1

COURSE MANUAL

INTERNATIONAL INVESTMENT LAW

Course Instructor: Dr. James J. Nedumpara, Professor

Teaching Assistant: Ms. Rubanya Nanda, Research Associate

SEMESTER B (Elective)

2019- 2020

2

Course Manual for International Investment Law

Semester B- 2020

The information provided herein is by the Course Instructor. The following information

contains the official record of the details of the course.

Part I

Course Title: International Investment Law

Course Duration: One Semester

No. of Credit Units: [4] credits

Medium of Instruction: English

Pre-requisites: Nil

Pre-cursors: Nil

Equivalent Courses: Nil

Exclusive Courses: Nil

The above information shall form part of the University database may be uploaded

to Dspace into the KOHA Library system and catalogued and may be distributed

amongst students.

3

PART II

A. Course Description

International investment law is undergoing an unprecedented revolution and expansion in

recent times. The course will introduce students to international investment law and how

certain public international law principles play an important role in the creating and

interpretation of international investment law. The various types of foreign direct

investment and the kinds of political risks involved in relation to such investments are

focused. In short, the course will examine the reasons for developing a separate discipline

and legal framework in this field. The course aims to examine the rules governing the

treatment of foreign direct investment, role of bilateral investment treaties, investment

chapters of comprehensive economic partnership agreements and free trade agreements.

One such example is Chapter 11 of the North American Free Trade Agreement (NAFTA).

Among other things, the course will focus on some of the noted judgments and awards such

as Metalclad, Methanex, Pope and Talbot, SDI Myers, and Sempra v. Argentina. Emphasis

will also be laid on Investor state arbitrations by examining some of the investment disputes

relating to India (e.g., White Industries case, Vodafone, etc).

These landmark judgments are prolific sources of international investment law and

adjudication. In addition to this, the course will also introduce students to some of the

popular and informative academic literature in this field.

In particular the course aims to provide an in-depth analysis of concepts such as investment,

investor, non-discrimination provisions, fair and equitable treatment, full protection and

security, expropriation, effective means, national security exceptions or state of necessity

exceptions and damages.

In addition to various lectures, the course instructor will try to arrange a few guest talks by

practitioners in this field.

Students will be expected to make class presentation on some of the selected cases. The

evaluation will be based on class presentations, short assignments and an end-of-the

semester examination.

B. Course Aims

The course

- seeks to provide in-depth overview of the operation of International Investment

Law

- seeks to enhance the understanding regarding the linkage between public

international law and international investment law

- Understand the dynamics of dispute settlement in international investment law

more importantly in the area of investor- state investment disputes.

4

At the end of the course, the student will be able to:

- demonstrate knowledge and understanding of the relevant aspects of international

investment law and its role and impact in a globalizing world; demonstrate an

ability to critically analyze and appreciate the core principles of international

investment law and dispute resolution.

C. Course Intended Learning Outcomes

Course Intending

Learning Outcomes:

Weight Teaching and Learning

Activities

Assessment

Tasks/Activities

By the end of the

course students should

be able to:

- Be able to

identify the key

issues in the

field

international

investment law

and apply the

learning to

ongoing

international

treaty disputes.

100% Reading of relevant treaty

material, cases, and relevant

journal articles.

Lectures will remain the

primary mode of instruction

Students will be required to

make case presentation

during the course of the

semester

Students will have to

prepare short assignments

as directed by the Course

Instructor.

Final

Examination

Paper (50% of

marks)

Class

participation

and Tutorials

5%- Attendance

5%- Class

participation

40%- Mock

negotiations

D. Grading of Student Achievement

To pass this course, students must obtain at least of 50% of the marks assigned for the

coursework. Coursework for this purpose means those ways in which students are assessed

as outlined above. The details of the grades as well as the criteria for awarding such grades

are provided below.

5

Percentage

of Marks

Grade Grade

Value

Grade Definitions

80 and

above

O 8 Sound knowledge of the subject matter,

excellent organizational capacity, ability

to synthesize ideas, rules and principles,

critically analyse existing materials and

originality in thinking and presentation.

75 to 79 A+ 7.5 Sound knowledge of the subject matter,

thorough understanding of issues; ability

to synthesize ideas, rules and principles

and critical and analytical ability.

70 to 74 A 7 Good understanding of the subject matter,

ability to identify issues and provide

balanced solutions to problems and good

critical and analytical skills.

65 to 69 A- 6 Adequate knowledge of the subject matter

to go to the next level of study and

reasonable critical and analytical skills.

60 to 64 B+ 5 Descent Knowledge of the subject matter

but average critical and analytical skills.

55 to 59 B 4 Limited knowledge of the subject matter

and irrelevant use of materials and, poor

critical and analytical skills.

50 to 54 B- 5 Poor comprehension of the subject matter;

poor critical and analytical skills and

marginal use of the relevant materials.

Will require repeating the course.

Below 50 F 0 None of the Above

E. Plagiarism Policy

Plagiarism is a serious breach of academic and intellectual honesty and could incur

penalties. All course work which could count towards grading should be original and the

result of independent work done by the student.

6

Part III

A. Readings:

Readings for each weekly session are indicated in the following Part.

Primary reading:

Andreas F. Lowenfeld, International Economic Law, Oxford University Press (2008)

Schefer, Krista Nadakavukaren. International investment law: text, cases and materials.

Edward Elgar Publishing, 2016.

Special Issue on India’s 2015 Model Bilateral Investment Treaty: Issues and

Perspectives, Jindal Global Law Review, Springer, 2016.

7

Part IV:

Course Details and Teaching Plan

I. PUBLIC INTERNATIONAL LAW AND FOREIGN INVESTMENTS

The following are some general and introductory reading on this course. Students

are expected to read these materials in addition to the prescribed weekly readings.

Jones, Doug. "Investor-State Arbitration in Times of Crisis." Nat'l L. Sch. India

Rev. 25 (2013): 27.

Guzman, Andrew T. "Why LDCs sign treaties that hurt them: Explaining the

popularity of bilateral investment treaties." (1998)

McLachlan, Campbell. "Investment treaties and general international

law." International and Comparative Law Quarterly 57, no. 02 (2008): 361-401

Salacuse, Jeswald W. "BIT by BIT: The growth of bilateral investment treaties

and their impact on foreign investment in developing countries." The International

Lawyer (1990): 655-675.

Francioni, Francesco. "Access to justice, denial of justice and international

investment law." European Journal of International Law 20, no. 3 (2009): 729-

747.

Kurtz, Jürgen. "Access to Justice, Denial of Justice and International Investment

Law: A Reply to Francesco Francioni." European Journal of International Law 20,

no. 4 (2009): 1077-1085.

Ratner, Steven R. "Regulatory takings in institutional context: Beyond the fear of

fragmented international law." American Journal of International Law (2008):

475-528.

Nedumpara, J, “India’s Trade and Investment Agreements", in Reconceptualizing

International Investment Law from the Global South (F. Morosini & M. Sanchez

Badin (Eds.), Cambridge University Press (2017): 146- 187.

8

II. APPLICABLE LAW & TREATY INTERPRETATION [Weeks 1 &2]

Identifying sources of International Investment Law (How different is it from the

sources of International Law, Art. 38 of the ICJ Statute)

Understanding treaty interpretation of international law.

Distinguishing between treaty-based and customary international law-based

obligations. Are there ways in which treaty-based and customary international

law-based obligations complement and reinforce each other?

Interplay between municipal laws and international law.

Cases and Articles

o Wena Hotel Limited v. Arab Republic of Egypt, ICSID Case No.

ARB/98/4, (Decision on Annulment) (5 February 2002), ¶¶ 15-16 (facts);

¶¶ 26-46.

o Salini v. Morocco

o Fedax v. Venezuela

o Guzman, Andrew T. "Why LDCs sign treaties that hurt them: Explaining

the popularity of bilateral investment treaties." (1998)

o Alvarez, José E. "A BIT on custom." NYUJ Int'l L. & Pol. 42 (2009): 17.

Additional issues for Discussion

o Forum Selection & Art. 42 of the ICSID Convention

o Why are Arbitral Tribunals barred from bringing a finding of Non-Liquet

II. INSTRUMENTS IN INTERNATIONAL INVESTMENT LAW [ Week 3]

Factors affecting investment climate and the role of instruments in investment

protection

History of instruments dealing with international investment protection

Role of BIPA/BITs/ CEPA/ FTAs

Role of World Bank and ICSID

Consider what constitutes an “investor” and ‘investment’ under a treaty

Consent and Jurisdiction

Case

Sempra Energy Int’L. V. Argentina, ICSID Case No." Arb/01/8, Objections

to Jurisdiction(2005) (extracts)

Articles

9

o Gus Van Harten, Five Justifications for Investment Treaties: A Critical

Discussion, 2(1) TRADE L. & DEV. 19 (2010).

o SALACUSE & SULLIVAN, “Do BITs Really Work?: An Evaluation of

Bilateral Investment Treaties and Their Grand Bargain,” 46 HARV. INT’L

L. J. 67 (2005)

o Mortenson, “The Meaning of “Investment”: ICSID’s Travaux and the

Domain of International Investment Law,” 51 HARV. INT'L L.J. 257

(2010)

Cases

o SGS v. Pakistan (excerpts)

o SGS v. Philippines(excerpts)

III. EXPROPRIATION [Week 4 &5]

Permanent Sovereignty Over Natural Resources – NIEO - Charter of Economic

Rights and Duties

Distinguish between lawful and unlawful expropriations.

Does partial taking amount to expropriation?

Consider appropriate role of the doctrine of ‘legitimate expectations’ for

determining expropriation

Identify types of acts that should be considered ‘police powers’ and therefore not

compensable expropriations

Consider the wisdom of a government’s embarking on a program of privatization

of key industries

Regulation and expropriation

Recommended Readings

o Methanex Corp. v. United States of America, UNCITRAL, (Final Award)

(3 Aug. 2005), Part II, Chapter D, 3-12; Part IV, Chapter D.

o CMS Gas Transmission Co. v. Argentina, ICSID Case No. ARB/01/8

(Award) (12 May 2005), ¶¶ 53-82 (facts) ¶¶ 252-265.

o Martin Arostegui, Venezuelan nationalization continuing, THE

WASHINGTON TIMES (12 May 2009).

o Compare NAFTA art. 1110 & U.S. Model BIT art. 6, Annexes A & B.

Additional issues for discussion

o What are the differences between NAFTA Article 1110 and the

expropriation provision in the 2004 U.S. Model BIT?

o What criteria should be used to establish the difference between a

regulatory action that does not give rise to expropriation and one that does?

10

If it is, then how does one ascertain government intent? Who in the

government needs to have the intent?

o Should every expropriation give rise to a duty to compensate, or only those

that do not involve public purposes?

o What is the ‘sole effect’ doctrine? Is it a useful way of looking at

expropriation doctrine?

o Would investors have a right to a market? Can regulation that removes all

economic value from a given market give rise to an expropriation?

V. RELATIVE STANDARDS OF PROTECTION [ Week 6 &7]

Identify the components of the standard of national treatment

Understand the importance of identifying the comparator

Assess the importance of the requirement that the comparators be in ‘like

circumstances’

Consider the relevance of WTO jurisprudence to the investment context

Evaluate whether ‘most-favoured-nation’ treatment operates to bring in more

favourable dispute settlement options as well as more favourable substantive

treatment

Evaluate the ‘exceptions’ to MFN proposed by the Maffezini tribunal

Readings & References for National Treatment

o Peter Clark, National Treatment under GATT and NAFTA: A Discussion

Comment,1:3 TRANSNATIONAL DISPUTE MANAGEMENT (July

2004).

o Methanex Corp. v. United States of America, UNCITRAL (Final Award)

(3 Aug. 2005), Part IV, Chapter B.

o Occidental Exploration & Prod. Co. v. Republic of Ecuador, LCIA Case.

No. UN 3467 (Final Award) (1 July 2004) ¶¶ 1-6, 25-35 (facts), 167-179.

o Gami Investments Inc. v. Mexico, UNCITRAL, (Final Award) (15

November 2004 ¶¶ 12-22 (facts) ¶¶ 111-115.

Readings & References for Most-Favored Nation

o Maffezini v. Spain (ICSID Case No. ARB/97/7), (Decision of the Tribunal

on Objections to Jurisdiction) (25 January 2000), pages 14-25.

o Plama Consortium Ltd v. Bulgaria, ICSID Case No. ARB/03/24 (Decision

on Jurisdiction) (8 February 2005) ¶¶183-227.

o Argentina – Spain BIT, Article IV.

11

o Bulgaria – Cyprus BIT, Article 3.

Other Readings

o UNCTAD, NATIONAL TREATMENT, UNCTAD/ITE/IIT/11 (Vol. IV)

(1999).

o Susan D. Franck, International Decisions: Occidental Exploration and

Production Co. v. Ecuador, 99 AM. J. INT’L L. 675 (2005).

VI. ABSOLUTE STANDARDS OF PROTECTION–INTERNATIONAL

MINIMUM STANDARD, FAIR & EQUITABLE TREATMENT & FULL

PROTECTION AND SECURITY [ Week 8]

Learn what factors distinguish the international minimum standard from fair and

equitable treatment

Consider what level of government conduct is required by the international

minimum standard today

Identify the factors that should guide a fair & equitable treatment analysis

Study the scope of the full protection and security standard

Recommended Cases

o Metalclad v. Mexico, Award (8/30/00), ¶ 28-112 o S.D. Myers 2000 (Substantive Decision)

o Glamis Gold Ltd. v. United States of America, UNCITRAL (Award) (8

June 2009) ¶¶ 10-15; 598-626.

o Merrill & Ring Forestry L.P. v. Canada, UNCITRAL (Award) (31 March

2010) ¶¶ 26-43; ¶¶ 182-233.

o Mondev International v. United States (2002)

Recommended Readings

o Rudolf Dolzer, Fair and Equitable Treatment: A Key Standard in

Investment Treaties’ 39 THE INTERNATIONAL LAWYER 87, 87-94;

100-06 (2005).

VII. NECESSITY, COUNTERMEASURES, AND ESSENTIAL SECURITY

INTERESTS [ Week 9]

Role of defences states can raise to investment claims and the concept of

circumstances precluding wrongfulness

Discuss the essential security clauses found in investment treaties, the customary

international law defences of necessity, and the appropriate relation between them

12

Assess whether the customary international law principle of necessity is useful in

the context of investor-state arbitration, or whether its provisions are so stringent

that they could never be satisfied

Consider whether the successful invocation of a circumstance precluding

wrongfulness prevents the award of damages

Discuss whether individual claimants have rights independent of states

Consider whether, if individuals do have direct rights, states are therefore

precluded from arguing they were justified in taking countermeasures

Consider the self-judging nature of treaty exceptions

Recommended Cases

o CMS Gas Transmission Co. v. Argentina, ICSID Case No. ARB/01/8

(Decision on Annulment) (24 September 2007), ¶¶ 101-50

o LG&E v. Argentina, ICSID Case No. ARB/02/1 (Decision on Liability) (3

October 2006), ¶¶ 201-14; 226-66

o Corn Products Int’l v. Mexico, ICSID Case ARB (AF)/04/01 (Decision on

Responsibility) (15 January 2008), ¶¶ 161-192.

VIII. DISPUTE SETTLEMENT/CONSENT/PREREQUISITES/ARBITRATOR

SELECTION [ Week 10 ]

Consider why arbitration is often viewed as an attractive alternative to litigation in

domestic courts

Identify the drawbacks to litigating in either home or host state courts

Identify the advantages investor-state disputes settlement holds over state-state

dispute settlement

Identify the various sources for consent to an investment arbitration

Learn about ‘fork-in-the-road’ clauses

Consider the potential overlap between domestic causes of action and

international investment law claims

Examine the waiver of the exhaustion-of-local-remedies rule

Review the identity of the most frequent defendants in investment cases

Discuss the qualities an arbitrator in an investor-state dispute settlement case

ought to have

Consider the ethical dilemmas faced by arbitrators in investor-state dispute

settlement

13

XI. DISPUTES/’UMBRELLA’ CLAUSES AND REMEDIES [Week 11]

Distinguish between treaty-based claims and contract-based claims

Learn about ‘umbrella clauses’

Consider the purpose or effect of an umbrella clause

Consider how much deference a tribunal should give to an earlier tribunal

decision on the same legal issue

Assess differences in treaty language in light of principles of treaty interpretation

Consider the effect of umbrella clauses on the law applicable to the arbitration

Discuss the availability of counterclaims in contract claims and in treaty claims

Consider the relationship between treaty claims and contract claims; if an investor

prevails on the latter, should it also prevail on the former?

Consider the role of remedies and the application of various doctrines of

compensation/ damages

Recommended Cases

o SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan,

ICSID Case No. ARB/01/13 (Decision on Jurisdiction) (6 August 2003) ¶¶

133-73.

o S.G.S. Société Générale de Surveillance S.A. v. Republic of the Philippines,

Case No. ARB/02/6 (Decision on Jurisdiction (29 January 2004), ¶¶ 92-97;

113-135.

o Rumeli Telekom/Telsim Mobil v. Kazakhstan (ICSID Case No. ARB/05/16)

Decision of the Ad Hoc Committee (3/25/2010) (English), pages 32-53

o Pope & Talbot, 2000, NAFTA case

Article

o Abdala, Spiller & Zuccon “Chorzów’s Compensation Standard as Applied

in ADC v. Hungary”, TDM Vol. 4, Issue 3, June 2007

Recommended Readings o Compare: NAFTA art. 1121(1)(b) (no ‘u-turn’); U.S.-Ecuador BIT art. VI (2)

& (3) (‘fork-in-the-road’), II(3)(b).

o Waste Management v. Mexico I & II (waiver, admissibility and jurisdiction):

Waste Management I (Final Award (Dismissing on Jurisdiction)) (6/2/00),

¶ 4-7, 14-31. (Dissenting Opinion (on Jurisdiction)) (6/2/00), ¶¶ 10 – 28.

Waste Management II (Award on Jurisdiction, second claim) (6/26/02), ¶

2-3, 19-37.

14

X. IMPORTANCE OF INTERNATIONAL INVESTMENT

ARBITRATION IN INDIA [ Week 12]

The Course focuses on the advantages and drawbacks of the present system through

the lens of India’s tryst with investment arbitration. We assess the debate around the

legitimacy of investment arbitration by reviewing the academic discussion, the White

Industries v. India Award and the series of threats of investment claims after the

Supreme Court’s 2G decision and the Vodafone/retrospective tax controversy.

Recommended Readings:

o White Industries Australia Limited v. The Republic of India, Final Award,

November 2011;

o Indian Model Bilateral Investment Promotion and Protection Agreement

(BIPA) Issued by the Department of Economic Affairs, Government of India,

December 2015, available at:

http://finmin.nic.in/reports/ModelTextIndia_BIT.pdf

o “Vodafone Threatens Claim Against India”, GLOBAL ARBITRATION REVIEW,

25 April 2012 and “Another Claim Looms Over 2G Licenses in India”,

GLOBAL ARBITRATION REVIEW, 18 July 2012.

o “India to Relook at 82 BIPAs as Foreign Investors Invoke Global

Arbitration”, THE ECONOMIC TIMES, 5 April 2013 (http://goo.gl/3H6zHJ) and

“US Wants MNCs to Have Right to Sue India Abroad”, THE ECONOMIC

TIMES, 25 September 2013 (http://goo.gl/B9ElRQ).

OTHER QUESTIONS THAT COULD BE DISCUSSED DURING THE COURSE

OF THE ACADEMIC MODULE

Foreign Investment and Human Rights

Foreign investment and corruption

Foreign investment and Economic Freedom (sovereignty)

Foreign investment and Cultural property

Foreign investment and Developing Countries.

Reading Materials for Class Discussion

Claire Cutler, “Human Rights Promotion through Transnational Investment

Regimes: An International Political Economy Approach”, Vol 1, Issue 1 (2013).

Cristina Mihaela Amarandei, “Corruption And Foreign Direct Investment.

Evidence From Central And Eastern European States”, CES Working Papers,

Vol. 5(3) (2013).

15

Valentina Saravadi, Cultural Heritage and International Investment Law,

International Journal of Cultural Property / Volume 15 / Issue 01 / February 2008,

pp 1-24.

Jernej Letnar Cernic, “Corporate human rights obligations and international

investment law”, Fecha de aceptación: 22 de febrero de 2010.

“Foreign Direct Investment, Aid, and Terrorism: An Analysis of Developing

Countries”, with Todd Sandler and Javed Younas, Oxford Economic Papers,

66(1), 25-50, January 2014.

Raphael De Vietri, “Incorporating Humanity and the Global Economy the Law of

International and Human Rights”, 15 Int'l Trade & Bus. L. Rev. 211 (2012).

Vibha Kapuria Foreman, “Economic Freedom and Foreign Direct Investment in

Developing Countries”, The Journal of Developing Areas Volume 41, Number 1,

Fall 2007 pp. 143-154.

Claudia Annacker, “Protection and Admission of Sovereign Investment under

Investment Treaties”, Chinese Journal of International Law (2011) 10 (3): 531-

564.

Deborah Sy, “Warning: Investment Agreements Are Dangerous To Your Health”,

George Washington International Law Review, 43 Geo. Wash. Int'l L. Rev. 625.

Should states be able to give authority to exploit natural resources to private

companies, whether domestic or foreign? Should they retain the right to get the

resources back?

Is there a link between economic development and development of the rule of law?

How can host countries ensure that they are attracting sustainable development?

What role does ant-corruption laws play in Investment Policy?

Is the illegality of an investment sufficient to deprive a tribunal of jurisdiction?

What if the state (or a state official) colludes in the illegality?

Week 15 &16 [Make up and Revision]