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.