Corporations and Business Law: International Investment Law Report

This report provides an analysis of International Investment Law, focusing on the complexities of International Investment Agreements (IIAs) and the crucial concept of the 'right to regulate'. It examines how the right to regulate, the sovereign right of any state to regulate public policy for the public interest, has gained prominence in recent years as countries seek to balance investor protection with their regulatory autonomy. The report investigates the evolution of IIAs and the challenges faced by developing countries in maintaining policy space, particularly in areas like health, safety, and environment. It presents a comparative study of South Africa and Brazil, highlighting their distinct approaches to managing foreign direct investment (FDI) and their experiences with bilateral investment treaties (BITs). South Africa's reliance on BITs and the subsequent limitations on its policy space are contrasted with Brazil's efforts to maintain regulatory control. The report concludes by emphasizing the need for countries to find a balance between investor interests and developmental priorities, advocating for creative and flexible alternatives that go beyond simply safeguarding policy space and incorporate broader economic objectives.

Running head: CORPORATIONS AND BUSINESS LAW
INTERNATIONAL INVESTMENT LAW
Name of the Student
Name of the University
Author Note

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Introduction:
An International Investment Agreement (IIA) is treaty between the countries which
refers to the issues in relation to investments across border generally for the reason of
promotion, protection and liberalisation of those investments (Subedi 2016). The concept of
‘right to regulate’ is observed as a complex aspect of understanding the growth of the
international investment law and its policy (Mouyal 2016).
Discussion:
The States’ right to regulate as well as control for the public interest has been the
main point of focus of increasing interest recently by finding formal acknowledgement in
several agreements of international investment. Formal consideration of this right of
regulation has been referred to greatly as a type of positive growth for making IIAs
comparatively more balanced in addition to giving the arbitral tribunals a clear information
against limiting the regulatory space of the States. This right to regulate can be regarded as
the sovereign right of any State to regulate the public policy for the interest of the public. As
the IIAs were formed to restrict some of the aspects of the rights of the countries to regulate,
the 1st wave of the IIAs prevented the regulatory experimentation regulated by the host
countries which could impose harm and affect the rights of the foreign investors. Increasing
number of domestic criticism together with new challenges before the tribunals against the
countries that have developed made them seek some policy space within the IIAs under the
ambit of the right of regulation. This improvisation in the investment law has mainly
benefited the countries that aim to regain the policy space in areas of health, safety and
environment.
In the light of this debate together with approaches based on development, countries
located in the Global South have failed to get same attention. From the aspect of the

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developing countries, reformation for promoting more policy space must be able to make
room for experimentation of policy in several areas ranging from distributive justice to
industrial policy. In this write up, proposal to enlarge the scope of right to regulate in IIAs for
including a dimensional development by considering the experiences of two countries namely
South Africa together with Brazil. Reforms that had occurred in these two countries unfold in
the relation of enhanced opposition with traditional model of investment protection
(Gaukrodger 2017). Such reforms can affect the reforms directed to the greater policy space
for the purpose of development.
South Africa is such a country that is still trying to cope up with inequality issue. It
highly depends on the foreign capital. It developed a strategy for attracting foreign direct
investment (FDI), according to which it entered in to bilateral investment treaties (BITs) with
those countries that are proficient in capital exporting to proceed towards global capitalism
commitment. The formulation of BITs permitted negligible policy space in respect of the host
nations and there lies no room for promoting the race based policies detrimental to the rights
of the investors. Desperate to enter into the system of global capitalist after isolation and for
the need of capital, the country failed to evaluate the negative externalities on the policy
space of BITs, until several disputes appear in the country’s scenario.
On the other hand, Brazil has successfully maintained the policy space apart from the
traditional investment scheme. The engagement of the country with other investing policies
has changed from withstanding standard BITs in 1990s to creating a new model for
investment in 2015 by replacing the standard of investing shield based on cooperation and
facilitation in investment. In these two situations, the Brazilian government was mainly
concerned with protecting the regulatory space of the country from commitments related to
investment.

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Conclusion:
Both the countries’ experimentation with the law of investment and policy for
resulting development faces a number of challenges. Their practice externally goes against
the traditional system on the basis of more than three thousand treaties that are made with the
neoliberal approach for investing regulation (Peinhardt and Wellhausen 2016) In spite of
these challenges, the experiences faced by Brazil and South Africa show that there lies
prospects of re-imagination and remodelling of the present investing policy in which the
interest and benefits of the investors are in relation with the developing aspects of the host
countries. The main need in this regard is to achieve a balance on the conflicting interest,
every country is required to be more creative in forming flexible alternatives that can go
behind and beyond the safeguard policy space on the fields of health and safety and
environment and incorporate other economic priorities of the country.

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References:
Gaukrodger, D., 2017. The balance between investor protection and the right to regulate in
investment treaties: A scoping paper.
Mouyal, L.W., 2016. International investment law and the right to regulate: a human rights
perspective. Routledge.
Peinhardt, C. and Wellhausen, R.L., 2016. Withdrawing from investment treaties but
protecting investment. Global Policy, 7(4), pp.571-576.
Subedi, S.P., 2016. International investment law: reconciling policy and principle.
Bloomsbury Publishing.