International Legal Framework on Foreign Investment

This briefing paper by the Center for International Environmental Law (CIEL) analyzes the international legal framework for foreign investment, arguing that current treaties and agreements prioritize investor rights and liberalization over environmental protection, social goals, and corporate accountability.

• The current international legal framework for foreign investment promotes liberalization and grants extensive rights to investors but fails to impose obligations on them or provide rights to other private stakeholders. It does not adequately address social and environmental aspects or strengthen corporate governance.
• Bilateral and regional investment treaties often include provisions that can undermine a host state's ability to regulate for public health and the environment. For example, 'national treatment' obligations may lead to lawsuits if a state treats a foreign company differently than a domestic one based on the sustainability of its production processes.
• Investment agreements frequently prohibit 'performance requirements'—such as technology transfer or local hiring rules—which developing countries have traditionally used to align foreign investment with national developmental and environmental goals.
• The expansion of 'indirect expropriation' to include regulatory actions for public health and the environment has created a 'chilling effect,' making governments reluctant to implement welfare regulations for fear of compensating investors.
• There has been a surge in investor-to-state dispute settlement, where investors use international arbitration to 'attack' host states. These proceedings are often characterized by secrecy, a lack of public access to documents, and binding decisions that cannot be appealed for legal mistakes.
• Concession contracts (host government agreements) are often negotiated privately and may include 'stabilization clauses' that require governments to restore a project's economic equilibrium if new environmental or health laws reduce profits.

APA

Bernasconi-Osterwalder, N. (2003). International Legal Framework on Foreign Investment. Center for International Environmental Law. https://www.ciel.org/wp-content/uploads/2015/03/Presentation_Kiev_Final-21May03.pdf

Chicago

Bernasconi-Osterwalder, Nathalie. International Legal Framework on Foreign Investment. Center for International Environmental Law, 2003. https://www.ciel.org/wp-content/uploads/2015/03/Presentation_Kiev_Final-21May03.pdf.

Wikipedia

{{cite report |last1=Bernasconi-Osterwalder |first1=Nathalie |title=International Legal Framework on Foreign Investment |publisher=Center for International Environmental Law |date=23 May 2003 |url=https://www.ciel.org/wp-content/uploads/2015/03/Presentation_Kiev_Final-21May03.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bernasconiosterwalder2003international, author = {Bernasconi-Osterwalder, Nathalie}, title = {{International Legal Framework on Foreign Investment}}, institution = {Center for International Environmental Law}, year = {2003}, month = may, url = {https://www.ciel.org/wp-content/uploads/2015/03/Presentation_Kiev_Final-21May03.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }