chapter  10
State responsibility and enforcement of obligations
Pages 52

Foreign investments are subject to the laws and regulations of host countries and therefore involve the actions and omissions of those states. It is widely recognized that foreign investments make important contributions to the economy of host countries. As that is the case, bilateral investment treaties (“BITs”) and free trade agreement (“FTAs”) are entered into to regulate the conduct of host countries for the main purpose of protecting foreign investments and investors.1 In other words, the international investment law regime must have the effect of limiting “the sovereign right of a state to subject foreign investors to its domestic administrative legal system.”2 Where a state has entered into a BIT or FTA, it is expected to perform its obligations arising therefrom. If a state refuses to enforce, or violates, its obligations under a BIT or FTA or a principle of customary international law, it must bear the consequences. For this purpose, the determination of whether an action or omission is attributable to the state is essential.