Over the last ten years, international investment protection law has been one of the fastest-growing areas of international economic law. This area of law is characterised by a fundamental tension, which may be roughly described as follows: Capital-importing states, often developing and emerging countries, submit themselves to binding international rules on the treatment of foreign investments primarily with the aim of promoting sustainable development of their economies. This increased level of legal certainty is intended to attract greater foreign investment. Capital-exporting states aim to comprehensively protect their businesses against political risks in host states through the application of relevant rules of international law. Any other concerns which arise tend to be dealt with as peripheral matters.
Several years ago, legal academic discourse dealing with the regulation of foreign investment was still oriented towards a one-sided position, promoting the widest possible protection of foreign investments. This often led to the protection instruments - mainly so-called Bilateral Investment Treaties ("BITs") – being considered in isolation, with an emphasis consequently on the interests of foreign investors, whom these instruments are designed to protect in the host country.
More recently however, it has been widely recognized that the application of international investment protection agreements by arbitral tribunals established in investor-state dispute settlement procedures, may also have adverse effects on states’ legitimate regulatory concerns. Developing and emerging countries attempting to implement legislative and policy measures – to ensure adequate water supplies to the host-state population, to establish functioning health systems, or to improve environmental protections by pursuing alternative policies – have had to confront huge challenges, namely from foreign investors initiating investor-state arbitrations to claim significant damages for the negative effects on their existing foreign investments in the these sectors. Even industrialized countries have had to realise the challenge of balancing legitimate regulatory concerns with investment protection, when faced with claims for billions of euros in such arbitrations - as is the case with Germany’s nuclear phase-out policy, which has led to an arbitration claim from the Swedish company Vattenfall.
In response to the perceived, or actual, lack of consideration of public interest concerns that serve the sustainable development of a country, recent political and legal opposition has been directed at the investment protection regime in its entirety. This in turn has led to a predictable, defensive shift by the "other side". Balanced approaches to examining the relationship between investment protection and the principles of sustainable development are, as yet, not sufficiently developed. This is the fundamental basis for the conference, "International investment agreements - balancing sustainable development and investment protection”. The hope is to create a forum for a critical, reflective and balanced analysis of this tension.
The specific catalyst for this conference is the "Investment Policy Framework for Sustainable Development" (IFSD), the conceptual framework published in April 2012 by the United Nations Conference on Trade and Development (UNCTAD). As yet the framework has not been fully analysed or evaluated in legal scholarship; the conference will therefore first focus on a critical study and discussion of this development.
In addition to the general discussion of IFSD, there will be thematic emphases, which will serve as a showcase to explore the issues raised by IFSD in more depth. To this end, we will establish a forum for which prominent voices from academia, business, media and civil society – both from Germany and abroad – have already been confirmed. The first key aspect of discussions will be to illuminate substantive law issues, such as the specific interplay of "investor protection" interests and "sustainable development" interests, in particular "national treatment" and "fair and equitable treatment" protection standards contained in BITs. (Session I).
Other key aspects of discussions will be to interrogate procedural (Session II) and institutional (Session III) issues. Discussions will conclude with regional perspectives on current developments in selected regions where innovative and widely discussed alternatives to traditional concepts of foreign investment protection are being tested (Session IV). As case studies, this discussion will focus on South Africa and South America, as well as on the future role and focus of EU investment “protection” policy.
Overall, the conference focus aims to be both academic and practice orientated, geared towards policy proposals which stimulate debate about the extent that existing or future investment protection agreements can meet the needs of sustainable development, particularly in developing and emerging countries. Debate around investment law jurisprudence will be complemented in particular by reference to political science.