The Journal of

WORLD INVESTMENT & TRADE

ABSTRACTS

Florian Haugeneder: Corruption in Investor-State Arbitration

 Although corruption is an old phenomenon, few investor-state arbitrations deal with corruption as a substantive issue because corruption could not be proved. The Icsid award World Duty Free v Kenya is the first published award in an investor-State arbitration that avoided a contract because it was procured by corruption. This article examines the impact of corruption allegations on the various stages of an investor-state arbitration: Corruption may be raised as substantive and procedural defence in contract-based arbitration as well as in treaty based arbitration. In treaty-based arbitration, corruption will often be a bar to the jurisdiction of the tribunal, while in contract-based arbitration corruption will generally entail the substantive invalidity of an investment contract. However, corruption is not only a defence of the host state, but may also be the cause of action for a damages claim of the investor. There is no different standard of proof for corruption allegations than for other violations of the treatment standards in investment protection treaties.

 Florian Haugeneder is an attorney in the Dispute Resolution group at Wolf Theiss, Attorneys at Law in Vienna , Austria .

Rahim Moloo and Alex Khachaturian: Foreign Investment in a Post-Conflict Environment

Foreign direct investment can play an important role in promoting economic growth in post-conflict states.  In order to attract the benefits of foreign investment, a host country must ensure foreign investors that they can safely invest there.  In post-conflict economies, the safety concerns, combined with a general distrust of post-conflict governments, are among the key considerations for foreign investors.  However, foreign investors recognize that new and untapped opportunities become available in a post-conflict context.  This article first seeks to identify certain issues relating to foreign investment that, from the perspective of the international lawyer, both post-conflict governments and potential investors in those countries should be aware of.   The second part of this article illustrates some of these issues in practice by considering the specific case study of Iraq . 

Rahim Moloo, B.Sc. (Queen’s University, First Class Honors), LL.B. (University of British Columbia), LL.M. (New York University School of Law) is a Special Legal Consultant in the International Arbitration Group at White & Case in Washington, D.C.

Alex Khachaturian, B.A. (University of Michigan, with distinction), M.S. (Suffolk University), J.D. (University of Connecticut School of Law, with honors) is an Associate in the Litigation & International Arbitration Groups at White & Case in Washington, D.C.

An Chen and Dong Chen: What Should Be China-s Strategic Position in the Establishment of New International Economic Order? With Comments on Neo-Liberalistic Economic Order, Constitutional Order of the Wto and Economic Nationalism’s Disturbance of Globalization

Since the temporary decline of the movement of establishing New International Economic Order (Nieo) from 1980s, various theories are mushrooming in international law community, such as ‘Neo-liberalistic Economic Order’, ‘Constitutional Order of the Wto’ and ‘Economic Nationalism’s Disturbance of Globalization’, etc. By analyzing and criticizing these theories, this article is aiming to emphasize that campaigning for the establishment of the Nieo is the common struggling goal for billions of people of the weak states. China should have an accurate comprehension of Deng Xiaoping’s foreign policy and be consistent with her strategic positioning as a reformer of the existing international economic order and also as an active promoter in the establishment of the Nieo.

An Chen is Professor of the International Economic Law Institute of Xiamen University, Supervisor for Doctoral Candidates, and Chairman of the Chinese Society of International Economic Law.

Dong Chen is Associate Professor & Dean Assistant, School of Law , Sun Yat-sen University . He holds a Ph.D. in International Economic Law, Xiamen University , and Bachelor of International Economics, Peking University .

Hakim Ben Hammouda, Stephen N. Karingi, Angelica E. Njuguna and Mustapha Sadni Jallab: Determinants of Diversification in Africa —A Continental Analysis

The objective of this paper is to analyze the economic and institutional variables that are significant determinants of diversification in Africa . An empirical investigation of the determinants of diversification in Africa based on the theoretical underpinning established from the existing literature leads to some very useful conclusions. With diversification as an endogenous variable, the study has established that diversification process in Africa is highly influenced by investment, the per capita income, level of openness, macroeconomic policy stance and the institutional framework under which the diversification efforts take place. Two stages of diversification with respect to investment were confirmed for Africa , with a U-shaped relationship between investment levels and diversification. The turning point for Africa was found to be at 12.5 per cent of Gdp, indicating that if the continent was to deepen its diversification process, the monotonically declining point of the U-curve needs to be lengthened, implying more diversification, thus requiring the turning point at a much higher level of investment to Gdp ratio. The second important result relates to income effects on diversification. Like in the case of investment, two stages of diversification as established in the literature were confirmed with the African sample. Thus, a per capita income level of US$ 1,667 was found to be the turning point for the diversification process in Africa .

Hakim Ben Hammouda is Director of the Institute of Training and Technical Cooperation Division of the Wt.in Geneva, Switzerland.

Stephen N. Karingi is a staff member of the Trade, Finance and Economic Development Division of the United Nations Economic Commission for Africa in Addis Ababa , Ethiopia .

Anjelica E. Njuguna is a staff member of the Trade, Finance and Economic Development Division of the United Nations Economic Commission for Africa in Addis Ababa , Ethiopia .

Mustapha Sadni Jallab is an economist with the Wto in Geneva , Switzerland .

William Lawton Kirtley: The Transfer of Treaty Claims and Treaty-Shopping in Investor-State Disputes

This article examines the question of whether an investor from a State that has not enacted a Bilateral Investment Treaty (“Bit”) with a host State of investment may or may not assign a treaty claim to a company located in a third State that has enacted a Bit with this host State of investment, in order to take advantage of said Bit and to bring a treaty claim against this host State of investment.  In other words, this article examines circumstances where “treaty-shopping” may or may not be permissible, especially in the Icsid (and Uncitral) contexts.  To this end, this article reviews and analyses the most pertinent arbitral awards dealing with the assignment of treaty claims and “treaty-shopping”, in order to determine when the assignment of treaty claims might be permissible and the conditions under which such assignments should arguably be made to avoid charges of “treaty-shopping.”

William Lawton Kirtley, Mayer Brown Paris, Associate, J.D. Columbia University , Maîtrise en Droit (Hons.) Paris 1 – Panthéon-Sorbonne, B.A. (Hons.) Harvard College, admitted to the Paris, New York and Washington, D.C. Bars.

Badar Alam Iqbal and Farha Naz Ghauri: Impact of Global Financial Crisis on Fdi Inflows

One of the most burning issues that the globe is facing today is serious financial crisis of greater magnitude affecting global economy in general and developed economies in particular in a big way. The latest United Nations Conference on Trade and Development (Unctad) for the year 2008 has opined that the present financial crisis in the developed economies namely in the US and European countries will affect Fdi inflows to major destinations especially emerging economies. These trends may in turn affect the rate of growth and development in the global economy in general and developed and emerging countries in particular. The present paper discusses the effect of meltdown on the inflows of Fdi at global level i.e. developed and developing countries, Asia in general and emerging economies namely India in particular.

Dr. Badar Alam Iqbal is Chairman of the Department of Commerce of Aligarh Muslim University in Aligarh , Uttar Pradesh , India .

Dr. Farha Naz Ghauri is Associate Professor in the Department of Commerce of Dr. Baba Sahib Amadkar Marathwarha University in Aurungabad, Maharashtra , India .

Georgios I Zekos: Precedent and Stare Decisis by Arbitration and Courts in Globalization

Arbitration was the central dispute mechanism a long time earlier than the establishment of state courts. Precedent, or stare decisis, refers the doctrine under which a court, when deciding a point of law, generally follows to a holding of a prior court on that point if that prior court is equal or superior in the judicial hierarchy. While the doctrine is regarded as serving rule-of-law values, observance to precedent has never been considered as itself an authoritarian rule of law. Arbitration creates its own arbitration-precedent. Arbitrators serve an important law-making function because it is by now apparent that at least some arbitration systems engender precedent. The interaction of societies causes changes in society’s life which have to be endorsed by the rule of law and so the existence of formal and informal dispute systems is fundamental for the existence of the rule of law because both systems of dispute contribute into the shaping of its content. Flexibility and adaptation should be the principle in application of the law rather than adherence to a strict precedent which suits more to arbitration rather than courts. Litigation and arbitration can go hand in hand and so a society can rely not only on law but also on norms. Presently it seems that judges have managed to establish courts as the single independent dispute mechanism without a solid proof that they offer more justice than arbitration. Adherence to a weak precedent is the most effective way to adjust successfully and comply with the needs of the new economy in globalisation in order to achieve justice.

Georgios I Zekos, OGA, Tripoli , Greece , BSc(Econ), JD, LLM, PhD.