Lecture Series on International Investment Law: Lectures 16 to 30

Just before the Second Wave of Covid19 in India, we started off a lecture series introducing international investment law. As was stated in a previous post in this blog, the objective of the lecture series was to cover the fundamentals of International Investment Law and making the subject more accessible through short lectures (approximately 8 to 10 minutes). The lecture series is not restricted to any particular jurisdiction, although many of the examples provided relate to India. Overview of the first fifteen lectures is contained in this post. This post covers lectures 16 to 30.

Chapter 3: Substantive Standards of Protection I

Lecture 15: Fair & Equitable Treatment: An Introduction

In this lecture, we discuss one of the most widely used substantial protections under international investment law, that is, Fair and Equitable Treatment, or FET. We also deal with the FET clause in the India-UAE BIT, 2013 and the Brazil India BIT, 2020

Lecture 16: Fair & Equitable Treatment: Preliminary Aspects

This lecture deals with certain preliminary aspects of the FET standard, including its brief history and its nature and function.

Lecture 17: More on Fair and Equitable Standards

This lecture addresses issues such as whether FET standard is a part of customary international law relating to minimum standard of treatment and the evolution of FET standard

Lecture 18: India and the FET Standard

This lecture looks at India’s skirmishes with the FET standard in the White Industries Award and the Cairn BIT Award. Note that the purpose of this lecture series is to introduce readers to the subject and therefore, this lecture does not critically examines the Award insofar as the FET standard is concerned but would only provide a descriptive comment.

Lecture 19: Introduction to Full Protection and Security Standard

This lecture introduces the full protection and security standard. It talks about how the standard finds its place in certain Indian BITs and about the first case in BIT history, which pertained to this standard.

Lecture 20: More on Full Protection and Security Standard

Lecture 20 discusses the scope of the FPSS and provides an overview of its features.

Lecture 21: Full Protection & Security in LDA v India Arbitration

This lecture concerns the application of the Full Protection and Security standard in the Louis Dreyfus Armateurs SAS (France) v. India arbitration, which India successfully defended.

Lecture 22: Non-Impairment Standard: An Introduction

Lecture 22 discusses Non-impairment standard, which is another substantive protection in investment treaties. The lecture discusses the non-impairment.

Lecture 23: More on the Non-Impairment Standard

Lecture 23 discusses the measures that can constitute a violation of the non-impairment standard. The cases of EDF (Services) Limited v. Romania, ELSI Elettronica Sicula SpA, Siemens v. Argentina, LG&E Energy Corp v. Argentina have also been discussed.

Lecture 24: The Umbrella Clause

This lecture discusses the meaning, evolution, and variants of the Umbrella clause.

Lecture 25: More on the Umbrella Clause

This lecture discusses the case of SGS v Pakistan insofar as it relates to the Umbrella clause.

Lecture 26: Approaches to the Umbrella Clause

Umbrella clause has not received a uniform interpretation. Different tribunals, including the one in SGS v. Pakistan, have construed the clause differently.

Lecture 27: Nissan v India and the Umbrella Clause

This lecture discusses the recent case of Nissan v. India which relates to the Umbrella clause.

Chapter IV: Substantive Standards of Protection II

Lecture 28: Most Favoured Nation Standard

In this lecture, we discuss the Most Favoured Nation or the MFN standard.

Lecture 29: More on the MFN Standard

In this lecture, we cover the issues of exceptions to MFN standard and the temporal scope of the standard.

Lecture 30: MFN & Procedural Rules

In this lecture, we deal with an interesting topic under MFN-extension of MFN to procedural rules. The MFN standard has been construed to extend even to procedural provisions such as dispute resolution although MFN in itself is a substantive standard.

Lecture 2: History of International Investment Law from 1870 to 1914 (Script & Video)

Those watching this lecture series would recollect that in the last lecture, we discussed about the origins of the IIL wherein we saw that it evolved out of colonialism. We also discussed that many concepts that evolved out of colonialism and imperialism are used even in the latest of Investment treaties.

In this lecture we delve into the evolution of IIL in the first phase that is, between 1870 and 1914. But before we go further, those watching may refer to two interesting papers on the origins before 1870, one by Kate Miles, the author of the book which we referred to in last lecture, and the other by Anne-Charlotte Martineau.

The two papers are:

• Kate Miles, International Investment Law: Origins, Imperialism and Conceptualizing the Environment, 21 Colo. J. Int'l Envtl. L. & Pol'y 1 (2010); and
• Anne-Charlotte Martineau, A Forgotten Chapter in the History of International Commercial Arbitration: The Slave Trade's Dispute Settlement System, Leiden Journal of International Law (2018), page 1 of 23.

The first lecture was mainly based on Chapter I of Kate Miles book, whose content is similar to the first paper.

The second paper above is equally interesting: it traces the origins of the present system of IIL and Dispute resolution system in IIL to slave trade in the 16^th to 18^th centuries. It states that the institution of judges-conservators established to resolve disputes out of slave trade was the precursor to arbitral tribunals established for resolving disputes through international arbitration.

Interesting conclusions are drawn in the paper: one, contrary to the widely held belief that international law came to rescue slaves by advocating its abolition, international law created, supported and perpetrated the slave trade regime for at least three centuries.

The author speaks of ‘private’ dimensions of formal and informal imperialism. This important and interesting. Colonialism has its roots in corporations effecting economic and political control over the third world. East India Company in India an apt example. 

The author is therefore correct in saying that : “There is nothing neutral, normal or apolitical in investment law and adjudication.”

So, the evolution of IIL is not about good faith, treaties and precedents, but about blood, sweat and tears.

Now, coming to the evolution of IIL from 1870, this phase saw two prominent developments.

One was the entrenchment of the expropriation doctrine. Standards for compensation due to expropriation were developed. For example, the Convention of Friendship, Commerce and Extradition Between the United States and Switzerland, 1850 stated in Article 2(3):

“In case of [] expropriation for purposes of public utility, the citizens of one of the two countries residing or established in the other shall be placed upon an equal footing with the citizens of the country in which they reside, with respect to indemnities for damages they may have sustained.”

Thus, the standard for compensation on account of expropriation was national treatment.

In this phase, expropriation was considered lawful if certain conditions were met. These conditions were:

a) it was carried out for a public purpose;

b) it was not arbitrary or discriminatory; and

c) prompt, adequate, and effective compensation was paid.

It would be interesting to note that the phrase “prompt, adequate, and effective” was coined in 1940 by United States Secretary of State Cordell Hull in diplomatic correspondence with Mexico. This became the ‘Hull Formula’. Interestingly, Hull was awarded the Nobel Peace Prize in 1945 for playing a pivotal role in establishing the United Nations.

Another development in this period was the entrenchment of the international minimum standards and the national treatment doctrines and the tension between these concepts.

While US and other European powers subscribed to the international minimum standard rule, the countries in the third world, especially the Latin American nations advocated the national treatment rule. Their argument was that the international minimum standards rule impinged on their sovereignty and foreign persons could not be afforded a treatment that was beyond what a state offered to its citizens.

National treatment was also the second limb of the famous Calvo Doctrine. This doctrine arose from the ideas of Carlos Calvo, a jurist from Argentina, first published in 1868.

The first limb of the Calvo doctrine was that state sovereignty precluded states from interfering into the affairs of another state, either through diplomatic channels or by force.

Although the Calvo doctrine came to be looked upon with disfavour by the Western nations, it has had a considerable influence in the evolution of IIL.

This is possibly a precursor to the local exhaustion rule in international investment law.

More on the first phase in the next lecture.

Lecture Series on International Investment Law: Lectures 1 to 15

Recently, we had commenced a lecture series introducing the subject of International Investment Law. We have completed the first fifteen lectures of the lecture series. The lecture series is aimed at covering the fundamentals of International Investment Law and making the subject more accessible through short lectures (approximately 8 to 10 minutes). The lecture series is divided into various chapters addressing specific topics and each chapter contains several lectures.

In this post, we will provide links to the first fifteen lectures with a brief overview of each video.

[Note: The first few videos have feeble audio. Readers may use headphones. For subsequent videos, laptop's inbuilt speaker will do.]

Chapter 1: Chapter 1 : History & Nature of International Investment Law

Lecture 1: Origins of International Investment Law before 1870 (click on the lecture name)

Historically, International Investment Law has evolved in three distinct phases in the modern history: Phase I is the period from 1870 to 1914; Phase II is the inter-war period, between 1918 to1945, and phase III is the post-war period, beginning from 1945. But, even before the first phase (1870), certain developments in international politics have had influence in the evolution of IIL. This lecture deals with those developments.

Lecture 2: More About Origins & A Bit about Phase I

In this lecture we delve into the evolution of IIL in the first phase that is, between 1870 and 1914. But before we go further, those watching may refer to two interesting papers on the origins before 1870, one by Kate Miles, the author of the book which we referred to in last lecture, and the other by Anne-Charlotte Martineau.

Lecture 3: Inter-War Period & Evolution Thereafter

In this lecture, we will see how International Investment Law evolved during the inter-war period, between 1914 and 1945,. We will also discuss its evolution during the post-II world war phase till 1964.

Lecture 4: The Era of Dichotomy

In the last lecture, we saw that there are four phases through which IIL evolved after the World War II. We saw that the first phase, known as the era of infancy spanned up to 1964. In this lecture, we look at the Era of Dichotomy from 1965 to 1987.

Lecture 5: The Eras of Proliferation and Reorientation

In this lecture, we discuss how International Investment Law evolved through the eras of proliferation (1990-2007) and reorientation (2008- till date).

Chapter 2: Investment Treaty/ Contract

Lecture 6: Nature of Foreign Investment

In the first five lectures we introduced the subject and provided a historical overview of how IIL evolved. In this lecture, we will have a look at the nature of foreign investment.

Lecture 7: What is Investment?

In this lecture, we will answer the fundamental question: what is investment?

Lecture 8: What is Investment? Part II

In the last video, we discussed the concept of “Investment” and analysed two different types of definition of investment, taking the India-UAE BIT and the Brazil- India BIT as examples. We also saw the general practices regarding the definition of investment. In this video, we’ll discuss the ICSID practice and the Salini test on the definition of investment.

Lecture 9: Who is an Investor?

In this video we will be dealing with another important threshold question: Who is an investor?

Lecture 10: Natural Persons as Investors

In the last lecture, we discussed certain general aspects relating to the question: “who is an investor?”. In this lecture, we will look at how the question is answered from the perspective of natural persons.

Lecture 11: Legal Persons as Investors

In this, video, we will discuss various tests to determine the nationality of juridical persons.

Lecture 12: Who is an Investor? Treaty Shopping

In this lecture we will deal with an important aspect relating to the question "who is an investor?": Treaty shopping.

Lecture 13: Shareholders as Investors

The general principles regarding investor and investment apply equally to shareholders. This lecture deals with the law relating to whether shareholders could initiate investment treaty claims.

Lecture 14: Elements of an Investment Treaty

In this lecture, we will see the core elements of an investment treaty. We will also use the India-UAE BIT, 2013 and the Brazil India BIT, 2020 to provide an idea of how these provisions look in practice.

Chapter 3: Fair and Equitable Treatment

Lecture 15: Fair & Equitable Treatment: An Introduction

In this lecture, we will discuss one of the most widely used substantial protections under international investment law, that is, Fair and Equitable Treatment, or FET.

History of International Investment Law: Lecture Series on Introduction to International Law

In the past three months, we have been uploading a lecture every fortnight on the broad purpose of providing an introductory overview to international investment law. The purpose of these lectures is to make the subject more accessible. The lectures uploaded so far can be accessed from here. The first five lectures provide a brief historical overview of the subject. The transcript of the first lecture on the origins of international investment law before 1870 are dealt with in this post.

Lecture 1: Origins of International Investment Law before 1870

Lecture Link: https://youtu.be/_x57zCsHOxU

Hello and welcome to the video lectures on the Introduction to International Investment Law.

In this lecture series, we would be covering about 10-12 broad topics on the subject, and these would include important and controversial topics such as expropriation, Fair and Equal Treatment and Most Favoured Nation principles, as well as the latest developments, both in international investment law and international investor-state arbitration.

This lecture series can be taken up by students and others who are interested in getting an introductory overview of the subject.

Moving on to the first chapter of this series, “Nature & Evolution of International Investment Law”, we can see that historically International Investment Law has evolved in three distinct phases in the modern history:

Phase I is the period from 1870 to 1914; Phase II is the inter-war period, between 1918 to1945, and phase III is the post-war period, beginning from 1945.

But, even before the first phase, certain developments in international politics have had influence in the evolution of IIL.

For example, in 1778, USA and France concluded the first commercial treaty, known as the Treaty of Alliance; in fact there were many treaties and they are collectively called Treaties of Alliance. The treaty importantly provided for commercial relationship between both countries.

Then followed the various Friendship, Commerce and Navigation Treaties entered into between countries, especially between US and others. Take the example of the United States–Paraguay Treaty of Friendship, Commerce and Navigation of 1859.

These treaties protected individual and other rights such as:

• Protection of individuals and their property,
• freedom of movement and worship,
• assuring rights to trade and to engage in commercial enterprise,
• granting national treatment and most-favoured-nation status,
• allowing for access to ports, and
• granting navigation rights through territorial waters

One would note that even the recent most treaties guarantee these rights.

There were also Unequal or capitulation treaties. These conferred one-sided rights on the dominant conquering colonizer. These were the products of actual or threatened use of force by the dominant powers, especially those from the West. Although these treaties were couched in neutral language, they were actually meant to protect the rights, property and investment of the colonizer.

Examples of such treaties include treaties between Western powers and China between 1840s to 1860s.

In fact, it has been argued that the imposition of such unequal treaties was a key legal strategy in the European colonization. Key features of these treaties included:

• Travel prerogatives of foreign traders,
• the securing of extensive trading and investment rights,
• non-discriminatory commercial access to the host state,
• grant of concessions to foreign companies,
• the protection of Christian missionaries,
• leasing or ceding of territory to foreign states, and
• governance powers, including establishment of parallel systems of governance.

Thus, the origins of the IIL themselves have been tainted by colonialism and the superstructure of IIL was built with colonialism and power dynamics between nations as the base.

Another important aspect is the evolution of the law on diplomatic protection to alien property in the 19th and the early 20th centuries.

A new branch of international law began to emerge in the 19th century known as diplomatic protection of aliens. This concerned establishment of an internationally acceptable minimum standard for the treatment of foreign persons and foreign companies, protection of person and property, etc. Violation of these standards meant that the host state was responsible and this meant military or other intervention by the state to which that alien belonged.

For more information on this, readers can refer to the first chapter of the book by Kate Miles titled “The Origins of International Investment Law: Empire, Environment and the Safeguarding of Capital” and published by the CUP in the year 2013.