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The Unworkability of “Balanced Treaties” and the Importance of Diversity of Approach Among the BRICS

  • M. Sornarajah (a1)
Extract

There is much rethinking being done about investment treaties. While some level of uniformity existed when there was institutional direction by the World Bank and hegemonic pressure exerted by states in the Global North, geopolitical power is now shifting in ways that are producing greater diversity in approaches to the field. The evidence seems to indicate that each state that is of sufficient size or power will seek to fashion its foreign investment policy in the context of its own circumstances. This is certainly true for Brazil, Russia, India, China, and South Africa (the BRICS). Within this group of newly industrializing countries, it is clear that a uniform approach to investment treaties will not emerge, despite avowals to the contrary. In this essay, I offer an assessment of the divergent paths some of these states have taken. I contend that China has emerged as a newly hegemonic actor in international investment in a way that undermines its traditional role as champion for the Third World, and that India's recent attempt to develop a “balanced approach” to investment treaties is unworkable. Only South Africa has developed an approach that seeks to protect its government's ability to serve the goals of its people by subjecting foreign investment disputes to South African law and courts.

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Copyright
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
References
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1 Jonathan Bonnitcha et al., The Political Economy of the Investment Treaty Regime (2017).

2 See Congyan Cai, Balanced Investment Treaties and the BRICS, 112 AJIL Unbound 217 (2018).

3 An Chen, The Voice From China (2016).

4 India: Bilateral Investment Treaties, UNCTAD Investment Policy Hub (2013).

6 White Indus. Austl. Ltd. v. India, Final Award, (UNCITRAL, Nov. 30, 2011).

7 See India – As Respondent State, UNCTAD Investment Policy Hub (2013).

8 Kavaljit Singh & Burghard Ilge, India Overhauls its Investment Treaty System, Fin. Times (July 15, 2016).

9 Id.

10 Grant Hanessian & Kabir Duggal, The Final 2015 Indian Model BIT: Is This the Change the World Wishes to See?, 32 ICSID Rev 216 (2016).

12 Id., art. 1.6.

13 Hesham Talaat M. Al-Warraq v. Indon., Award on Respondent's Preliminary Objections to Jurisdiction and Admissibility of the Claims (UNCITRAL, June 21, 2012).

14 The same rationale applies to tax incentives for investment. There is no proof that they attract investments, but most states offer them because other states do so and there is fear that a state will place itself at a disadvantage by failing to go along.

15 Piero Foresti et al. v. S. Afr., ICSID Case No. ARB(AF)/07/01 (Aug. 4, 2010).

16 See Engela C. Schlemmer, Dispute Settlement in Investment-Related Matters: South Africa and the BRICS, 112 AJIL Unbound 212 (2018).

17 Piero Foresti et al. v. S Afr., supra note 15. The case arose from the South African government's seizure of the mineral rights of Italian companies in order to rearrange the sector so as to profit black citizens.

18 Most of these commentaries appear on websites of large law firms. See, e.g., Allen & Overy, Indian Model Bilateral Investment Treaty (Aug. 5, 2016).

19 White Indus. Ltd. v. India, supra note 6.

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AJIL Unbound
  • ISSN: -
  • EISSN: 2398-7723
  • URL: /core/journals/american-journal-of-international-law
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