown rapidly, yet no formal framework has been set up for regulating such exchanges.  This article argues for the creation of an Fta-type economic and trade arrangement between the Mainland of China and Taiwan and offers a tentative outline.

Guiguo Wang, J.S.D. (Yale), LL.M. (Columbia), is an Associate Editor of The Journal of World Investment & Trade; Professor (Chair) of Chinese and Comparative Law at the City University of Hong Kong; Distinguished Professor of Law at Hunan Normal University, Changsha, China; Chairman of the Hong Kong Wto Research Institute; Member of the International Academy of Comparative Law; and Arbitrator of China International Economic and Trade Arbitration Commission. He is also the author of previous several articles published in the Journal of World Investment & Trade, the most recent of which, Sino–U.S. Textile Disputes—Legal Perspectives, appeared in Volume 6, Number 1, February 2005

Locknie Hsu: Mfn and Dispute Settlement—When the Twain Meet

Bilateral and regional trade and investment treaties are increasing in number, and many carry most-favoured nation (Mfn) clauses. These clauses seek to obtain Mfn treatment by treaty parties for investors who are covered under the agreements. In Maffezini v. Kingdom of Spain, a significant investor–State arbitration arising out of a bilateral investment treaty, Mfn treatment was ruled to cover treatment in relation to dispute settlement processes, beyond substantive economic treatment. Subsequent international arbitration tribunals have since been wrestling with the issue. This article examines the state of play on this important issue and suggests ways for States to ensure some certainty in planning for disputes.

Locknie Hsu is Associate Professor in the Faculty of Law at the National University of Singapore.

Laura J. Loppacher and William A. Kerr: Investment Rules—The U.S. Agenda in Bilateral Trade Agreements

The United States is the world economy’s largest source of foreign direct investment. Protecting those investments in an important policy goal of the U.S. government.  A central component of this policy is fostering international agreements governing the treatment of foreign investors.  Ideally, strong multilateral rules would be created, but this has proven elusive thus far.  As a result, the U.S. government has turned to bilateral investment treaties.  Investment chapters are also included in almost all U.S. bilateral or regional free trade agreements.  The United States enjoys unequal power when negotiating these agreements, which could result in significant concessions being included in the final agreement.  Thus, the recent focus on regional or bilateral free trade agreements negotiated during the Administration of President George W. Bush could significantly alter the investment rules of U.S. trade partners.  This article examines the history of multilateral attempts to create investment rules and the U.S. bilateral program to discern the impact that free trade agreements are having on the domestic policies of trading partners toward foreign direct investment.

Laura J. Loppacher is Research Associate at the Estey Centre for Law and Economics in International Trade in Saskatoon, Saskatchewan, Canada.

William A. Kerr is Van Vliet Professor at the University of Saskatchewan, Canada; and Senior Associate at the Estey Centre for Law and Economics in International Trade in Saskatoon, Saskatchewan, Canada.

Max Gutbrod and Steffen Hindelang: Externalization of Effective Legal Protection against Indirect Expropriation

At a time when international investor–State disputes have become an effective weapon against maltreatment of foreign investment, what do the national legal orders of developing countries actually have to say about the protection of foreign investment? Unfortunately, one has to say, not much. In fact, they mostly seem to fail to live up to the standards required by international investment agreements. This article looks at six typical challenges for foreign investment caused by acts of the administration, focusing on the issues of discrimination, mala fide and lack of transparency, and discusses the response of national and international rules applicable to the situation of indirect expropriation.  The authors’ prediction is that if developing countries like Russia and, for instance, Argentina, do not start quickly living up to the standards required by international investment agreements, they might face their national legal orders being severely affected by foreign investment disputes. Such conflicts, which earlier had clearly an “internal component”, would increasingly become international and, in this sense, be externalised.

Max Gutbrod, Dr. jur. (Munich), Rechtsanwalt (German lawyer), is a Partner at Baker & McKenzie in Moscow and has advised on many investment being made in emerging markets as well as some international arbitration proceedings.

Steffen Hindelang, Ref. jur. (Marburg), LL.M. (Sheffield), is a Research Fellow, Lecturer and Doctorial Candidate in the Faculty of Law at the Eberhard-Karls-University in Tübingen, Germany. He is also the author of  Bilateral Investment Treaties, Custom and a Healthy Investment Climate—The Question of Whether Bits Influence Customary International Law Revisited, which appeared in The Journal of World Investment & Trade, Vol. 5, No. 5, October 2004.

Abdullah Al Faruque: The Rationale and Instrumentalities for Stability in Long-Term State Contracts—The Context for Petroleum Contracts

The discourse on stability of long-term State contracts such as petroleum agreements revolves around how to resolve the tension between the sovereign right to regulate the foreign investment and the necessity to protect the legitimate interests of foreign investors. The irreversible nature of investment in the petroleum sector, and the political and commercial
risks inherent in petroleum projects necessitates stability over the life of the contract as an
essential condition for achieving economic interests for companies. The notion of stability in such long-term contracts is shaped by both legal and extra-legal norms. Stability mechanisms in legal, contractual and economic forms are needed to counter these political, fiscal and commercial risks in petroleum contracts.

Abdullah Al Faruque, Ph.D. (Cepmlp), is Assistant Professor in the Department of Law of the University of Chittagong, Bangladesh.

Chika B. Onwuekwe: Reconciling the Scramble for Foreign Direct Investments and Environmental Prudence—A Developing Country’s Nightmare

This article examines the manner in which most developing countries (DCs) rush to accept foreign direct investment (Fdi) and projects funded by multinational financial institutions (Mfis) without adequately considering their environmental impacts. Even where DCs desire to conduct environmental impact assessments on potential investments or projects, they lack the necessary tools and manpower skills to execute them.  The DCs’ predicament is worsened by the huge debts most of them owe, coupled with lack of purposeful leadership.  Hence, this article contends that, to date, DCs lack the ability to make unbiased choices in their quest to attract and retain sustainable investments or projects.  As such, they fail to reconcile attracting Fdi or Mfis’ projects and environmentally sound investments.  In the process, their natural resources, which should be a source of wealth and development for them, become a source of impoverishment due to over-exploitation.

Chika B. Onwuekwe, LL.B (Awka), LL.M (Lagos), LL.M and Ph.D (Saskatchewan), is Attorney-at-Law and member of the Nigerian, Calgary and Canadian Bar Associations and currently Assistant Professor of Law and Society in the Faculty of Communication and Culture of the University of Calgary, Alberta, Canada.

Chun Huiping: China–Asean Investment Negotiations—The Substantive Issues 

China is currently negotiating with the Association of South-East Asian Nations (Asean) to establish the China–Asean Free Trade Area. The negotiation of an investment agreement between the two Parties is included. General consensus has been reached by the two Parties as to the basic contents of the future agreement. However, substantive controversies exist as to the issue of investment liberalization, including the necessity to include such liberalization, the feasibility of realizing it, and the modalities to address “progressive liberalization”. The modality debate is the unresolved problem. The author suggests modalities for the liberalization-related issues, specifically, definitions for “investor” and “investment”, market access (opening-up of industries), national treatment and pre-establishment national treatment.

Chun Huiping is Associate Professor at the Xiamen University School of Law, Xiamen, China.

Khrushchev Ekwueme: A Nigerian Perspective on a Forward-Looking Multilateral Agreement on Investment

While bilateral investment treaties and trade agreements with investment disciplines proliferate, there is no multilateral agreement on investment (Mai) of a global nature. The attempt by Oecd States to conclude a Mai reinforced questions concerning the interaction between national policy-making and international investment rule-making. Primarily, this article examines the development impact of the Oecd’s Draft Mai on developing countries using Nigeria as a reference point, and provides policy suggestions relating to the development dimension of a forward-looking Mai. It also presents the arguments for and against regulating foreign investment by means of a multilateral agreement and provides the plausible reasons why a global Mai is yet to be concluded. It rounds off by arguing in favour of negotiating a future Mai under the auspices of the World Trade Organization.

Khrushchev Ekwueme, LL.M, Dr. iur. (Hamburg), is Visiting Researcher at Harvard Law School in Cambridge, Massachusetts.