BILATERAL INVESTMENT TREATIES AS A MEANS FOR ADVANCEMENT OF FOREIGN DIRECT INVESTMENT

Апстракт

The aim of the analysis of BITs as a method for advancement of foreign direct investment is to cover
several important topics. Those are: defining the term and the concept, determining its historic
development, explaining its basic characteristics, analyzing their features and the reasons for
concluding them. BITs serve a purpose of advancing the economic linkages of the signatory parties,
with an ultimate objective of development or economic advancement. From the eighteenth century
onward the forerunners of the modern BITs were the historic so-called Friendship, Commerce and
Navigation (FCN) agreements that were concluded by the major colonial powers as well as the USA.
The key difference between the FCN treaties and modern BITs is that the FCN instruments were
designed at a time when international commerce largely consisted of trading in goods by merchants.
Irrespective of the number of BITs concluded, their basic characteristics are more or less the same -
they are designed to cover the following five substantive areas: (i) definition of investment and
investor; (ii) admission of foreign investors; (iii) fair and equitable treatment of investors; (iv)
compensation in the event of expropriation; and (v) methods of settling disputes. Formally, BITs
regulate FDI-related issues such as admission, treatment, expropriation, and the settlement of disputes
at the bilateral level. Several important features are relevant for BITs: are concluded between capitalexporting
states and capital importing states, are differentiated phases of pro-investor attitude and
phases of state-centred thinking, cover mechanism to expand international standards and to codify lex
specialis, arises the question whether exhaustion of local remedies is required. One important reason
to conclude BITs being analyzed is certainly the fact that they have instilled a sense of security in
foreign investors. Finally, the reasons for concluding BITs are being presented.