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46 Harv. Int'l L.J. 67 (2005)
Do BITs Really Work: An Evaluation of Bilateral Investment Treaties and Their Grand Bargain

handle is hein.journals/hilj46 and id is 73 raw text is: VOLUME 46, NUMBER 1, WINTER 2005 Do BITs Really Work?: An Evaluation of Bilateral Investment Treaties and Their Grand Bargain Jeswald W. Salacuse* Nicholas P. Sullivan** I. INTRODUCTION International investment law has undergone a remarkable transformation in a relatively short time. The fundamental tool for effecting that transfor- mation has been the bilateral investment treaty (BIT), an international legal instrument through which two countries set down rules that will govern in- vestments by their respective nationals in the other's territory.' From 1959 to 2002, nearly 2200 individual BITs were formed,2 making the BIT one of the most widely used types of international agreement for protecting and influen- cing foreign investment.3 As the twenty-first century begins, the time has come to evaluate whether BITs have achieved their objectives.4 To answer this question, Part II exam- * Henry J. Braker Professor of Law, The Fletcher School of Law and Diplomacy, Tufts University. ** Executive Director, Money Matters Institute, Boston, Mass., and General Partner, Global Horizon Fund, Boston, Mass. The authors express their thanks to Michael Klein, Seiji Niwa, and Josh Robbins for their assistance. 1. The literature and doctrinal commentary on BITs are abundant and have expanded over the years as the number of Bilateral Investment Treaties (BITs) has grown. See generally, e.g., RUDOLF DOLZER & MARGRETE STEVENS, BILATERAL INVESTMENT TREATIES (1995); M. SORNARAJAH, THE INTERNA- TIONAL LAW ON FOREIGN INVESTMENT 225-76 (1994); U.N. CONE. ON TRADE AND DEV. (UNC- TAD), BILATERAL INVESTMENT TREATIES, 1959-1999, U.N. Doc UNCTAD/ITE/IIA/2 (2000), at http://www.unctad.org/en/docs//poiteiiad2.en.pdf (last visited Nov. 29, 2004); UNCTAD, BILATERAL INVESTMENT TREATIES IN THE MID-1990S, U.N. Doc. UNCTAD/ITE/IIT/7 (1998); K. J. VANDE- VELDE, UNITED STATES INVESTMENT TREATIES: POLICY AND PRACTICE (1992); Antonio R. Parra, The Scope of New Investment Laws and International Instruments in Economic Development, in ECONOMIC DEVELOP- MENT, FOREIGN INVESTMENT AND LAw 27 (R. Pritchard ed., 1996). In addition, see the website of the International Centre for Settlement of Investment Disputes (ICSID) for materials on BITs, including the texts of many BITs, arbitration awards that have interpreted and applied them, and a bibliography of books and articles commenting on BITs. See ICSID, ICSID Bilateral Investment Treaties, at http://www. worldbank.org/icsid/treaties/treaties.htm (last visited Nov. 30, 2004). 2. See UNCTAD, WORLD INVESTMENT REPORT 2003: FDI POLICIES FOR DEVELOPMENT: NATIONAL AND INTERNATIONAL PERSPECTIVES 89, U.N. Doc. UNCTAD/WIR/2003 (Sept. 4, 2003) (stating that 2181 BITs were in effect as of the end of 2002). 3. See id. 4. For earlier speculation on this question, see Jeswald W. Salacuse, BIT by BIT. The Growth of Bilat- eral Investment Treaties and Their Impact on Foreign Investment in Developing Countries, 24 INT'L LAw. 655,

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