ABSTRACT
Despite the large and growing importance of foreign direct investment (FDI) (UNCTAD 2007), the international legal investment framework is highly fragmented. The number of international investment agreements has increased sharply in the last decade (Adlung and Molinuevo 2008) More than 2,500 bilateral investment treaties (BITs) and about 180 trade and economic integration agreements comprising substantive investment provisions have been concluded in this period (Miroudot, this book, Chapter 8). Other agreements are currently under negotiation. The legal content of these agreements has also evolved significantly. International investment disputes have not only become more common, but the cases brought to dispute settlement have also become increasingly complex, creating various interpretations of their provisions and generating huge debates among governments, academics and practitioners. Accordingly, a growing body of jurisprudence and legal literature deals with the interpretation and implementation of the myriad treaties. Furthermore, it seems reasonable to assume that an inscrutable and uncertain investment environment favours large firms with specialized legal departments and preferential access to governments. Thus, the current situation is a potential source of concentrations of power and rent-seeking activities with adverse consequences. International investment is still subject to significant distortions. Specific rules included in a multilateral agreement aiming to remove, or at least to reduce, these policy distortions would increase world GDP. More liberalized markets for investment encourage competition and economic efficiency between and within markets, endorsing a broader dispersion of technology and capital. Probably the most important reason for concluding a multilateral investment agreement is that it offers better protection to investors.
