Investment Treaties and Transition from Authoritarian Rule
Australian National University (ANU) - Crawford School of Public Policy
July 10, 2012
Society of International Economic Law (SIEL), 3rd Biennial Global Conference
Following revolutions in Libya and Egypt several foreign investors have lodged international claims under investment treaties. Several more claims are yet to become public. Several of these cases follow a common fact pattern. They concern foreign investors that acquired investments from authoritarian governments without competitive bidding processes and at substantially below market-value. Subsequently, new governments sought to renegotiate these contracts and concessions. The foreign investors then invoked the protections of an investment treaty, demanding market-value compensation for interference with their investments.
This paper examines the implications of investment treaties for transitions from authoritarian rule. It comprises two sections. The first section clarifies the nature and extent of the legal constraints placed on new regimes emerging from transitions by investment treaties. It considers the significance of the principle that treaties ratified by a former government bind a successor government, the principle that investments that were lawful at the time at which they were made are entitled to the protection of an investment treaty, and the extent of substantive protection provided by investment treaties in such circumstances.
The second section draws on political science literature to explore the implications of the constraints identified in the first sections for democratic transition. It argues that investment treaties may facilitate transition from authoritarian rule by mollifying economic elites that might otherwise oppose democracy. On the other hand, investment treaties may hinder democratic transition either by placing additional fiscal burdens on incoming governments, or by constraining the ability of new regimes to reorganize their economy in the process of building coalitions to support the incoming regime.
Number of Pages in PDF File: 29
Keywords: foreign investment, investment treaties, transition, revolution, democracy, authoritarianism
JEL Classification: F02, F10, F20, F30, F40working papers series
Date posted: July 11, 2012 ; Last revised: April 17, 2013
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo1 in 0.344 seconds