Recent Posts

Archive

Tags

TERMINATION OF BILATERAL INVESTMENT TREATIES: ALTERNATIVES FOR LEAST DEVELOPED COUNTRIES

Clinic: IELPO, Fall 2018

Beneficiary: University of Auckland


Executive Summary

The full report and consolidated table can be found here.


Introduction


Bilateral Investment Treaties (BITs) have proliferated dramatically as one of the main instruments to shield foreign investments. However, their operation has generated discontent in a number of States (including least developed countries, or LDCs) and caused discussions about their termination. LDCs[1] might have specific reasons for terminating their BITs, including not only the rapid recent growth in investment disputes (which also includes disputes against LDCs), but also limited legal capacity and lack of bargaining power at the time of the conclusion of their BITs.


The Project team takes no position on the desirability of terminating BITs. The goal of the present study is to outline the choices LDCs have at their disposal for terminating their BITs and the legal questions arising from termination. The Project team has analyzed the theoretical background outlining possible ways for terminating BITs; mapped 213 BITs concluded by LDCs (that are currently in force) and identified common features and potential problems of their termination; formulated policy options for LDCs regarding termination of their BITs; and addressed legal questions arising from such termination.


Ways of Termination of BITs


Bilateral investment treaties, being treaties under public international law, are subject to the rules of the Vienna Convention on the Law of Treaties[2] (VCLT), which also apply to termination of BITs. According to Article 54 of the VCLT, the termination of a BIT can take place: 1) in conformity with the termination provisions of the treaty or 2) at any time by consent of the parties. If these options are not available, States may resort to other modes of termination generally available in public international law and specified in the VCLT.


Unilateral termination according to a BIT termination clause. The majority of BITs incorporate provisions that contain information on the duration of the initial validity period of the BIT, which enables determining the earliest possibility to terminate the treaty, requirements for the notice of termination to the other Party, and the provision on the extension of the BIT.