3 The Foundations of International Investment Law

Subject(s):

Definition of investment — Investor — Claims — Creeping expropriation — Regulatory expropriation (or regulatory taking) — Investment ‘in accordance with host state law’ — Sources of international law — Standards of treatment — Takings, legal and illegal (confiscatory measures)

This chapter examines the state of customary international law governing international investments, that is, the law that exists in the absence of an applicable treaty. Following World War II, such law for most investors was incomplete, vague, contested, and without an effective enforcement mechanism, meaning that investors and their home governments needed to find another way to protect investments of their nationals. This would lie in negotiating investment treaties. Topics covered include state and investor interests shaping international investment law; the sources of international law; customary international law and general principles of law governing international investment; customary international law on expropriation and breach of state contracts; challenges to Western views on international investment law; and deficiencies of customary international law on investment.