International Investment Law - IV (New Actors in Foreign Investment)

In the past, there were only bi-lateral treaties or agreements. They were nothing more than private international agreements. Hence, at that time, International Investment Law was considered to be a part of the Private International Law. However, recently the state also came into the picture because of the following issues that arose in international agreements and treaties:

1. Enforcement of agreements

2. Remedies in case of breach of an agreement

3. Locus Standi in Dispute Settlement Forums

4. Jurisdiction Clause

5. Law that is to govern the agreement.

Thus, law of contract and law of private international law had to get divorced as the law of contract was unable to handle the issue of specific remedies and other related problems.

This table will illustrate the difference that exists between states and corporations (with reference to International Investment Law).

State	Corporation
BITs/MITs (Multilateral Investment Treaties)	MNCs/TNCs (Transnational Corporations)
Recent Origin (1990s)	During 1947 to 1994, there were hardly any BITs or MITs. So MNC/TNCs entered into bi-lateral or multi-lateral agreements with states.

The state came into the picture because of the disparity that started to creep into the trade done by the private players. An unfavourable balance of trade started to get created. Thus, the states started playing their role by entering into BITs with each other. But, for MITs, a common international law was needed. An international diaspora was needed too.

A multilateral framework became a reality and organizations like WTO came into existence. Various dispute settlement forums such as ICSID were also present. Today, there are multiple actors in the field of International Investment Law and these actors have a role that is interlinked to one another. This is the reason that today the jurisdiction and operational limits of such actors is becoming tough to define.

Now there are multiple actors in the field of International Investment Law and these actors have roles that are interlinked. The jurisdiction and operational limits of such actors is becoming tough to define. These actors include States, MNCs, TNCs, Chambers of Commerce, and NGOs etc.

It is important not to forget that in case of a treaty, rights are bestowed upon the states. The violation of rights takes place of the states and only that state can represent itself to enforce its rights.

Legal Entity of Multinational Corporations

It is of vital significance that a treaty cannot be entered into by a private entity. Only a sovereign has the power to do so. But, we must not forget that a company has a separate legal entity too. However, despite having a separate legal entity, a company or a corporation cannot create laws to govern itself in the arena of international trade. A company or a corporation can only frame bye-laws for itself. And such bye-laws owe their existence to the parent statute that gives power to the corporations to frame laws in their limited sphere of influence.

International Trade Law Notes