Rethinking Policy and Judicial Approaches Toward the Economic Contribution of Foreign Investment to the Host State

Abstract

Different views have been reflected in the policymaking and decisions of international Tribunals concerning the economic contribution of foreign investment to the host State. Policymakers usually view foreign investment as the main driver of the host State's economic development.  However, it is essential to be realistic when evaluating the contribution of foreign investment to the host State's economic development. This evaluation should follow a case-by-case approach, looking at (i) the nature of the investment project, (ii) where it is invested, and (iii) how it is regulated based on the development policies of the host state and international investment agreements that recognize the application of such policies. Moreover, it is necessary to redefine the elements of foreign investment—set out in the Saline case—to avoid unqualified tribunals' interpretations of the term “foreign investment." This article argues that “contribution to the sustainable development of the host State” should be considered as a fundamental element to qualify “foreign investment” by tribunals. I term this overarching argument on the economic contribution of foreign investment the “domestic policy dependency argument." This article employs the doctrinal method of legal research to interpret and analyze the qualitative data extracted from legal frameworks and case law.