Academic journal article Vanderbilt Journal of Transnational Law

Say What You Mean: Improved Drafting Resources as a Means for Increasing the Consistency of Interpretation of Bilateral Investment Treaties

Academic journal article Vanderbilt Journal of Transnational Law

Say What You Mean: Improved Drafting Resources as a Means for Increasing the Consistency of Interpretation of Bilateral Investment Treaties

Article excerpt

ABSTRACT

Following the demise of international recognition of the Hull Rule as the standard governing foreign direct investment, countries throughout the world have turned to bilateral investment treaties (BITs) to govern direct investment relationships. BITs allow countries to bind themselves credibly to commitments by granting substantive rights to investors and offering remedies for violations of those rights, thereby incentivizing new investments and facilitating economic ventures. The recent dramatic increase in disputes arising under BITs has shaken the legitimacy of these agreements. Arbitration panels interpret these documents inconsistently, which disparately impacts developing nations negatively. The inconsistent interpretations rob BITs of clarity and transparency as to the nature and extent of the commitments. Consistency in interpretation can be achieved through reform of the arbitration process or reform of the drafting process. Reform of the arbitration process would fly in the face of the nature and character of the arbitration process, and it cannot alleviate the interpretive difficulties the panel faces. Reform of the drafting process can improve the documents themselves, as well as the interpretive process. BIT drafters must conquer the inherent difficulties of communicating intentions through language, as well as the additional problems created by the existence of multiple authoritative texts in different languages. This Note concludes that improved drafting is the key to providing consistency in interpretation, thereby increasing the credibility of BITs. To that end, this Note proposes a multilingual compilation of key BIT terminology, as provided by each individual country, to serve as a resource to drafters and interpreters.

TABLE OF CONTENTS
  I. INTRODUCTION
 II. DEFINITION OF AND HISTORICAL CONTEXT FOR
     BILATERAL INVESTMENT TREATIES
     A. Definition
     B. Historical Context: The Hull Rule--Its
        Importance and Its Demise
III. BIT DEVELOPMENT AND CURRENT CONFLICTS
     A. Introduction to the Conflict of
        Inconsistent Interpretations in
        Arbitration
     B. The Conflict of Inconsistency as
        Particularly Problematic for Developing
        Countries
IV.  DRAFTING A BILATERAL INVESTMENT TREATY:
     TRADITIONAL PROVISIONS
 V.  PROBLEMS OF CONSISTENCY: ARBITRATION
     REFORM AND INTERPRETATIVE DIFFICULTIES
     A. Arbitration Restructuring as a Means to
        Improving Consistency of Interpretation
     B. The Interpretative Process--Background
        for Drafters
        1. Interpretive Issues Inherent in the
           Difficulty of Communicating Intentions
           through Language
        2. Multiple Authoritative Texts in
           Different Languages as the Impetus
           for Additional Problems
VI.  PROPOSAL FOR A COMPILATION OF KEY TERMINOLOGY
     TO SERVE AS A MULTILINGUAL "THESAURUS" FOR
     THE PURPOSE OF DRAFTING IMPROVEMENTS
     A. Why Multilateral Investment Treaties
        Are Not the Solution
     B. Characteristics of an Improved Draft
     C. A Compilation of Key Terminology as a
        Resource for Improved Drafting and
        Interpretation
VII. CONCLUSION

I. INTRODUCTION

"Foreign investment is a vital tool for economic development and global prosperity." (1) Developing countries rely on foreign investment to infuse their local industries with capital and to improve their infrastructure, while investors simultaneously receive financial returns and a "foothold in the markets of the future." (2) Historically, direct investment was governed by very loose international customary law, in particular the Hull Rule. (3) Following joint lobbying in the United Nations by developing countries opposed to the Hull Rule, and generally multilateral regulation of direct investment, investors were provided no protection when investing and, therefore, assumed myriad risks. …

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