2.2.2
IIAs and domestic investment laws: a comparative analysis in MERCOSUR countries
The 1990s witnessed an explosion in the number of international investment agreements (IIAs), seen by countries interested in attracting foreign direct investment (FDI) as a mechanism to signal their hospitality, by offering foreign investors both substantive and procedural protection based on a treaty.
However, a significant part of the substantive protection offered by these IIAs already existed in domestic legal systems. This notion would apply, to varying extents, to the principles of national treatment, most favoured nation, fair and equitable treatment, full protection and security and protection against expropriation. The novelty would be precisely the avenue afforded by IIAs to challenge governmental measures in international arbitration proceedings, as opposed to relying solely on domestic enforcement mechanisms.
This project engages in a comparative analysis of the IIAs negotiated by MERCOSUR countries and their domestic laws concerning foreign investment. The following questions are addressed:
- What are the differences and similarities between the standards of protection in IIAs and in domestic law?
- To what extent do the solutions prescribed by the domestic legal systems differ from those determined by international arbitral tribunals?
- The Brazilian puzzle: why does Brazil resist ratifying IIAs? Why is it still one of the top recipients of FDI? How is protection sought in the absence of IIAs?
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