Rethinking National Investment Laws

The report examines national investment laws as versatile domestic policy instruments, tracing their evolution from 1950s development-driven codes to 1980-2010 models aligned with international treaty standards. It identifies seven primary functions of contemporary investment laws: governing admission, conferring incentives, facilitating investment, guaranteeing legal protection, managing disputes, specifying investor obligations, and monitoring oversight. The authors argue against 'off-the-shelf' models, suggesting instead a functional framework where design is tailored to national context and sustainable development objectives. The report warns against the risks of 'legal enclaves' and the potential for costly litigation when treaty-style protections and advance consent to international arbitration are incorporated into domestic law.

• National investment laws have evolved through three distinct phases: an early period (1950–1979) driven by domestic development priorities, a period of alignment with international standards and investment treaties (1980–2010), and a current phase of renewed interest in diversifying these laws to meet modern challenges.
• The report identifies seven main functions that contemporary national investment laws serve: governing the admission and approval of new foreign investment, conferring and administering investment incentives, facilitating investment, guaranteeing legal protection, establishing systems for managing investor–state disputes, specifying investors’ obligations, and monitoring and oversight of investment.
• A survey of 70 investment laws reveals that at least 80% deal with investment incentives, roughly 70% guarantee legal protection to investors, and almost 70% expressly address the settlement of investment disputes.
• The report warns that incorporating treaty-style protections, such as fair and equitable treatment (FET) or stabilization clauses, into national laws can create 'legal enclaves' and expose states to the same legal and financial risks as old-style investment treaties.
• There is a significant trend toward 'negative list' approaches for investment admission, where foreign investment is permitted in all sectors except those specifically listed as restricted, as opposed to 'positive list' approaches which are now rare.
• The report argues that there is no universal 'off-the-shelf' model for investment laws; instead, the appropriate design depends on the national context and the specific functions policy-makers want the law to serve to promote sustainable development.
• The report highlights the risk of 'automatic' investment approval upon the expiry of a time limit, which can be particularly problematic for developing countries with limited bureaucratic capacity to conduct environmental or social impact assessments.

APA

Bonnitcha, J., Nikiéma, S. H., & John, T. S. (2023). Rethinking National Investment Laws. International Institute for Sustainable Development. https://www.iisd.org/system/files/2023-07/rethinking-national-investment-laws-en.pdf

Chicago

Bonnitcha, Jonathan, Suzy H. Nikiéma, and Taylor St John. Rethinking National Investment Laws. International Institute for Sustainable Development, 2023. https://www.iisd.org/system/files/2023-07/rethinking-national-investment-laws-en.pdf.

Wikipedia

{{cite report |last1=Bonnitcha |first1=Jonathan |last2=Nikiéma |first2=Suzy H. |last3=John |first3=Taylor St |title=Rethinking National Investment Laws |publisher=International Institute for Sustainable Development |date=July 2023 |url=https://www.iisd.org/system/files/2023-07/rethinking-national-investment-laws-en.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bonnitcha2023rethinking, author = {Bonnitcha, Jonathan and Nikiéma, Suzy H. and John, Taylor St}, title = {{Rethinking National Investment Laws}}, institution = {International Institute for Sustainable Development}, year = {2023}, month = jul, url = {https://www.iisd.org/system/files/2023-07/rethinking-national-investment-laws-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }