About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

41 Harv. Int'l. L. J. 469 (2000)
Economics of Bilateral Investment Treaties, The

handle is hein.journals/hilj41 and id is 475 raw text is: VOLUME 41, NUMBER 2, SPRING 2000

The Economics of
Bilateral Investment Treaties
Kenneth J. Vandevelde*
In the 1990s, one of the fastest growing areas of international law
emerged from the phenomenal proliferation of bilateral investment
treaties (BITs). More than 1300 such treaties have been negotiated,
involving more than 160 countries in every region of the world.' By
the mid-1990s, these treaties were being negotiated at the rate of one
every other day.2
Regardless of which states negotiate BITs, provisions of these
agreements are remarkably uniform.3 In general, the agreements pro-
*Dean and Professor of Law, Thomas Jefferson School of Law. B.A., University of Louisville,
1975; J.D., Harvard, 1979. Professor Vandevelde served as Attorney-Adviser for the State De-
partment Legal Advisor's Office from 1982 to 1988. In recent years, he has served as a consultant
on international law to the governments of Lithuania, Georgia, and Slovakia, the United Nations,
and the U.S. Senate Foreign Relations Committee.
1. For a listing of the treaties, see UNITED NATIONS CONFERENCE ON TRADE AND DEVEL-
OPMENT (UNCTAD), BILATERAL INVESTMENT TREATIES IN THE MID-1990s, annex I at 159-
217, U.N. Doc. UNCTAD/ITE/IIT/, U.N. Sales No. E98.ll.D.8 (1998). The International
Centre for Settlement of Investment Disputes (ICSID) separately compiled a list of more than
1100 treaties involving 155 countries through the end of 1996. See ICSID, BILATERAL
INVESTMENT TREATIES 1959-1996 (1997).
2. For example, more than 180 BITs were negotiated in 1996 alone. See UNCTAD, supra note
1, annex I at 159-217.
3. See Ibrahim El. Shihata, Preface to RuDoLF DOLZER & MARGRETE STEVENS, BILATERAL
INVESTMENT TREATIES at v, v (1995). But see generally M. SORNARAJAH, THE INTERNATIONAL
LAW ON FOREIGN INVESTMENT (1994).
Several factors account for the uniformity among BITs. Most BITs between developed and de-
veloping states have been negotiated on the basis of models drafted by the developed states. The
models themselves are similar because the drafters often drew upon certain common sources, such
as the 1967 Organization for Economic Co-operation and Development (OECD) Draft Conven-
tion on the Protection of Foreign Property. See KENNEMI J. VANDEVELDE, UNITED STATES IN-
VESTMENT TREATIES: PoucY AND PRACTICE 29 (1992).
When developing states began to negotiate BITs among themselves, conservation of adminis-
trative resources militated in favor of using developed-state models as a basis for negotiation
rather than preparing an entirely new text. Furthermore, the developing states' goal of attracting
foreign investment was best served by an agreement favorable to investors, which presumably
would be one similar to those drafted by the capital-exporting developed states. Moreover, be-
cause developing-state concerns about the adverse effects of foreign investment, discussed infra
text accompanying notes 101-164, are greatest in the case of large investments, a developing
state that was willing to guarantee protection to large investors in developed states would have
had little reason to deny similar protections to smaller investors from other developing states.
Finally, as a technical matter, the most-favored nation treatment clause of BITs gives every BIT
concluded by any one state the same effect as the most rigorous agreement concluded by that
state, and thus, unless that clause were deleted or restricted in scope, efforts to vary or dilute the

What Is HeinOnline?

HeinOnline is a subscription-based resource containing nearly 3,000 academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline with pricing starting as low as $29.95

Contact us for annual subscription options:

Already a HeinOnline Subscriber?

profiles profiles most