Bilateral Investment Treaty

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A Bilateral Investment Treaty (BIT) is an agreement establishing the terms and conditions for private investment by nationals and companies of one state in the state of the other. This type of investment is called Foreign direct investment (FDI). BITs are established through trade pacts.

Most BITs grant investments made by an investor of one Contracting State in the territory of the other a number of guarantees, which typically include fair and equitable treatment, protection from expropriation, free transfer of means and full protection and security. The distinctive feature of many BITs is that they allow for an alternative dispute resolution mechanism, whereby an investor whose rights under the BIT have been violated could have recourse to international arbitration, often under the auspices of the ICSID (International Center for the Resolution of Investment Disputes), rather than suing the host State in its own courts.[1]

There are currently more that 2500 BITs in force, involving most countries in the world.[2] Influential capital exporting states usually negotiate BITs on the basis of their own "model" texts (such as the US model BIT).

Contents

[edit] BITs involving the U.S.

Up to date as of November 1, 2006

In force

  1. Flag of Albania Albania: signed January 11, 1995, entered into force January 4, 1998
  2. Flag of Argentina Argentina: signed November 14, 1991, entered into force October 20, 1994
  3. Flag of Armenia Armenia: signed September 23, 1992, entered into force March 29, 1996
  4. Flag of Azerbaijan Azerbaijan: signed August 1, 1997, entered into force August 2, 2001
  5. Flag of Bahrain Bahrain: signed September 29, 1999, entered into force May 30, 2001
  6. Flag of Bangladesh Bangladesh: signed March 12, 1986, entered into force July 25, 1989
  7. Flag of Bolivia Bolivia: signed April 17, 1998, entered into force June 6, 2001
  8. Flag of Bulgaria Bulgaria: signed September 23, 1992, entered into force June 2, 1994
  9. Flag of Cameroon Cameroon: signed February 26, 1986, entered into force April 6, 1989
  10. Flag of the Democratic Republic of the Congo Democratic Republic of the Congo (Kinshasa): signed August 3, 1984, entered into force July 28, 1989
  11. Flag of the Republic of the Congo Republic of the Congo (Brazzaville): signed February 12, 1990, entered into force August 13, 1994
  12. Flag of Croatia Croatia: signed July 13, 1996, entered into force June 20, 2001
  13. Flag of the Czech Republic Czech Republic: signed October 22, 1991, entered into force December 19, 1992
  14. Flag of Ecuador Ecuador: signed August 27, 1993, entered into force May 11, 1997
  15. Flag of Egypt Egypt: signed March 11, 1986, entered into force June 27, 1992
  16. Flag of Estonia Estonia: signed April 19, 1994, entered into force February 16, 1997
  17. Flag of Georgia (country) Georgia: signed March 7, 1994, entered into force August 17, 1997
  18. Flag of Grenada Grenada: signed May 2, 1986, entered into force March 3, 1989
  19. Flag of Honduras Honduras: signed July 1, 1995, entered into force July 11, 2001
  20. Flag of Jamaica Jamaica: signed February 4, 1994, entered into force March 7, 1997
  21. Flag of Jordan Jordan: signed July 2, 1997, entered into force June 12, 2003
  22. Flag of Kazakhstan Kazakhstan: signed May 19, 1992, entered into force January 12, 1994
  23. Flag of Kyrgyzstan Kyrgyzstan: signed January 19, 1993, entered into force January 12, 1994
  24. Flag of Latvia Latvia: signed January 13, 1995, entered into force December 26, 1996
  25. Flag of Lithuania Lithuania: signed January 14, 1998, entered into force November 22, 2001
  26. Flag of Moldova Moldova: signed April 21, 1993, entered into force November 25, 1994
  27. Flag of Mongolia Mongolia: signed October 6, 1994, entered into force January 1, 1997
  28. Flag of Morocco Morocco: signed July 22, 1985, entered into force May 29, 1991
  29. Flag of Mozambique Mozambique: signed December 1, 1998, entered into force March 3, 2005
  30. Flag of Panama Panama: signed October 27, 1982, entered into force May 30, 1991. Amendment: signed June 1, 2000, entered into force May 14, 2001
  31. Flag of Poland Poland: signed March 21, 1990, entered into force August 6, 1994
  32. Flag of Romania Romania: signed May 28, 1992, entered into force January 15, 1994
  33. Flag of Senegal Senegal: signed December 6, 1983, entered into force October 25, 1990
  34. Flag of Slovakia Slovakia: signed October 22, 1991, entered into force December 19, 1992
  35. Flag of Sri Lanka Sri Lanka: signed September 20, 1991, entered into force May 1, 1993
  36. Flag of Trinidad and Tobago Trinidad and Tobago: signed September 26, 1994, entered into force December 26, 1996
  37. Flag of Tunisia Tunisia: signed May 15, 1990, entered into force February 7, 1993
  38. Flag of Turkey Turkey: signed December 3, 1985, entered into force May 18, 1990
  39. Flag of Ukraine Ukraine: signed March 4, 1994, entered into force November 16, 1996
  40. Flag of Uruguay Uruguay: signed November 4, 2005, entered into force November 1, 2006

Not yet ratified

  1. Flag of Belarus Belarus: signed January 15, 1994, not yet ratified
  2. Flag of El Salvador El Salvador: signed March 10, 1999, not yet ratified
  3. Flag of Haiti Haiti: signed December 13, 1983, not yet ratified by Haiti or the U.S.
  4. Flag of Nicaragua Nicaragua: signed July 1, 1995, not yet ratified by the U.S.
  5. Flag of Russia Russia: signed June 17, 1992, not yet ratified by Russia
  6. Flag of Uzbekistan Uzbekistan: signed December 16, 1994, not yet ratified
  7. Flag of Pakistan Pakistan: negotiations announced September 28, 2004, began February 7, 2005

Note: Many countries that do not have BITs with the U.S. are instead covered by free trade agreements.

[edit] U.S.-Panama BIT as an example

The Bilateral Investment Treaty (BIT) between the governments of the United States and Panama was signed on October 27, 1982.[3] It was the second BIT ever to be signed by the U.S., with the Egypt treaty resolved only a month prior. The 1982 Treaty protects U.S. investment and assists Panama in its efforts to develop its economy by creating conditions more favorable for U.S. private investment and thereby strengthening the development of its private sector.

Here are some of the Treaty’s key areas:

TREATMENT OF INVESTMENTS.

The nations are to maintain favorable investment conditions for each other. Each country shall treat the other’s investments as if they were made by their own nationals or companies. Each country is allowed to have exceptions to this treaty which are listed in the Annex section. These exceptions may arise from laws or regulations which are enforced in either of the countries, and they must be disclosed before the BIT is signed. The investment of nationals and companies will receive fair and equitable treatment under protection and security of that country. The protection and treatment of the investments will fall under national and international law. Neither country will impose conditions of performance requirements which specify that goods or services must be purchased only in that country.

COMPENSATION FOR EXPROPRIATION.

It is said that no investment should be expropriated or nationalized by the government unless this is done for a public purpose, is not discriminatory, done under due process of law, and offers proper compensation, equivalent to the fair market value of that investment. In the event that a national or a company of one of the countries suffers a loss in its investment in the territory of the other country because of war or other type of armed conflict, it shall not be treated less favorably, with regard to restitution or other payments for such loss, than nationals or companies of such other country.

TRANSFERS.

This guarantees the rights of an ivestor to conduct all transfers related to the investment, in and out of the country without delay. Such rights include: returns, compensations, contract payments, management expenses, dispute payments, license royalties, proceeds from liquidation and sale, etc.

INVESTMENT DISPUTE SETTLEMENT.

This part of the treaty provides ways of settling investment disputes between a foreign investor and a government. The treaty suggests initial efforts to be through negotiation and consultation but if this fails then the dispute would be settled through procedures upon which the foreign investor and the government agreed.

[edit] Notes

  1. ^ See Jarrod Wong, "Umbrella Clauses In Bilateral Investment Treaties: Of Breaches of Contract, Treaty Violations, and the Divide Between Developing and Developed Countries In Foreign Investment Disputes", George Mason Law Review (14 Geo. Mason L. Rev. 135) (2007).
  2. ^ See Rudolf Dolzer and Christoph Schreuer, Principles of International Investment Law, Oxford, 2008, p. 2. Also see UNCTAD, World Investment Report (2006) XVII, 26.
  3. ^ "Treaty Between the U.S. and Panama Concerning Protection and Treatment of Investments of 1982"; See also "Protocol Amending Investment Treaty with Panama of 2000".

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