Exploring International Trade and Investment Law: Tips on Analyzing Key Instruments and Practical Research

International Trade and Investment Law shapes global commerce through a web of agreements and treaties. Key instruments like Bilateral Investment Treaties (BITs) and Regional Trade Agreements (RTAs) are crucial in this dynamic field. Understanding these instruments is essential for navigating the complexities of international trade and investment. The JGLR editorial team had the invaluable opportunity to interview Mohammad Akefi Ghaziani, Ph.D. in International Law. Dr. Ghaziani's works focus on enhancing global welfare through trade and investment law. His Ph.D. dissertation delved into the relationship between International Investment Agreements (IIAs) and renewable energy investments. With several scientific articles to his name, Dr. Ghaziani continues to tackle issues like economic development, energy transition, and climate change through the lens of international law.

1. Can you share with us how you first became involved in international trade and investment law?

Since my early teen years, I was eager to explore humanities and social sciences, particularly in the fields of history and international relations. Later on, I began to write short notes, particularly about astrology— kind of charts and surveys, indeed. When I was pursuing my bachelor's degree, I became inclined to conduct elementary pieces of research about law. I found it to be the precious fruit of humanity and social life, which still needs to evolve to address several errors in the daily, national, and international practices of mankind. I found international law to be the most impactful single branch of legal studies, which overshadows every aspect of law.

Hence, during my Master’s course in International Law, I tried to focus on international law mechanisms that enhance the welfare and prosperity of mankind throughout the world. It appeared to me that several societies are directly or indirectly suffering from economic difficulties, energy poverty, climate change, etc. I tried to find solutions for these challenges through the prism of international law. Delving into the subject, I became persuaded that international trade and investment law, as its subsystems, are increasingly responding to these challenges in one way or another. Therefore, I dedicated my Master’s thesis to a more or less interdisciplinary topic in this field (i.e., Legal Consequences of Iran's Membership in the Energy Charter Treaty from the viewpoint of the Rules Governing Foreign Investments). Since then, I have been writing about different aspects of International Investment Law and its correlations with energy transition, security, disasters, economic development, etc. I recently defended my Ph.D. dissertation, which focused on the relationship between International Investment Agreements (IIAs) and the promotion and protection of renewable energy investments, while publishing several scientific articles in this field.

2. How do bilateral investment treaties (BITs) impact foreign direct investment cases?

It is indeed a controversial issue. Some scholars contend that BITs either have no impact on the promotion of foreign investments or do not play a significant role in this context. However, many recent studies acknowledge the potential contribution of BITs to the protection and promotion of foreign investments in state parties. The increasing number of Investor-State Dispute Settlements (ISDSs) is evidence of this fact. So far, there have been hundreds of BIT-based ISDSs; many of which are decided in favor of foreign investors. There is no doubt that well-drafted applicable BITs can create a sense of confidence among foreign investors and increase the predictability of their investment outcomes. These factors can encourage prospective investors to choose the correct investment destinations, resulting in the promotion of foreign investments, ceteris paribus.

The efficacy of BITs largely depends on their provisions. In my opinion, a BIT can have a positive impact on foreign investment promotion if it combines protective standards of treatment with some investment promotion provisions and envisages a reliable ISDS mechanism. Besides, the protective standards need to be definite, have broad applicability, and limit the tribunals’ margin of interpretation. The more definite the BITs’ provisions, the more predictable and consistent the arbitral awards.

3. What role do regional trade agreements (RTAs) play in international trade?

Generally speaking, RTAs are a special kind of International Investment Agreements (IIAs) as they often contain a considerable number of investment obligations. Therefore, these instruments can increase the flows of trade and foreign investment among nations. It is really interesting to know that RTAs have proved to be among the exemplary IIAs. The most notable examples are the Agreement between the US, Mexico, and Canada (USMCA) and the Central American-Dominican Republic Free Trade Agreement (CAFTA-DR), which have adopted several modern approaches to investment liberalization and protection, security, transparency, and dispute resolution. These approaches benefit both the covered trade and investments and can be followed by future IIAs.

4. Do you have any tips on how to effectively research foreign direct investment case law? Aside from journals, are there other ways to find cases related to specific keywords?

First and foremost, it is important to know that not all investment case laws are transparent. This is particularly due to the fact that investment arbitration is a developed form of commercial arbitration, where confidentiality is one of its peculiarities. Thus, it may not always be possible to access all of them. However, more and more investment case laws are being released today, and there are some notable databases where you can find the cases in detail. As a researcher who has analyzed a relatively large number of investment arbitrations, I recommend using Jus Mundi, Investment Policy Hub, and italaw. Researchers can find almost any information about the released investment arbitrations through these sites. Specifically, Investment Policy Hub enables you to search for the “breaches alleged” and “breaches found” throughout the indexed disputes.

5. If there is a contradiction between the jurisdiction decision and the award in an investment arbitration case, which one should be followed?

Principally, investment arbitrations are not exempted from the customary requirement of the exhaustion of local remedies. Therefore, in the absence of a waiver of local remedies, clear ISDS mechanisms under the applicable IIAs, or the host State’s consent to directly refer the dispute to arbitration, we may encounter the problem of parallel proceedings and the breach of lis pendens rule. Here, I need to recall the principle of forum prorogatum, according to which a host State’s engagement in (investment) arbitration per se is evidence of its eventual consent to this process.

As a matter of fact, most often, once the arbitral awards are handed down, the host States voluntarily implement them. This is because the initiation of investment arbitration depends on the parties’ consent, and States are free to omit ISDS from their IIAs or opt out of such provisions from the outset. Committing themselves to such clauses and refraining from the implementation of arbitral awards principally amounts to a breach of pacta sunt servanda and is against the good faith in trade/investment tradition. As a result, the investors may file cases in other territories where the host State is believed to have assets in order to collect the sums awarded by the tribunals. This leads to a sort of chaos and a bulk of disputes against such governments here and there. Therefore, the judgments taken by courts in some jurisdictions to give effect to investment awards are generally not a constructive approach. By the way, refraining from implementing arbitral decisions has a negative impact on a State’s foreign investment profile and thereby may act as a factor discouraging foreign investors from making future investments.

6. How do you see the future of international trade and investment law evolving?

Overall, international trade and investment law literature is gradually benefiting from an increasing number of sector-specific studies. We are witnessing the evolution of international trade and investment law doctrine. Similarly, arbitral decisions, which have traditionally been suffering from divergent and sometimes contradictory approaches, are aligning more and more, concretizing a sort of stare decisis in international arbitration. Moreover, modern IIAs are incorporating tailored provisions that help create a level playing field for these instruments to increasingly promote foreign investment and trade across borders. Many States have not signed any IIAs among themselves, and sooner or later, I foresee that they also will hold negotiations to keep pace with the prevailing international trade and investment law trends.

Unfortunately, many enforceable IIAs do not meet the high standards of investment protection. They need revisions to break barriers and unleash their utmost legal potential in favor of investment and trade liberalization. New IIAs need to adequately address issues like protection against cyber and physical threats, police power and indirect expropriation, standards of compensation, transparency, institutional frameworks that can better solidify cooperation among the actors and facilitate technology diffusion, definite ISDS mechanisms, and umbrella clauses to internationalize investment contracts and host States’ obligations toward foreign investors. Overall, I believe the era of international investment and trade has taken off, and that addressing all these issues can help catalyze this much-needed process.

This interview was conducted by the Associate Editors of JGLR: Fresina Choerupriyatna, Keyza Audirasandi, Sabina Zildji.