LAWPPR

ARSI UNIVERSITY
SCHOOL OF LAW
GRADUATE PROGRAM (LLM PROGRAM)
LAW AND DEVELOPMENT STREAM
INTEGRATION OF ENVIRONMENTAL SUSTAINABILITY UNDER ETHIOPIA’S

BILATERAL INVESTMENT TREATIES
By: Musa Hussen
Advisor: - Abayneh Adane ( PhD)
May, 2021
Assela, Ethiopia
i|Page
A Thesis Submitted in Partial Fulfillment of the Requirements of LL.M Degree in Law and
Development
BY
Musa Hussen
Advisor: Abayneh Adane (PhD)
Arsi University, School of Graduate Studies,
School of Law
Asela
May, 2021
ii
Approval sheet by Board of Examiners
Integration of Environmental Sustainability under Ethiopia’s Bilateral Investment Treaties
I hereby declare that the Integration of Environmental Sustainability under Ethiopia’s Bilateral
Investment Treaties is my original work and that it has not been submitted for any degree or
examination in any other university. Whenever other sources are used or quoted, they have been
duly acknowledged.
Student: Musa Hussen ………………………….
Student No: SM/GS/172/2009
Approved by Board of Examines
Abyneh Adane (PhD) There is invisible signature on 17th May 2021
Advisor Signature Date
…………………………………….. …………………… ……………………..
Examiner Signature Date
………………………………….. …………………… ……………………..
Examiner Signature Date
iii
Acknowledgement
Alhamdulillah; I trust in Allah with all my heart. So I would like to thanks him for everything
happen!
I also would like to extend my sincere and heartfelt appreciation for my thesis advisor, Dr.
Abayneh Adane not only for his invaluable and academic comments, but also for his relentless
and friendly supervision of my thesis.
Lastly, I would like to express my deepest appreciation for my Mom, My Wife and all my
Nuclear families for their unreserved support in all aspects.
iv
Acronyms
ACP-African, Caribbean and Pacific
BITs- Bilateral Investment Treaties
CSE-Conservation Strategy of Ethiopia
EC-Environmental Council
EFMHACA -Ethiopian Food, Medicine and Health Care Administration) and Control Authority
EIA-Environmental Impact Assessment
EIC- Ethiopian Investment Commission
EPA-Environmental policy Agency
EPA-Environmental Protection Authority
EPRDF-Ethiopian People Revolutionary Democratic Front
FDI- Foreign Direct Investment
FDRE-Federal Democratic Republic of Ethiopia
FET- Fair and Equitable Treatment
FEPAE -Federal Environmental Protection Authority of Ethiopia
FGRSAICs-Federal Government and Regional State Administrations Investment Councils
FTA-Free Trade Area
GATT-General Agreements on Trade and Tariff
GTP-Growth and Transformation Plan
HPRE-House of Peoples Representatives of Ethiopia
ICSID-International Convention for Settlement of Investment Disputes
IIAs-International Investment Agreements
IPAs-Investment Promotion Agencies

v
MEAs-Multilateral Environmental Agreements
MFN-Most Favored nation
MNCs-Multinational Corporations
MIGA -Multilateral Investment Guarantee Agency
MITs- Multilateral Treaties
NIAC-National Investment Advisory Council
NGOs-Non-Governmental Organizations
NHCWM-National Health Care Waste Management
NT- National Treatment
OECD- Organization for Economic Co-operation and Development
OECD-The Organization for Economic Co-operation and Development
SADC- The South African Development Communities
SD-Sustainable Development
TNC- Transnational Corporation
TNC- Transnational Corporation
UN- United Nations
UNCITRAL-United Nations Commission on International Trade Law
UNCTAD- United Nations Conference on Trade and Development
WB- World Bank
WTO-World Trade Organization
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TABLE OF CONTENTS
Title________________________________________________________________________ii
Approval Sheet_______________________________________________________________iii
Acknowledgement______________________________________________ ______________iv
Acronyms_____________________________________________________ ______________v
Abstract______________________________________________________ _____________xi
CHAPTER ONE______________________________________________________________1
1. INTRODUCTAION_____________________________________________________1
1.1.Background____________________________________________________________1
1.2.Literature Review_________________________________________ ______________4
1.3. Statement of the problems ________________________________________________7
1.4. Research questions _______________________________________ ____________9
1.5. Limitation of the Study_________________________________ ______________10
1.6. Objectives of the Research_____________________________________________10
1.6.1. General objective ____________________________________________________10
1.6.2. Specific objectives______________________________________ _____________10
1.7. Significance of the Study______________________________________________11
1.8. Research Methodology ___________________________________________________11
1.9. Scope of the research _____________________________________________________11
1.10. Structure of the Study ___________________________________________________12
CHAPTER TWO_____________________________________________________________13
GENERAL OVERVIEW ON BILATERAL INVESTMENT TREATIES__________ _____13
2.1. History and concept of investment treaties __________________________________ ___13
2.1.1. Introduction_________________________________________________________ ___13
2.2. Origins and Historical Evolution of Bilateral Investment Treaties____________________15
vii
2.3. The Structure of bilateral investment treaties __________________________________18
2.4. Reasons for Bilateral Investment Treaties______________________________________22
2.5. The Salient features of bilateral investment treaties_______________________________23
2.6. The impact of BITs on Foreign Direct Investment _______________________________24
2.7. Environmental regulatory space in international investment agreements_______________26
2.8. The BITs of other contracting states __________________________________________28
2.9. Recent Trends in States Practices on BITs______________________________________31
2.10. Risks and Opportunities of BITs ____________________________________________33
2.11. Model Bilateral Investment Treaties__________________________________________34
2.12. Bilateral investment treaties and sustainable development Nexus___________________39
2.13. Bilateral investment treaties and Environmental sustainability concerns______________40
CHAPTER THREE___________________________________________________________41
LEGAL REGIMES GOVERNING FOREIGN DIRECT INVESTMENT AND

ENVIRONMENTAL INTERETS IN ETHIOPIA___________________________________42
3.1. INTRODUCTION_________________________________________________________42
3.2. Legal Frame Work On FDI in Ethiopia_________________________________________43
3.2.1. FDRE Constitution_______________________________________________________43
3.2.2. Subsidiary legislatives on investment in Ethiopia_______________________________44
3.3. Institutional framework for investment in Ethiopia_______________________________45
3.3.1. Ministry of Trade _______________________________________________________45
3.3.2. Ministry of Industry ____________________________________________________50
3.3.3. Ethiopia Investment Board_______________________________________________50
3.3.4. Ethiopia Investment Commission__________________________________________51
viii
3.3.5. The Federal Government and Regional state Administrations Investment Council
(FGRSAIC) _________________________________________________________________52
3.3.6. National Forums for FDI in Ethiopia _________________________________________53
3.4. Legal and Institutional framework on Environmental Sustainability interests in Ethiopia__54
3.4.1. Ethiopia’s Legal frame work on Environmental sustainability__________________ ___56
3.4.1.1. Ethiopia’s international Environmental sustainability conventions_______________ _56
3.4.1.2. Ethiopia’s Environmental sustainability policies_______________________________57
3.4.1.3. Ethiopia Environmental Sustainability laws __________________________________60
3.4.2. Institutional framework on Environmental sustainability in Ethiopia ________________67
3.4.3. Law of sustainable development in Ethiopia___________________________________68
3.4.4. The principle of Environmental integration BITs and interrelationship in Ethiopia _____69
CHAPTER FOUR____________________________________________________________70

BILATERAL INVESTMENT TREATIES ________________________________________71
4.1. INTRODUCTION ________________________________________________________71
4.2. The Definition, Objectives and Scope of BITs in Ethiopia _________________________72
4.3. Scope of Application of the BITs of Ethiopia___________________________________73
4.4. Objectives of the BITs of Ethiopia____________________________________________74
4.4.1. Foreign Direct Investment promotion ____________________________________75
4.5. The Structures and Nature of BITs of Ethiopia___________________________________75
4.6. Basic Characteristic Features of BITs Signed by Ethiopia__________________________78
4.7. Ratified and non ratified BITs of Ethiopia______________________________________78
4.8. Bilateral Investment Treaties and Sustainable Development in Ethiopia_______________83
ix
4.9. The status of BITs on environmental sustainability interests in Ethiopia______________84
4.10. Environmental mainstreaming in Ethiopian BITs projects ________________________92
4.11. The need to integrate environmental sustainability within the BITs of Ethiopia________93
4.12. Ethiopia BITs and obligations to regulate Environmental sustainability ______________95
4.13. The Draft Model BITs of Ethiopia___________________________________________96
CHAPTER FIVE_____________________________________________________________97
5.1. CONCLUSSION AND RECOMMENDATIONS_______________________________97
5.1.2. Conclusion_____________________________________________________________97
5.1.3. Recommendations ______________________________________________________103
6. References _______________________________________________________________107
x
Abstract
In the world we are living in, well managed investment is a proper route to economic prosperity.
Here, we have to discern the fact that this mainly implies foreign investment, and different
countries endeavor to attract this kind of investment. Accordingly, there is a fruitful proliferation
of foreign direct investment that presupposes well regulatory system which at the same time
insures both investment protection and business accountability. During the past few decades,
many developing countries, including Ethiopia, have begun to sign Bilateral Investment Treaties
(BITs) to attract Foreign Direct Investment (FDI). However, these BITs signed by the country
remained silent about Environmental sustainability. Environmental sustainability is main pillar
of Sustainable development, and is a fundamental principle of International Law.
This research after analysis of BITs, international legal instruments, literatures, has found that
the terms and conditions of BITs that signed by the country failed to address developmental
concern through environmental sustainability. These treaties have been limited to address the
interest of foreign investors through creating conducive environment. In order to balance the
interest of parties involved in the economic relations, the study recommends re-negotiations of
these treaties to accommodate environmental interest which sustains development.
Key terms: - Environmental sustainability, Foreign Direct Investment, Bilateral

Investment Treaties
xi
CHAPTER ONE
INTRODUCTION
1.1. Background
The current international economic relationship among States is characterized by massive cross-
border flow of capital paving ways through which foreign nationals could directly invest their
finance in other States. This type of capital flow, referred to as Foreign Direct Investment (FDI),
often takes place between capital exporting and capital importing countries. The effect of FDI in
the state which hosts the investment is multifarious. For one thing, it contributes the economic
development of the state through adding capital inflow, creates job opportunity.... This economic
goal is not automatic, since its success depends on many factors including regulatory measures in
a way that balances party’s interest besides existence of good governance in the hosting country.
Otherwise, the inflow of foreign investment entails negative repercussion on the environmental
interest detrimental to public interest.1
Viewed from historical aspect, international investment laws has passed through different stages
of development ranging from application of domestic laws on the foreign company to the
recent treaties based legal regimes. In this sense, the Havana Charter of 1948 can be remarked a
base for universal trade agreement that spawned the General Agreement on Tariffs and Trade,
the GATT.2 It has been almost sixty years (1959) since the first BIT was signed between
Germany and Pakistan to protect transnational capital.3
Currently, Bilateral Investment Treaties (BITs) are used as the main means that regulate foreign
investment internationally. But it seems that developing nation’s governments are giving due
concern for economic gain through treaty as means of FDI attraction by waiving aside
maintenance and realization of environmental interests. Ethiopia has ratified dozens of BITs to
attract the inflow of FDI’s in to the country4 However, there is ongoing issue with this source of
1
Foreign Direct Investment and the Environment: Pollution Haven Hypothesis Revisited, Aliyu Mohammed ,2005
2
Konrad Von Moltk and Howard Mann (2004) Towards A Southern Agenda on International Investment:
Discussion Paper on the role of International Investment Agreements, at http://WWW.iisd.org. p.3
3
Mulugeta Getu, the Ethiopian floriculture and its impact on the environment, 2011.
4
Asaminew Gizaw , Ethiopia’s Bilateral Investment Treaties and protection of the environment,2017
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laws regarding whether they integrative in environmental interest in the hosting country.
Primarily, the main regulator body of international investment laws, Bilateral Investment
Treaties (BITs) signed between investor and host state since the primary goal of BITs is to
create confidence between investor and host state. 5 However, it has been often criticized for lack
of flexibility to balance competing economic interests of the parties involved in such relations.
Compared to most national or regional investment flows, international investment is under-
regulated. Most binding agreements at the international level are instruments for investor
protection. BITs have varying scope and complexity, and have been signed between countries at
all levels of development. In this respect, the proposed OECD, Multilateral Agreement on
Investment would have combined the most investor-friendly parts of these previous agreements,
6
inside a framework aimed at total liberalization with direct investor-state dispute settlement.
These instruments, however, is limited to promote FDI while narrowing the host country
capacity to control the behavior of foreign business. As with any market, the lack of adequate
international regulation over FDI will result in uncontrollable environmental pollutions. For this
reason, foreign investments tend to cause environmental damages.
After Stockholm conference of 1972, the 1992 Rio Declaration on Environment and
Development can be the major move made by the international community to control the
behavior of the transnational community to safeguard environmental damages. 7. Due to positive
impact of the international community move to balance economic interest with environment and
social interest, in the second half of the 20th century new BITs have been emerged that
accommodate environmental sustainability in the agreement. The soft law approach, through
Organization of Economic Center for Development (OECD) agreement in 1999, can be cited as
the best practice at international level.8
5
Ibid
6
Habtamu.L, interplay between investment laws and environmental laws in ethiopia with regard to environmental
protection, 2015.
7
Peterson, Luke Eric (2004) “Investment Treaty Tribunal Looks under the Umbrella,” Invest-Sd News Bulletin,
8
Ibid
2
However, the existing international community practice on the environmental sustainability lacks
strong implementation mechanisms. For example, the UNCTAD Code on Controlling Restrictive
Business Practices has no adequate international regulation over FDI behavior. For this reason,
there are allegation on the existence of negative relationship between foreign business with
environment that might be caused be relaxed environmental regulatory frame work by a hosting
country due to poor governance and corruption.9
Developing countries including Ethiopia have embarked upon an ambitious effort to conclude
Bilateral Investment treaties with many countries to achieve its economic object. The country is
not different from global economic influences/globalization pressures and environmental
sustainability concerns. At the era of Emperor Hialeselassie the country had adopted liberal
economic policy which allowed pro-foreign investment which was changed in to Marxist
economic policy by the military regime in the 1994.10 During Marxist regime, the forest law can
be the first attempt that made to protect environmental interest. Forest Proclamation number
225/1965) incorporated the issue of environmental protection under its Article 55 (3).11
However in 1991, the country returned back to pro-foreign capital due to seizure of the present
regime since 1992 when the country has enacted different laws to attract foreign direct
investment (FDI). In this respect, the 1995 FDRE Constitution has inserted mixed economic
policy that allow private economy, in addition to free movement of foreign capital in to the
country and state involvement in the market either directly as well as through regulatory
measures.12
In order to attract foreign investment, the country has gone through serious amendments of its
investment laws to create at most smooth and favorable environment for foreign investment
(Proclamation No.15/92, Proclamation No. 37/1996, Proclamation No. 116/1998, Proclamation
280/2002, Proclamation No.769/2012 and the recent amendment proclamation (proclamation
No.849/2014). As a result foreign capital has joined in to the county. Currently, we have near
9
Nick Mabey and Richard McNally, Foreign Direct Investment and the Environment: From Pollution Havens to
Sustainable Development, 1999.
10
Meskerem Daniel Menamo, Impact of Foreign Direct Investment on Economic growth of Ethiopia, 2019, p.6,
availableathttps://www.duo.uio.no/bitstrean1/handle/l0852/39250/Menamo-Meskerem-
MasterThesis.pdf?seguence=1 accessed on 10 November 2019
11
Ethiopia Forest Proclamation, Proclamation Number 225/65)
12
Mekete Teferi, The Existing Status of Bilateral Investment Treaties in Ethiopia: Issues and Trends, 2011
3|Page
40 BITs which are signed by the country. The government has also come up with several
environmental protection laws. Pillar legal provisions are incorporated in the 1995 Constitution
to guarantee the clean and health environment to everyone. Number of environmental protection
laws enacted in the country. Environmental impact assessment Proclamation, Proclamation
No.299/2000, environmental Pollution control Proclamation, Proclamation No.300/2002, and
solid waste management Proclamation, Proclamation No. 513/2007, are some of the laws to
maintain environmental sustainability.13 Despite the existence of regulatory frame work, there
exists a negative relationship between international investment and the environment. The thesis
was aimed at examination of an integration of the environmental sustainability in BITs ratified
by Ethiopia in protection of FDI. It is to examine if an environmental sustainability is also a
concern to BITs that Ethiopia has signed/ratified with different states so far.
1.2. Statement of the problem
The 1995 Constitution incorporates significant provisions dealing with environmental interest.
Accordingly, Article 92 lays down the environmental objective and described this in its sub
provisions.14 Depending on this base of the constitution different laws and regulations have been
15
enacted by the government of Ethiopia. Despite promulgation of environmental laws and
policies since 1995, environmental interests have not been integrated to BITs ratified so far.16 As
indicated by Ethiopian Investment Commission and some researchers, most of the FDI in
Ethiopia seems to go the manufacturing sector which has been causing serious environmental
pollutions. Almost all BITs signed by the country with different investment nations failed to
integrate environmental interests. Ethiopia-China BIT of 1998, the Ethiopia-Yemen BIT of 1999
(both entered in to force in the year 2000) and Ethiopia-Sudan BIT of 2001, Ethiopia-Turkey,
Ethiopia –Tunisia are few examples that can be mentioned.
The issues of lack of integration of environmental sustainability under BITs ratified by Ethiopia
so far needed an urgent and practical character when real cases of environmental sustainability
13
Adede A, International Environmental Law Digest; Instruments for International Responses to Problems of
Environment and Development 1993)
14
See FDRE Constitution, Article 92
15
Gilbert Nyamweya Omoke, environmental management and direct foreign investment in
sustainably,Kenya,Nairobe,2011
16
Ibid at 5
4
17
issues are examined. . Most of the BITs that signed by the country generally seem traditional
BITs categories which are solely limited to deal with protection of investors’ property interest
without any concern for environmental sustainability. Hence, it is traditional similar to early
BITs that made between Germany-Pakistan in 1959. For instance, Ethiopia-France BIT of 2004,
Ethiopia-Israel BIT of 2004, Ethiopia-Tunisia BITs of 2000, Ethiopia-Turkey BITs of 2000
focused only on investment matters as first and second generations of BITs. 18 This has been
causing damage on the environment and hindering any effort control the same. It is widely
believed that bilateral investment treaties contribute to establish a favorable investment climate,
build confidence and sending a positive signal to investors. For home countries, the most
important purpose of bilateral investment treaties is to secure predictable conditions for their
investment abroad, including certain standards of treatment and protection. But such investment
activities has to be in compliance with environmental sustainability and the FDI protection
principles enshrined in BITs must not be at the cost of environmental interest.19
Environmental standards are criteria for measuring acceptable quality of the environment with
regard to pollutions. The environmental law protects the environment by stipulating standards
such as standards of pollutants released to air, standards for production and control of hazardous
materials. Today, environmental sustainability standards are aimed at protecting the
environmental quality than compensating the harm caused to an individual. Thus, the modern
environmental law focuses to protect the environment itself. Bilateral investment treaties need to
strike a balance between providing predictable conditions for investment abroad and reserving
for host countries the flexibility to pursue their economic development and maintain their
environmental sustainability.20Considerable numbers of Ethiopian people are farmers and/or
residents of rural areas. Any investment activities of investors must be in compliance with such
interest of the Ethiopia farmers. Specially, regarding large scale farming investment activities,
there are environmentally dangerous implications. In running agricultural activities, investors
17
Tesfaye Abate,Laws of investment and environmental protection: The case of Ethiopian large scale
agriculture,2018.
18
Asaminew Gizaw ,Ethiopia’s Bilateral Investment Treaties and protection of the environment,2017.
19
Michael P. porter, the Ethiopian investment law, Addis Ababa University, 1999.
20
5
have been using fertilizers too boost their product.21 This however, has been causing damage on
the environment. In addition, the steady population growth, with its increasing need for energy
and food, presents a challenge for the environment. More people mean more demand for energy
and food production, and more demand for production would result in more carbon emissions.
Emissions of greenhouse gases from energy and food production cause climate change. In short,
managing the interplay between investment and environmental sustainability is a grand challenge
which needs immediate action in integration of the two in an inseparable manner. This thesis is
examined an integration of environmental sustainability into BITs ratified by Ethiopia so far,
identified the setbacks and proposed possible the ways out. 22
1.3. Literature review
The literatures which deal with FDI protection and environmental concerns in Ethiopia, though
they are not mainly aimed at identifying the means how to integrate environmental sustainability
concerns based on the BITs signed by the country Ethiopia so far. In one way or another, these
literatures focused on protection of environmental protection. Among them Getahun Seifu was
the one who has examined foreign direct investment in Ethiopia and the emergence of bilateral
investment treaties and regulatory space of the respective country23. He focused on the
fundamental rights related to non-discriminatory treatments, that are national treatment and most
favored nation treatment of foreign investments are relative rights. He argues that these treaties
grants protection to investors and denied safeguard to its own nationals.
Mekete Teferi has examined the Status of Bilateral Investment Treaties in Ethiopia, Issues and
Trends24. This study has been limited to deal with the status of BITs, and has not been extended
to negative spill over on Ethiopia environmental policy if not properly regulated. Furthermore,
the study has not deeply explored the way how to integrate an environmental sustainability issues
into the BITs of Ethiopia.25
21
Laws of investment and environmental protection: The case of Ethiopian large-scale agriculture, Abebe, Tesfaye
Abate, March 2018
22
Ibid
23
Girma seifu, foreign direct investment in Ethiopia and the emergence of bilateral investment treaties and
regulatory space of the respective country,2016
24
Mekete Teferi, the Existing Status of Bilateral Investment Treaties in Ethiopia: Issues and Trends, 2011.
25
Ibid.
6
Asamnew D.Gizaw, has examined Ethiopia’s Bilateral Investment Treaties and protection of the
environment26. However, this work has not examined the issue of integration of environmental
sustainability concerns directly though it has focused on environmental protection. On the other
hand, Ethiopia has no model BITs as countries like Canadian, American, Brazil, South Africa,
Belgium and the likes did which in vain can negatively affect an environmental sustainability of
the country.27
Tesfaye Abate, on his work ‘Laws of investment and environmental protection: The case of
Ethiopian large-scale agriculture’ after having identified the existence of enforcement gaps in the
area has proposed proper enforcement of laws through supervision and monitoring by a proper
authority. This work, has focused largely on agricultural area, and has not directly deal
environmental issues relating to BITs signed by the country.28
Habtamu Lanjore, on the other hand, has examined the interplay between investment laws and
environmental laws in Ethiopia with regard to environmental protection29. He has proposed that
the right to live in clean and healthy environment is guaranteed under the FDRE Constitution,
1995. In order to achieve this goal, he recommended the government to make more effort to
enforce this right. Still this research has not examined an integration of environmental
sustainability under Ethiopian BITs in protection of FDI.30
Mulugeta Getu, in his research work on "Ethiopian floriculture and its impact on the
environment”, has analyzed practical environmental impacts of the project after having identified
some legal gaps in connection with floriculture sectors. He underlined the existence poor
management of waste material by floriculture investment, and recommended the removal of the
waste. However, this work has not engaged directly on the integration environmental
sustainability relating BITs of Ethiopia.31
26
27
Ibid
28
agriculture,2018.
29
protection, 2015.
30
Ibid
31
7
Yehualashet Tamiru has examined the Symmetry of Ethiopia’s Bilateral Investment Treaties. His
work has been general to deal with the status of Ethiopia BITs on environmental sustainability
concerns.32
Elias Nour work has been directed to environmental laws of the country, and he has made an
attempt to explore legal gaps on EIA Proclamation and Pollution Control Proclamation. 33 But,
this work has limited scope since it has been focused on environmental protection relating to
floriculture industry.34
Generally, the foregoing literature review reveals that the question of the implication of
environmental sustainability under BITs signed by the country under the guise of FDI has not
been specifically studied in a holistic manner. The existing studies address the relationship
between FDI and the environment, however, they mostly have not directly attempted to integrate
environmental sustainability with BITs that signed by the country. It is the objective of this study
to integrate environmental sustainability with BITs35 Realizing the importance of curb the
existing gaps in the literature would the work paves the way for materialization of the principles
sustainable development in the country. To this end, this study has endeavored to identify
problems associated with environmental concerns so as to balance development interest with
environmental concern. In this regard, the joint work of Martha Belete and Tilahun Esmael, that
reviews Ethiopia’s BITs in light with investors’ treatment standards, might give us glimpse for
the discussion on the issue.36
32
A Critical Examination of the Symmetry of Ethiopia’s Bilateral Investment Treaties,Yehwalashet Tamiru,
September 2019
33
Investment promotion and environment protection in Ethiopia's floriculture, Elias Nour,2014,p 43
34
Ibid
35
Wakgari Kebeta Djigsa, The Adequacy of Ethiopia’s Bilateral Investment Treaties in Protecting the Environment:
Race to The Bottom, HARAMAYA LAW REVIEW 6 (2017): 67-90
36
98 M Belete and T Esmael ‘Rethinking ethiopia’s bilateral investment treaties in light of recent developments in
international investment arbitration’ (2014) 8:1 Mizan Law Review 117-144
8
1.4. Research questions
To search solution for the stated problem, the study was guided by the following key questions.
1. What is international legal regime governing the behavior of foreign investment on the
issue of protection and integration of environmental sustainability?
2. Does the existing legal regime adequate to balance the interest of parties involved in the
relationship?
3. Does BITs signed by Ethiopia actually balance the property interest of foreign investment
with environmental interest?
4. What are the best international practices?
1.5. Limitation of the study
The main limitation of the study is lack of adequate materials written on the issues in the context
of Ethiopia pertaining to the area of a special focus. The other limitations are financial problems,
time constraint and problems associated with access to internet facility. There are difficulties of
getting all BITs in English language. For instance, the BIT Ethiopia concluded with Italy is
available only in Latin and that concluded with Brazil with Brazilian, which makes it almost
impossible to examine its content.37
1.6. Objectives of the Research
1.6.1. General objective
The general objective of this research is to examine the adequacy of national legal regime
governing foreign investment, basically BIT’s signed by the country, have been in align with
protection and integration of environmental concerns, or not; and to search any policy
alternatives.
37
agriculture,2018.
9
1.6.2. Specific objectives
More specifically, it aimed to:
1) To examine the adequacy of international legal regime governing foreign investment, on the
protection and integration of environmental concern, or not;
2) To examine the adequacy of BITs signed by the country issue of on the integration of
environmental interest.
3) To examine whether these BITs balanced the property interest of foreign investment with
environmental protection; and
4) To search any policy alternative based on the analysis of international instruments and
foreign experience.
1.7. Significance of the Study
This study might contribute to policy alternative for law making organ, besides creating
awareness on the law enforcing organs. Academically, it is also expected to add new insight for
academic purpose.
1.8. Research Methodology
The study has followed doctrinal research method which involves analysis of legal texts,
literatures, documents to overcome inadequacy associated with international investment laws.
In this respect, the study has collected international instruments, and best practices, and analyzed
together with BITs Ethiopia ratified/signed so far. Accordingly, Model practices and experiences
of Brazil, and South Africa and China’s have been examined to draw a lesson. The study has also
made the use of relevant literature written by renowned publicists to substantiate the principles of
sustainable development. Ethiopian environmental policy and laws have analyzed. In this
respect, IISD (International Institute for Sustainable Development) Model Agreement, Indian
Model BIT, SADC (South African Development Community) Model BITs, have been
considered.
In order to supplement, legal texts, selected officials from Federal investment Commission and
Federal Environmental Authority have been interviewed to show the underground reality
associating with enforcement problem. Among others; the selection of interviewee was based on
10
their professional experience and relevant educational back ground. The members and high
officials of Federal investment commission and the environmental Authority were targeted for
interview.
1.9. Scope of the research
The study has been focused sustainability of environment in the country through balancing
competing interest of parties involved in the economic relations based on the international legal
regime governing the economic relations through BITs. With respect, international experience
has been examined to draw a lesson for the country.
1.10. Structure of the Study
The study was organized in to five chapters. Chapter one focuses introductory matters including
problem statement, objective, methodology, research questions and so on. Chapter two is focused
on the general overview of bilateral investment treaties, historical evolution and development of
investment treaty instruments .The origin, evolutions of BITs is also dealt with under this
chapter. The structures, features and the status of other states on BITs are dealt with under this
chapter. BITs models practices are examined to compare it with Ethiopia BITs status on
Environmental issues. Additionally, the conceptual understanding of sustainable development is
examined under this chapter. The chapter tried to lay a foundation for international investment,
specially, bilateral investment treaties in general. Chapter Three focused on the legal and
institutional framework of investment and environmental sustainability in Ethiopia. The brief
over view on Environmental sustainability policies and laws of Ethiopia and policies, laws and
institutional set up of investment activates are analyzed under this chapter. The general concept
of environmental sustainability and evolution of environmental sustainability and Ethiopian
Investment laws and policies are dealt with in detail. Additionally, I endeavored to elaborate
Ethiopian investment laws that balance the vey objectives of the concept of sustainable
development by recognizing the environmental sustainability concerns. Chapter Four examines
the integration of environmental sustainability under Ethiopia’s Bilateral Investment Treaties.
Among others, the status, nature, structure and scope of the BITs in Ethiopia and environmental
sustainability is discussed here. The concept of BITs in Ethiopia and its relation with
environmental sustainability, Origin and structure, evolutions as well as currently existing
environmental status of BITs and rational for integration of environmental sustainability
11
concerns in to Ethiopia’s BITs are also examined under the chapter. The contribution of an
integration of environmental sustainability into BITs in attaining/realizing sustainable
development goals are dealt with too. It is to explore the elements of BITs of some nations and
compared how they balance the divergent economic and environmental interest. The BITs
models of practices of different nation states are also dealt with under this chapter. Finally,
conclusion and recommendations are stated under chapter five.
12
CHAPTER TWO
GENERAL OVERVIEW ON BILATERAL INVESTMENT TREATIES
2.1. History and concept of investment treaties
2.1.1. Introduction
The flow of foreign investment from home country to host, through international investment
treaty including BITs are the recent phenomenon. What is foreign investment? Organization for
Economic Development (OECD) Define Foreign Direct Investment (FDI) as:38 A category of
cross-border investment made by a resident in one economy (the direct investor) with the
objective of establishing a lasting interest in an enterprise (the direct investment enterprise) that
is a strategic long-term relationship with the direct investment enterprise to ensure a significant
degree of influence by the direct investor in the management of the direct investment enterprise.
The economic relations that might created through BIT basically involves two country i.e. host
and home countries. Each country in this international economic relation has its own aspiration.
The former country exports capital, while the later allow the entry of foreign capital to satisfy its
development object through job creation, transfer technology, etc through the presence of foreign
capital.
Recently, this economic tie is regulated by agreements which signed by respective countries, and
commonly referred as BITs. The United Commission on Trade and Development (UNCTAD),
on the other hand, defined this regulatory instrument as: ‘agreements between two countries for
reciprocal encouragement, promotion and protection of investments in each other’s territory by
companies based in either country.’ 39BITs, though the most important international source, it is
not the sole one. There is another international treaty which is referred as IIAs, and concerned
40
to a body of international rules that deal with investment protection. IIAs range from BITs to
BITs-like investment arrangement which commonly found in regional, interregional, multilateral
38
OECD OECD benchmark definition of foreign direct investment 4th ed. (2008) at 17.
39
UNCTAD 2004b as quoted in Jennifer Rank International Investment Agreements and investments in renewable
energy (2007) Yale school of forestry and environmental studies, pre-publication draft (file with the author) at 30.
40
13
and free trade agreements. Thus, IIAs are the broader legal framework that governs issues of
investment and it is a proper subset of BITs.41
Unlike many international areas, there is no comprehensive single legal regime governing the
issue of investment.42 Currently, almost in all countries, there is a wave of movement to attract
FDI. Since the aftermath of the First World War capital exporting countries was in a precarious
position to enforce their conception of appropriate foreign investors’ treatment in capital
importing countries.43 In the early stage it was identified that investment will not occur unless
there is a reasonable prospect of profit and an assurance of security. After the end of First World
War various efforts to come up with a comprehensive multilateral agreement on protection of
foreign investors and investment did not bring any fruit.44 The Havana Charter of 1948 was
intended to form the basis of a universal trade agreement to complement the Breton Woods
institutions.45 This is the agreement that, for example, spawned the General Agreement on
Tariffs and Trade, the GATT. But the host state centered approach of the Havana Charter is far
removed from the investment agreements that were actually concluded, beginning with a
bilateral agreement between Germany and Pakistan in 1959 and thereafter proliferation of BITs.
The total number of international investment agreements has reached near 5,400 (including
above 3,000 BITs and a number of other regional, bilateral and interregional agreements to this
effect), and the number of investment cases referred to international investment tribunals has
recently seen a massive growth. This rapid growth has often been described as an
‘explosion/revolution’ in FDI law. The BITs themselves have not only reiterated the customary
41
MA Weiss and others International Investment agreements: Frequently asked question Congressional research
service (2015) at 4. See also H Mann ‘International investment agreements, Business and human rights: Key issues
and opportunity’ (2008) International institution for sustainable development 1-42 at 3
42
At different time various efforts were made to come up with multilateral investment agreement which would have
worldwide application like GATT. However, for many reasons it never come into force. For more detailed
discussion concerning OECD ‘initiative for such agreement please see J Canner ‘The multilateral agreement on
investment’ (1998) 31:3 Cornell International Law Journal 657-682.
43
C Lipson Standing guard: Protecting foreign capital in the nineteenth and twentieth centuries (1985) University
of California Press, Pp. 8-11.
44
The proposed convention to protect private foreign investment: A round table’ (1960) 9 Journal of Public Law
115-124 at 115
45
Hebert Brownell (1976) Foreign investment in united state should not be restricted, current legal aspects of
foreign investment in the united states, P. 57
14
international law principles of foreign investment law but have extended the scope of such rules
to a great extent. 46
At the time of agreement, States have started to include provisions in BITs, FTAs or other
international investment agreements (IIAs) designed to protect the environmental sustainability,
reduce poverty and implement certain elements of corporate social responsibility. 47 For instance,
The Canada-based International Institute of Sustainable Development (IISD) is at the fore front
of the debate on balancing investment sustainability with environmental sustainability and has
proposed a Model International Agreement on Investment for Sustainable Development to this
effect. Such campaigns in favor of the environmental sustainability principles and other societal
values seem having a certain impact on new BITs.48 The inclusion of provisions on regulatory
measures in the Canada–Peru BIT of 2006 and the Draft African, Caribbean and Pacific (ACP)–
EU Agreement on Economic Partnership of 2006 are examples. Similarly, the inclusion in the
UK’s Companies Act 2006 of a duty to pay attention to the environmental sustainability maters
in the list of a company director’s duties is another example.49
2.2. Origins and Historical Evolution of Bilateral Investment Treaties
Bilateral investment treaties (BITs) have been negotiated since the late 1950s.50 The agreements
were developed as a solution to the long-standing uncertainty as to the applicable international
law standards governing the treatment of foreign property and property-owners. As of May 2019
we have 2932 BITs out of which 2346 has come into force.51 Although there is no global
investment agreement, BITs together with the 1958 Convention on Recognition and Enforcement
Award (commonly known as the New York Convention), the 1965 Convention on the Settlement
46
International Law Association, First Report of the International Law Committee on International Law on
Sustainable Development. London: International Law Association, 2004, p. 3.
47
Havana Charter for an International Trade Organization, at: http://www.globefield.com/ havana.htm. Article 11
called for international negotiations on an investment agreement. Article12 sets out set specific guidelines for such
negotiations.
48
Marie-France Houde, Novel Features in Recent OECD Bilateral Investment Treaties, INTERNATIONAL
INVESTMENT PERSPECTIVES, 145 (2006).
49
Pritchard, R. (1996).Economic Development, Foreign Investment and the Law: Issues of Private Sector
Involvement, Foreign Investment, and Rule of Law in a new Era. The Hague London and Boston: Kluwer Law
International and International bar Association
50
JF Coyle ‘The treaty of friendship, commerce and navigation in the modern era’ (2013) 51 Columbia Journal of
Transitional Law 302-359 at 327
51
Surya P Subedi (2008) International Investment Law Reconciling Policy and Principle, Hart Publishing, USA,
15
of investment disputes between states (commonly known as ICSID Convention) and the 1985
Convention Establishing the Multilateral Investment Agency constitute the international
investment legal regime States have traditionally welcomed foreign investment for a variety of
reasons.52 Foreign investment takes place in different forms, including through committing
capital resources abroad either directly or through portfolio investment and by licensing the use
of technology, etc.53 Because of the form such investment takes, it requires special regulatory
mechanism under the law of the country concerned.54 This is because foreigners who purchase
land and other immovable property or enter into joint ventures to create a new company cannot
leave the host country as and when they want.55 Their commitment to the host country is long
term, and hence there is a need for long-term Sustainability under special laws. Such
Sustainability has traditionally been sought under international law and more recently under
BITs.56
In the 1990s, one of the fastest growing areas of international law emerged from the phenomenal
proliferation of bilateral investment treaties (BITs).57 As mentioned above, more than 3,000 of
BITs are in force today, with almost every state in the world a party to at least one BIT.
Irrespective of which states negotiate BITs, provisions of these treaties are remarkably uniform.58
52
Kenneth J. Vandevelde, A Brief History of International Investment Agreements, in THE EFFECT OF TREATIES
ON FOREIGN DIRECT INVESTMENT: BILATERAL INVESTMENT TREATIES, DOUBLE TAXATION TREATIES,
AND INVESTMENT FLOWS 3,13-35 (Karl P. Sauvant & Lisa E. Sachs eds., 2009) (observing that the motivation
for the developed country to conclude BITs “was to obtain protection for its foreign investment.”) [hereinafter
Vandevelde]; Patrick Juillard, Bilateral Investment Treaties in the Context of Investment Law, Investment Compact
Regional Roundtable on Bilateral Investment Treaties for the Protection and Promotion of Foreign Investment, at 1
(2001) available at http://www.oecd.org/dataoecd/44/ 41/1894794.pdf (observing that BITs developed out of an
emergency situation, which reached its peak in the late 60s and early 70s, and noting specifically that in the late
60s, “developing countries – former colonies of former major European powers – embarked upon extensive
expropriation policies which involve at foreign held investment – i.e. investment owned by nationals of the former
colonial powers”)
53
Caudell Jane (2005) Investment, 5th ed., ICB publishing, New Delhi, p.5
54
Konrad Von Moltk and Howard Mann, (2004), Towards A Southern Agenda on International Investment:
Discussion Paper on the role of International Investment Agreements, at http://WWW.iisd.org, p.6
55
J Venderelde ‘A brief history of international investment agreements’(2005) 12 University of California Davis
Journal of International Law and Policy 157-194 at 158.
56
(2007) Bilateral Investment Treaties 1995-2006: Trends in Investment Rulemaking, UNCTAD, United Nations,
New York and Geneva, p.21
57
UNCTAD (2003) World Investment Report, p. 21
58
16
In general, they are aimed at a reciprocal sustainability and promotion of investment.59 Because
of this accompanied with the fact that there is yet, no single comprehensive global treaty to
regulate foreign investment.60 BITs have become the most dominant international vehicle
through which foreign investment is regulated. There has been an extraordinary increase in the
number of BITs across the world from merely 500 in the 1990s to above 3,000 by the end of
2020.Paradoxically, despite the large and increasing number of BITs concluded, there are signs
of growing awkwardness with the current BIT regime. In the public debate about BITs, concerns
have been expressed about the potential limitations of the right of host states to regulate in the
public interest.61 Another reason for the global backlash against BITs is that, most of these states
concluded these treaties on the presumption that, BITs increases the inflow of Foreign Direct
Investment (FDI). Regrettably, there is little empirical evidence in the literature proving that
BITs increase the inflow of Foreign Direct Investment. For example, Tobin and Rose-Ackerman
studied the trends of BITs and FDI from 1975 to 2000 by sampling over 45 developing countries.
The authors concluded that BITs seem to have little impact on FDI. These developments have
led to a global backlash against the ISDS and BITs in general. 62For instance, Bolivia denounced
the International Centre for the Settlement of Investment Disputes (ICSID) Convention.
Following Bolivia’s lead, Ecuador and Venezuela have also submitted written notices of their
denunciation of the ICSID Convention. The countries such as Ecuador, Bolivia, South Africa,
Indonesia and India have all terminated a significant number of their BITs and there are signals
that more BITs would be terminated.63 Therefore, the current BITs regime is characterized by a
revival of the seemingly dead Calvo Doctrine.64 No clear evidence has emerged to show that
BITs have made a difference, for example, by increasing FDI flows between parties. They do not
59
J Kurtz ‘A general investment agreement in the WTO: Lesson from Chapter 11 of NAFTA and the OECD
multilateral agreement on Investment’ (2002) 23:4 University of Pennsylvania Journal of Law 713-901 at 717. 121
As Above pp. 717-718.
60
DM Ray ‘The cause of expropriation of american property abroad’(1976) 11 Stanford Journal of International
Law 122-152 at 125.
61
agriculture,2018.
62
The New Encyclopedia (2003) vol. VI, 15th ed. P.363
63
World Bank, Global Economic Prospects and the Developing Countries: Investing to Unlock Global
Opportunities, (2003) World Bank, Washington, p. 129
64
International Investment Agreements: Key Issues, Vol. I, UNCTAD, United Nations, New York and Geneva, p.59
17
contribute to the institutional development of host countries to enable them to meet requirements
of public health, nor do they ensure the very objectives of sustainable development.65
BITs are part and parcel of international law governed by the Vienna Convention on the Law of
Treaties (VCLT). The whole reading of Article 54 to Article 57 of the Vienna Convention made
clear that termination, withdrawal or denunciation of the treaty will be conducted as per the
provisions of the treaty or based on the consent of the parties. However, in case the treaty failed
to specify such clause, then a state may only withdraw or denunciation or termination of that
treaty only if the very nature of the treaty permits such possibility. Usually BITs have sunset
clauses for giving protection for investors even after termination of the treaty. So, if a state feels
that their BITs are not advantageous enough, there are two options: termination or renegotiation.
Developing states rather than denounce BITs, which has a huge impact on reputation of
compliance, should opt for letting BITs elapse and pave the way for renegotiation. Renegotiation
is one of the tools to challenge the cherished notion of international law as a means of regulating
state behavior because renegotiation carries within it a suggestion of willful and opportunistic
disobedience.66
2.3. The Structure of bilateral investment treaties
Bilateral Investment Treaties defined:-Bilateral investment treaties (BITs) are said to be useful
tool in creating a welcoming environment for companies seeking to invest in foreign countries. 67
Since the late 1980s, BITs have come to be universally accepted instruments for the promotion
and legal Sustainability of foreign investments.68 UNCTAD defines bilateral investment treaties
(BITs) as agreements between two countries for the reciprocal encouragement, promotion and
Sustainability of investments in each other's territories by companies based in either country.69
Salacuse also defines BITs as agreements signed at bilateral, regional or multilateral level by two
or more countries to protect investments made by one country’s investors in the other country.
65
Race to The Bottom, HARAMAYA LAW REVIEW 6 (2017): p 43
66
T Meyer ‘Power, exit costs, and renegotiation in international law’ (2010) 51:2 Harvard International Law
Journal 379-426 at 397.
67
Konrad Von Moltk and Howard Mann (2004), Towards A Southern Agenda on International Investment:
Discussion Paper on the role of International Investment Agreements, at http://WWW.iisd.org, p.5
68
Caudell Jane (2005) Investment, 5th ed., ICB publishing, New Delhi, p.5
69
18
As one can deduce from these definitions, aside from Sustainability of investment, BITs also aim
to create good conditions for greater investment flow. BITs also restrict the regulatory discretion
of the parties by imposing conditions that prohibit certain types of conduct such as breaking
agreements, discrimination among foreign investors or favoring domestic investors over foreign
investors, revoking essential licenses or confiscating property.70 The term investment, parties to
the treaty, returns, territory, etc is frequently defined in all BITs as they are essence of the treaty
itself. All BITs seems similar as all deals with parties to the treaties if it is natural or artificial
person, territory in which each contracting state party exercises sovereign rights or jurisdiction,
return or amount yielded by investment, that each contracting party takes the responsibility in
accordance with the legislation, guarantee to investors of the other contracting party, freedom
from state discriminatory activities, compensated expropriation etc.71
Format of BITs:-Investment treaties more or less share a standard format. They start with the
preamble. In the preambles they spell out the principal objectives intended to be achieved by the
contracting parties, then comes defining terms that require clarity to avoid misunderstanding at
the time of implementation of the treaty.72
Territory: Means the territory in which each contracting state party exercises sovereign rights or
jurisdiction in accordance with its legislation and international law including its exclusive
economic zone, land and seas, continental shelf over which the contracting state party has
power.73
Parties to the investment Treaty:-Investors are either natural persons or legal entities. The state
itself may directly or through the use of state owned legal entities participate in foreign
investment of all sorts.74 Hence, all BITs uniformly define the term investor as a natural person
who is a national (citizen) of the contracting party without at the same time being a national or
permanent resident of the other contracting state, or any legal entity, including a corporation, a
70
71
Bilateral Investment Treaties 1995-2006: Trends in Investment Rulemaking, UNCTAD, United Nations, New York
and Geneva, p.23
72
Key Terms and Concepts in IIAs: A Glossary, UNCTAD series on issues in international investment agreements,
2004,United Nations, New York and Geneva, p.13
73
and Geneva, p.23
74
19
firm, an association or a partnership consisted or otherwise duly organized under the laws of one
of the contracting parties and has its principal seat and economic activities in the territory of the
same contracting party.75
Treatment:-Bilateral investment treaties are signed between two contracting states to create
favorable conditions for investment by investors of one state in the territory of the other state.
Each contracting party takes the responsibility in accordance with the legislation, guarantee to
investors of the other contracting party. Full sustainability security to investments made by
investors of one state, to bring an action at international arbitration forum against the other
contracting party that has done harm to the investments carried out by the investor in the territory
of the other state. States enter into such agreements to provide and attract investors. 76
Returns:-No treaty is missed to define this term as it is related with the purpose of entering in
investment activity itself. It is understood to include amount yielded by investment such as
profits, dividends, interests, capital gains, royalties and other fees. After definition, the
sustainability that is intended to be provided by the signing of the treaty is reflected in detail.77
Discriminatory Treatment:-Treating one of contracting parties differently from the other is

prohibited. An action is deemed to be, discriminatory in effect if it results in treatment of an
investor that is different from that accorded to other investor in a similar or comparable
situation.78 China is presently entering into many investment honoring treaties seriously as it is
now investing in other countries.79 It wants to be recognized as a nondiscriminatory state so that
80
its nationals investing in other countries would not be discriminated.
Expropriation:-The right to expropriate properties operation in the territory of a given sovereign

states is inherent to the right of statehood. Treaties therefore do not generally prevent states from
taking the property of an investor but they prohibit expropriation without compensation.81
75
Ibid
76
Sornarajah, M. (1994), The International Law on Foreign Investment. Cambridge University Press, USA, P.209
77
Ibid
78
Race to The Bottom, HARAMAYA LAW REVIEW 6 (2017):
79
UNCTAD (2003) World Investment Report, p. 21.
80
Konrad von Moltke. (2000) An International Investment Regime?, Issues of Sustainability, international institute
for sustainable development, USA, PP.55-57
81
Ibid
20
Most Favored nation Clause:-A state must not treat less favorably to the nationals of a
contracting state than accorded to the host state or any other state. Each contracting, state must
provide treatment at least as favorable as that provided by international law. 82
National Treatment:-Each contracting party has to render foreign investors as favorable as that
provided to the host country’s citizen (s) and provide full sustainability and security for foreign
investment. Investors are, in any case, granted either national or most favored nation treatment,
whichever may be better. Equally important is the responsibility that falls on each contracting
party to avoid unreasonable conduct that restricts the operation, management, maintenance or
expansion of the investment. Besides, each contracting party shall comply with obligation that
they have undertaken with each other.83
Other Provisions of Bilateral Investment Treaties:-BITs exhibit a certain pattern of

uniformity in their structure and content. Elements common to virtually all such treaties are the
use of a broad definition of the term “investment”, the inclusion of certain general standards of
treatment of foreign investment, such as fair and equitable treatment and constant sustainability
and security, and more specific standards of sustainability regarding expropriation and
compensation, transfer of funds, and the sustainability of foreign investment in case of civil
strife. Most such treaties also provide for national and MFN treatment, although this is frequently
limited to the treatment of foreign investment after admission. Many such treaties provide for the
ability of States as well as foreign investors to resort to international arbitration.84 In practice,
BITs vary widely in scope and content. The majority, however, includes provisions on
investment sustainability, investment promotion, capital flows, and direct payment liberalization,
as well as post-admission issues such as non-discrimination and bans on certain performance
requirements.85 Some BITs go further, including pre-admission issues (i.e. establishment and
acquisitions) across the board of economic activities, and more explicit sustainability provisions
in the form of expropriation and compensation clauses. In most cases, BITs cover only the post
82
83
Race to The Bottom, HARAMAYA LAW REVIEW 6 (2017)
84
Supra Note at 13
85
for sustainable development, USA, P.15
21
establishment phases of investment. They confer rights to investors regarding treatment by host
governments of a wide range of types of investment after they have been established in the host
country. 86
2.4. Reasons for Bilateral Investment Treaties
Bilateral investment treaties are an increasingly used policy instrument to encourage foreign
direct investment (FDI) inflows into generally from a higher income country to a lower income
states.87 The overwhelming majority of bilateral investment treaties have one thing in common,
to protect foreign investors and their investments by according them an additional layer of
sustainability than currently accorded under the customary international law.88 The increased
importance of foreign direct investment over the past few decades was accompanied by a rise in
the popularity of BITs.89 There were several unsuccessful attempts at multilateral treaties on
foreign investment Sustainability.90 The reasons for the failure of these attempts are obvious. The
issues that relate to foreign investments made by large multinational corporations give rise to
sensitive issues of sovereignty, exploitation of natural resources and internal economic policies.
It is unlikely that developing states will commit themselves readily on such issues in a binding
91
multilateral treaty, though developed state will be keen to realize such a treaty. Bilateral
treaties, on the other hand, are different in that they are made on an ad hoc basis and their ability
to give rise to general principles is remote.92 In addition, such treaties could be negotiated in such
a manner as to suit the mutual interests of the parties, whereas a multilateral treaty cannot93.
86
Ibid
87
1997) Bilateral investment treaties and their relevance to a possible multilateral framework an investment: issues
and question, Trade and Development Board Commission an investment, Technology and Related Financial Issue
Expert Meeting on Existing Agreements on Investment and their Development Dimensions Geneva, 28-30 may 19
97, United Nations, Geneva, pp. 5-6
88
This was a widespread stance by Latin America the so-called Calvo doctrine which in most BITs it referred as
Calvo clause. As per this doctrine any disputes should be resolved locally and foreign should be treated in the same
manner as domestic investors see JC Baker and J Yoder ‘ICSID and the Calvo Clause a hindrance to foreign direct
investment in LDCs’ (1987) 5 Ohio State Journal on Dispute Resolution 75-96 at 75
89
Sornarajah, M. (1994) The International Law on Foreign Investment. Cambridge University Press, USA, P.212
90
Espouse means to bring an action by state on behalf of its nationals see AL Palenzuela ‘The International Court
of Justice and the standing of corporate shareholders Under international law: Elettronica Sicula v Raytheon( U.S
v. Italy) (2015)’ 1 University of Miami International and Corporate Law Review292-308 at 292
91
Supra note at 14
92
Ibid
93
Ibid at pp217-219
22
Bilateral solutions become necessary simply because of an absence of a consensus to create
multilaterally acceptable norms.94
2.5. The Salient features of bilateral investment treaties
The structure of BITs has a basic similarity. The treaty begins with a prefatory statement as to
the aim of the treaty, which is usually the reciprocal encouragement and Sustainability of
investment flows between the two states.95 This is followed by an identification of the types of
property which are protected and the nature of the link of nationality to one of the parties that
entitle the foreign investor to the Sustainability of the treaty. The standard of treatment to be
accorded to the foreign investor is established. The right of repatriation of profits is asserted.
There are statements on the nature of the compensation, if any, to be provided to the foreign
investor for loss occurring during wars and civil riots.96 The standard of compensation in the
event of a takeover of the foreign investor’s property is identified. The procedure for the
settlement of disputes arising from the investment by arbitration is stated. These are standard
contents in all bilateral agreements.97 But, there are variations of the statements of the rule that
are to be applied as between the parties on each area. To understand these variations, it is
necessary to analyze the contents thereof. 98
Investment treaty is not like a friendship and cooperation treaty. The obligations of the parties
emanating from the agreements variations indicate the impossibility of customary principles
arising from these treaties.99 The fundamental elements of BITs, cover areas of the regulation of
foreign investment scope and definition of investment, admission and establishment, national
treatment, most-favored nation treatment, fair and equitable treatment, compensation in the event
of expropriation or damage to the investment, guarantees of free transfers of funds and dispute
94
Karl P. Sauvant and Lisa e. Sachs (2009) The effect of treaties on foreign direct investment: bilateral investment
treaties, double taxation treaties, and investment flows, Oxford University Press, New York, p.352
95
and Geneva, p.21
96
97
Watson, Farley and Williams (2009) Introduction to Investment Treaties, at www.wfw.com, p.11
98
Sornarajah, M. (1994) The International Law on Foreign Investment. Cambridge University Press, USA, P.212
99
JW Salacuse and NP Sullivan ‘Do BITs really work: An evaluation of bilateral investment treaties and their grand
bargain’ (2005) 67 Harvard International Law Journal 67-130 at 73
23
settlement mechanisms, both state to state and investor to state.100 These are the distinguishing
features of BITs from general aspects of international law.101
2.6. The impact of BITs on Foreign Direct Investment
An increasing awareness on the part of international investors of the advantages of BIT

sustainability is now driving the structure of overseas investments, particularly in the developing
world where there is perceived to be an element of political risk or instability.102 Whereas in the
past many transactions were structured to obtain favorable tax treatment or maximize tax
concessions, for investors in many parts of the world it is now just as important to ensure the
security of their investment from the consequences of State interference, and the maximization of
investment treaty sustainability is therefore their prime concern.103 Depending upon the terms of
the particular BIT, it is often a relatively straightforward task to structure a transaction in a way
which maximizes BIT sustainability104. In many cases it is sufficient simply to channel an
investment through a company incorporated in a jurisdiction which has signed a BIT with the
host State.105 Bilateral investment treaties vary across countries, but they generally share similar
features of defining foreign investment and laying out various principles regarding treatment,
transfer of funds, expropriation, and mechanisms for dispute settlements.106 One common clause
included in many BITs is the right the investor to sue the host country if actions undertaken by
the government are deemed to substantially expropriate the business of the firm.107 Two points
should be highlighted: First, this right of an individual investor to sue the government is in itself
100
M Hallward-Driemerier ‘Do bilateral investment treaties attract FDI? Only a bit….and they could bite’(2003)
Working Paper No. 3121 World Bank Development Research 1-36 pp. 22-23
101
Sornarajah, M. (1994) The International Law on Foreign Investment. Cambridge University Press, USA, P 213
102
Surya P Subedi , International Investment Law Reconciling Policy and Principle (Oxford and Portland, Oregon,
2008) p 69,
103
KM Adeleke; OS Olwe FO Oluwanfolakemi ‘Impact of foreign direct investment in Nigeria economy’ (2014) 4:8
International Journal of Academic research in business and social science at 235
104
(2004) Key Terms and Concepts in IIAs: A Glossary, UNCTAD series on issues in international investment
agreements, United Nations, New York and Geneva, p.67
105
MA Weiss and others International Investment agreements: Frequently asked question Congressional research
service (2015) at 4. See also H Mann ‘International investment agreements, Business and human rights: Key issues
and opportunity’ (2008) International institution for sustainable development 1-42 at 3.
106
This information is available at https://investmentpolicyhubold.unctad.org/IIA (accessed 19 May 2019). 127 UE
Of odile ‘Africa-China bilateral investment treaties: A critique’ (2013) 35 Michigan Journal of International
107
Espouse means to bring an action by state on behalf of its nationals see AL Palenzuela ‘The International Court
of Justice and the standing of corporate shareholders Under international law: Elettronica Sicula v Raytheon( U.S
v. Italy) (2015)’ 1 University of Miami International and Corporate Law Review292-308 at 292
24
an expansion of investor’s rights. In most cases, the government can claim sovereign immunity,
leaving little recourse in the legal system.108 The remaining alternative is to seek the assistance of
the investors’ own home country in gaining diplomatic sustainability.109 This may not be granted
and makes the entire process a political one. Instead, with the investment treaty, the host country
consents to a standing offer to arbitrate disputes covered by the treaty. Second, BITs outline the
terms under which expropriation could be deemed lawful and compensation would be due. The
exact wordings of such clauses vary by signatory countries. But there is broad agreement on the
thrust of the terms. Property can only be legally expropriated if it is for a public purpose, in non-
discriminatory way, if compensation is paid, and if the expropriation is in accordance with due
process of law.110 It should be recognized that a BIT could be an important commitment device;
the nature of the commitment can vary enormously depending on the terms of the BIT. Too
much attention has been placed on whether or not a BIT exist than on the strength of the property
rights actually being enshrined in these agreements.111 To date there is no discussion in the
economic literature of whether the strength of the rights enshrined in a BIT would provide
adverse incentives to potential investors, or provide insurance well beyond what domestic
investors enjoy or that foreign investors would require with consequences that could potentially
have enormous impact on the feasible policy choices available to host governments.112 In
113
addition, we look at potential anticipation effects after signing and before ratifying a BIT.
Below we concentrate on FDI and analyze whether outward FDI stocks rise as new bilateral
investment treaties are signed or implemented.114 For a long period of time, the justification for
the conclusion of BITs has been that countries sign BITs to help increase, promote and
encourage new investment flows between the parties to the BITs thereby increasing the amount
108
Ibid at p 67
109
Ibid
110
Structurally almost all BITs will have preamble, definition of investment and investors, standard of treatment,
compensation and expropriation, return of investment and profit, dispute settlement and entry of enforcement and
other issues
111
Karl P. Sauvant and Lisa e. Sachs (2009) The Effect of Treaties on Foreign Direct Investment: Bilateral
Investment Treaties, Double Taxation Treaties, and Investment Flows, Oxford University Press, New York, p.352
112
Ibid
113
JW Salacude and NP Sullion ‘Do BITs really work: An evaluation of bilateral investment treaties and their grand
bargain’ (2005) 46 Harvard International Law Journal 67-130
114
25
of capital and associated technology that flows to their territories.115 Let’s suppose the FDI can
contribute to economic development, it remains uncertain whether BITs enable countries to
116
attract a higher level of foreign investment. Some investment lawyers have highlighted the
lack of tangible evidence to demonstrate investment flows and a link to investment treaties in
reality to self described proponents of the investor sustainability contained in such agreements
117
concede that the agreements may be negatively linked to investment flows. Countries like
Brazil and Nigeria saw large investment flows despite not concluding such treaties. Moreover
many Central African or Latin American nations have seen little investment despite having
entered in to many of BITs.118 Moreover, countries such as China and Cuba are said to have
seen sizable flows of investment from countries with which they have not concluded BITs.
Astonishingly many analyses examining the economic effects of signing BITs have generally
come to the rather disappointing conclusion that BITs are not linked with large increase in
foreign investment. For example, The World Bank’s 2003 report on the global economic
prospects of the developing countries conclude that, even the relatively strong sustainability in
BITs do not seem to have increased flows of investment to signatory developing countries. 119
Notwithstanding these irritating doubts about the impact of BITs upon investment flows,
developing countries have continued to champion the agreements despite lack of evidence to
show their efficacy in increasing FDI flows to developing countries. Even if investment treaties
play a relatively marginal role in the promotion of new investment, it needs to be asked to what
extent the protective function of the treaties will impact upon the ability of governments to
regulate investments in the public interest, including for the furtherance of development goals.120
115
Ibis at 69
116
KJ Vandevelde ‘A brief history of international investment agreement’ (2012) 12 University of California Davis
Journal of International Law and Policy 157- 194at 160
117
agriculture,2018.
118
According to latest Word Bank Report Ethiopia is one of the fastest growing countries
http://pubdocs.worldbank.org/en/575011512062621151/Global-Economic-Prospects-Jan-2018-Sub-Saharan-
Africaanalysis. pdf( accessed March 26, 2019)
119
E Aisbett; M Busse and P Nunnenkamp ‘Bilateral investment treaties do work: Until they don’t’(2016) Kiel
Working Paper No. 2021 1-22 at 1
120
JL Tobin and ML Busch ‘A BIT is better than a lot: Bilateral investment treaties and preferential trade
agreement’ (2010) 62 World Policy 1-26 at 13.
26
2.7. Environmental regulatory space in international investment agreements
Being an integral part of modern IIAs, environmental stipulation have featured in different parts
of agreements, from preamble through substantive parts and annexes. As looking into IIAs serve
as a foundation to evaluate Ethiopian BITs, this section presents how sovereign rights of
regulating the national environment are coined in IIAs, and its implication and meaning
(enforceability) when they appear in different parts of an agreement. The sovereign right to
regulate and environmental protection may be expressly recognized in the preamble of IIAs. At
this juncture, it is vital to consider the role of preambles. The Vienna Convention on the Law of
Treaties stipulates that treaty shall be interpreted in good faith in accordance with the ordinary
meaning to be given to the terms of the treaty in their context and in the light of its object and
purpose. It goes on saying that the context for the purpose of the interpretation of a treaty shall
comprise, in addition to the text, including its preamble and annexes. Thus, preambles could be
used in interpretation of treaties both at the text and context stage, and at the object and purpose
stage. Since the existing BITs primarily focus on the protection of investments, tribunals have
often relied on preambles to justify expansive interpretations of investor protections, where the
preambles clearly indicated that the overriding objective of the treaty was investment promotion.
For instance, in SGS v. Philippines, the tribunal relied on the preamble of the applicable BIT, i.e.
Philippines-Switzerland BIT of 1997, which is intended to create and maintain favorable
conditions for investments by investors of one contracting party in the territory of the other
contracting party thereby favoring the investor. The tribunal stated that: The BIT is a treaty for
the promotion and reciprocal protection of investments. According to the preamble it is intended
…to create and maintain favorable conditions for investments by investors of one Contracting
Party in the territory of the other…. It is legitimate to resolve uncertainties in its interpretation so
as to favor the protection of covered investments. The BIT entered into between Finland and
Nigeria, employs environmental language in its preamble. After stipulating the desire to promote
and protect international investment, the preamble of the agreement recognizes the importance of
environmental protection. It provides that “these objectives can be achieved without relaxing
health, safety and environmental measures of general application.” The preamble to the Canada-
Senegal BIT also explicitly refers to the promotion of sustainable development. It reads
“recognizing that the promotion and the protection of investments of investors of one Party in the
territory of the other Party will be conducive to the stimulation of mutually beneficial business
27
activity, to the development of economic cooperation between them and to the promotion of
sustainable development…” The preamble of the Canada-Tanzania BIT can also be considered
as a good example in striking the balance between investment protection and sustainable
development. It acknowledges the Parties’ desire in the following terms: Desiring to intensify
economic co-operation and promote sustainable development for the mutual benefit of both
countries…; recognizing that the promotion and reciprocal protection of such investments favor
the economic prosperity and sustainable development. This concern for the protection of the
environment and other social objectives annexes. The foregoing preambles declare not only the
parties’ interest to achieve economic objectives but also their desire to reach the objectives in a
manner consistent with environmental sustainability. This concern for the protection of the
environment and other social objectives could not be underestimated as it informs tribunals to
take care of such non-economic interests in the course of interpretation of the BIT.
2.8. The BITs of other contracting states
Investment treaties can help facilitate environmental sustainability. A non exhaustive survey of
BIT preambles confirms this observation.121 As said, preambular provisions are indicative of the
“object and purpose” of a treaty.122 References to environmental sustainability or to sustainable
development have found their place in BIT preambles, together with provisions containing other
objectives, such as the promotion of investment.123 The following states BIT recognize
environmental sustainability with equal footing of investment on its preambular part of the treaty
contrary to what many developing sates BITs encompasses.124
The United States-Rwanda BIT … Recognizing that agreement on the treatment to be

accorded such investment will stimulate the flow of private capital and the economic
121
Ibid
122
Professor of International Law and International Organization at the University of Geneva; Associate Member of
the Institut de droit international; Arbitrator and Counsel with various International Courts and Tribunals. Correo
electrónico: Laurence. BoissonDeChazournes@unige.ch
123
United States , Import Prohibition of Certain Shrimp and Shrimp Products WT/DS58/AB/R (1998), paras. 185
124
Ying and Y.ang, Environmental Protection and Investment Arbitration, ACDI, Bogotá, ISSN: 2027-1131/ISSNe:
2145-4493, Vol. 10, pp. 371-399, 2017
28
development of the Parties; …desiring to achieve these objectives in a manner consistent with
the sustainability of health, safety, and the environment.125
The Canada-Benin BIT…Recognizing that the promotion and the sustainability of investments
of investors of one Contracting Party in the territory of the other Contracting Party are conducive
to the stimulation of mutually beneficial economic activity, the development of economic
cooperation between both countries and the promotion of sustainable development.126
The China-Canada BIT…Recognizing the need to promote investment based on the principles
of sustainable development.127
The Brazil-Mozambique BIT…Acknowledging the essential role of investment in the

promotion of sustainable development, economic growth, poverty reduction, job creation,
expansion of productive capacity and human development.128
The insertion of similar language in the preambles of recent model BIT also evidences this
trend.129 Those preambular clauses will help inform the interpretation to be given to rights and
obligations contained in a treaty.130
125
Treaty between the Government of the United States of America and the Government of the Republic of Rwanda
Concerning the Encouragement and Reciprocal Protection of
Investment, 19 February 2008, available at: http://go.usa.gov/3pmXd, consulted on 14 February 2016
126
Agreement Between the Government of Canada and the Government of the Republic of Benin for the Promotion
and Reciprocal Protection of Investments, 9 January 2013, available at:
http://investmentpolicyhub.unctad.org/IIA/country/35/treaty/563, consulted on 14 February 2016.
127
Agreement Between the Government of Canada and the Government of the People’s Republic of China for the
Promotion and Reciprocal Protection of Investments, 9 September 2012,
http://investmentpolicyhub.unctad.org/IIA/country/42/treaty/778, consulted on 14 February 2016.
128
Acordo de cooperacão e facilitacão de investimentos entre o governo da república federativa do Brasil e o
governo da república de Moçambique, 2015, available at: http://
investmentpolicyhub.unctad.org/Download/TreatyFile/3352, consulted on 15 February 2016.
129
unctad Investment Policy Framework for Sustainable Development, Principles for Investment Policy Making
(2015), available at http://unctad.org/en/PublicationsLibrary/ diaepcb2015d5_en.pdf, consulted on 15 February
2016; Agreement between the Kingdom of Norway and […] for the Promotion and Protection of Investments, Draft
Version, 13 May 2015, available at http://investmentpolicyhub.unctad.org/Download/TreatyFile/2873, consulted on
15February 2016; Model text for the Indian Bilateral Investment Treaty available at
http://finmin.nic.in/the_ministry/dept_eco_affairs/investment_division/ ModelBIT_Annex.pdf, consulted on 16
February 2016.
130
29
Regarding the Regulatory Power and Exceptions The BIT provisions can explicitly
acknowledge that the promotion and sustainability of investment may not result in relaxing
environmental standards. The following extracts are examples of such provisions:
The Switzerland-Mexico BIT:-The Parties recognize that it is inappropriate to encourage

investment by relaxing domestic health, safety or environmental sustainability measures.131
Accordingly, neither Party should waive or otherwise derogate from, or offer to waive or
derogate, such measures as an encouragement for the establishment, acquisition, expansion or
retention in its territory of an investment of an investor. If either Party considers that the other
Party has offered such an encouragement, it may request consultations.132
The Belgium-Luxembourg Economic Union- Mozambique BIT:-. Recognizing the right of

each Contracting Party to establish its own levels of domestic environmental sustainability and
environmental development policies and priorities, and to adopt or modify accordingly its
environmental laws, each Contracting Party shall strive to continue to improve those laws. The
Contracting Parties reaffirm their commitments under the international environmental
agreements, which they have accepted. They shall strive to ensure that such commitments are
fully recognized and implemented by their domestic laws.133 The granting of a permit is one
example of a regulatory power that often involves environmental considerations. In this context,
it should be noted that “the obligations of the host State towards foreign investors derive from
the terms of the applicable investment treaty and not from any set of expectations investors may
have or claim to have”.134
The same approach is taken in recent model BITs that confer wider latitude to States, enabling
them to determine their own level of environmental sustainability and place the BITs within the
broader network of multilateral environmental treaties. One example of this is the Southern
African Development Community Protocol on Finance and Investment, which reads as follows:
131
Supra note at 15
132
Ad Article 3 of the Protocol of the Agreement between the Swiss Confederation and the United Mexican States on
the Promotion and Reciprocal Protection of Investments, 10 July 1995, available at
http://investmentpolicyhub.unctad.org/Download/TreatyFile/2006, consulted on 15 February 2016.
133
Article 7 of the Agreement between the Belgium-Luxembourg Economic Union and the Government of the
Republic of Mozambique on the Reciprocal Promotion and Protection of Investment, 18 July 2006, available at
http://investmentpolicyhub.unctad.org/ Download/TreatyFile/393, consulted on 15 February 2016.
134
MTD Equity SDN. Bhd. and MTD Chile S.A. v. Republic of Chile (ICSID Case No. ARB/01/7), Decision on
Annulment, 21 March 2007, para. 67.
30
“Nothing in this Annex shall be construed as preventing a State Party from exercising its right to
regulate in the public interest and to adopt, maintain or enforce any measure that it considers
appropriate to ensure that investment activity is undertaken in a manner sensitive to health,
safety or environmental concerns.135
The Finland-Nigeria BIT:-The BIT entered into between Finland and Nigeria, employs
environmental language in its preamble. After stipulating the desire to promote and protect
international investment, the preamble of the agreement recognizes the importance of
maintaining environmental sustainability. It provides that “these objectives can be achieved
without relaxing health, safety and environmental measures of general application.”
The preamble to the Canada-Senegal BIT also explicitly refers to the promotion of sustainable
development. It reads “recognizing that the promotion and the sustainability of investments of
investors of one Party in the territory of the other Party will be conducive to the stimulation of
mutually beneficial business activity, to the development of economic cooperation between them
and to the promotion of sustainable development on the way to maintain environmental
sustainability too…”
2.9. Recent Trends in States Practices on BITs
There is a growing awareness in policy circles that the existing BIT regime is becoming
increasingly irrelevant in terms of addressing emerging economic, environmental and
developmental challenges, both at national and global levels. States are increasingly becoming
more skeptical in concluding BITs. There has been a noticeable recent trend in States practices
away from the typical customary international law standard of treatment of aliens towards less
stringent interpretations of the standard. For example, BITs drafted based on older versions of
the United States model BIT prior to 2004 required each state to provide ‘fair and equitable
135
Recent agreements add specific language to ensure the protection of the environment and appropriate corporate
behavior. For instance, countries sometimes include clauses that confirm their right to establish their own level of
environmental protection, that carve out environmental-related clauses from isds or that include language aimed at
enhancing coherence between IIA and multilateral environmental agreements. J. Zhan, “Investment policies for
sustainable development: addressing policy challenges in a new investment landscape,” in Roberto Echandi and
Pierre Sauvé, eds., Prospects in International Investment Law and Policy (Cambridge University Press, 2013), p.
26. See also UNCTAD, World Investment Report: Investing in a Low-Carbon Economy (UNCTAD/WIR/2010).
31
treatment’ to covered investment.136 However, her 2012 model BIT now requires treatment in
accordance with customary international law. On the other hand the India’s new Indian model
BIT does not contain an explicit free and equitable treatment provision. However, it contains a
clause entitled ‘Treatment of Investments’ which imposes similar obligations on States. 137
The
number of new BITs continuously increased in the 1990s their number has recently stagnated. It
appears that, BITs have reached a turning point. According to reports published by the
International Monetary fund, five different countries have terminated their treaties within some
few years. Ecuador, Bolivia, South Africa, Indonesia and India have all terminated a significant
number of their treaties.138
Languages referring to environmental sustainability were rare in BITs concludes in the 1990s.
However, due to the growing number of Investor-States cases in connection with environmental
sustainability, many states are increasingly incorporating environmental sustainability in their
BITs negotiations. The first manifestation of such language in BITs was the 1985 China-
Singapore BIT.139 In 2005, over 50% of newly concluded treaties contain provisions referring to
environmental sustainability. A significant number of recent treaties contain provisions that
preclude non-discriminatory environmental sustainability regulation as a basis for claims,
particularly of the so called ‘indirect’ or creeping expropriation. Many of the recent BITs are
overwhelmingly concerned with carve-outs to limit the definition of indirect or creeping
expropriation.140The China-Colombian BIT provided for a much expressed environmental
sustainability concerns. It provides among other things that non-discriminatory measures of a
Contracting Party designed and applied for public purposes or social interest or with objectives
such as public health, safety and environment sustainability, do not constitute indirect
expropriation. Although, this is a good step towards striking a balance between the rights of
Investors and the power to regulate, nonetheless, there are flaws in it. Such wording is still
136
The Existing Status of Bilateral Investment Treaties in Ethiopia: Issues and Trends, A Thesis Submitted in Partial
Fulfillment of the Requirements of LL.M Degree in Public international Law ,MEKETE TEFERI, October, 2011
Addis Ababa Ethiopia ,pp 65-67
137
Race to The Bottom, HARAMAYA LAW REVIEW 6 (2017):
138
Ibid at pp 55-57
139
Article7(3)oftheDraftPanAfricaInvestmentCode(2016)availableathttps://au.int/sites/default/files/documents/32844
-doc-draft_pan-african_investment_code_december_2016_en.pdf( accessed 5 August 2019).
140
Ibid
32
subject to multiple interpretations. For instance, the use of words like ‘applied in good faith’
what constitute good faith? China then took a different approach in her BIT with Turkey. The
China-Turkey BIT now read as: nothing in this Agreement shall be construed to prevent a
Contracting Party from adopting, maintaining, or enforcing any nondiscriminatory and necessary
measures (a) designed and applied for the sustainability of human, animal or plant life or health,
or the environment; (b) related to the conservation of living or non-living exhaustible natural
resources.141 The Southern African Development Community (SADC) (to be dealt with in
section 2.11) developed a Model Bilateral Investment Treaty which provides investors and their
investments a duty to respect environmental interest and that investors must manage or operate
investments consistently with international human rights obligations where living in health and
sustainable environment is one of the pillars such basic rights.142
2.10. Risks and Opportunities of BITs
The desire for economic development may induce policies and legal regimes towards
encouraging investment projects in spite of adverse environmental sustainability effects; while
on the contrary, the sustainability of the ends that investment is meant to serve (i.e. profit, capital
accumulation, development and ‘wellbeing’) necessitate the assurance of environmental
sustainability. An investment project offers various economic opportunities whose benefits can
be eroded by the corresponding cost incurred due to failure to meet environmental sustainability
standards. These economic opportunities might even be lost in case the project is denied license
owing to its failure to meet an environmental sustainability policy requirement. On the other
hand, allowing investment projects irrespective of their damage to the environmental
sustainability may involve irreversible environmental cost that might ultimately render the
economic benefits unsustainable. Informed decision of policy makers and legislators thus
141
A Critical Examination of the Symmetry of Ethiopia’s Bilateral Investment Treaties, A Mini-Dissertation
Submitted to the University of Pretoria in Partial Fulfilment of the Requirements for the Master’s of Law(LLM) in
International Trade and Investment Law in Africa Program, Yehualashet Tamiru,2019
142
33
requires ranking alternatives and comparing “the net benefits of one policy option with the
opportunity cost of that choice”. Various arguments are forwarded in favor of both views.143
Those who forward the first view reinterpret the concept of risk and underline the loss incurred
in forfeiting opportunities of economic development. This raises the issue of opportunity cost of
a given choice thereby referring to “the value of the next best alternative, which was given up. A
rational choice from among competing options is anticipated to yield benefits that exceed the
opportunity cost”. One may argue that the risk of depletion of certain resources (under specific
circumstances) is transient and does not justify the risk of forfeiture of opportunities toward rapid
economic development.144 Adams states that the distributions of risks that accompany
development are uneven and are concentrated in the zone and the workplace of the poor. A given
course of action is said to be positive and beneficial if it brings about a net advantage, i.e.
provided that ‘benefits’ outweigh ‘costs’. Such balance of benefit and cost can, for example, be
perceived in the context of using pesticides and fertilizers in agriculture which on the one hand
helps “developing countries to deal with hunger and poverty” and meanwhile involves various
risks such as development of resistance, wider adverse impacts on the environmental
sustainability impacts and “persistence of pesticides in food, and the problem of acute poisoning,
particularly in people using them”.
In addition to such risks of hazard, sustainability is concerned about the risk of resource
depletion. From this perspective, sustainable development can be interpreted not only “as
requiring some constancy in the stock of natural environmental sustainability assets” but also
from the “notion of discounting future gains and losses”. The analysis of present and future
benefits and cost determines how much of natural resources can be used sustainably because
exhaustible resources have “a faster rate of depletion in the earlier years, and the shorter is the
interval before which the resource is exhausted”.145
143
144
Wakgari Kebeta Djigsa, The Adequacy of Ethiopia’s Bilateral Investment Treaties in Protecting the
Environment: Race to The Bottom, HARAMAYA LAW REVIEW 6 (2017):
145
International Trade and Investment Law in Africa Program, Yehualashet Tamiru,2019 p 55
34
2.11. Model Bilateral Investment Treaties
The International Institute for Sustainable development (IISD’s) model multilateral investment
agreement attempts to change the prevailing structure of investment treaties to specifically
introduce development objectives into them. The IISD model agreement achieves this by
creating both rights and obligations for investors and host countries.146 The Model was designed
in such a way that the sustainability for investors is conditioned upon minimum responsibilities,
including conducting environmental impact assessments. Art. 12 of the Model require foreign
investors or their investments to undergo environmental impact assessments prior to the
establishment of the investment in accordance with the laws of the host state. Similarly, Article
14 imposes post-establishment obligations on foreign investors to maintain environmental
management system and standard. Furthermore, Article 20 provides that it is inappropriate for
the parties to attract foreign investment through the adoption of lax environmental and other
standards. More specifically, Article 21 (1) of the Model calls for high levels of assuring
environmental sustainability. By so doing, the model seeks a balance between rights and
obligations for investors, host states, and home states. The agreement affirms the inherent right
of governments to regulate foreign investment in the public interest and to articulate their own
development policy. 147
The IISD Model Agreement introduces the concepts of sustainable development and sustainable
investment. Some of the expressions employed in its preamble are worth due attention.148 To
mention few: a) the concern for sustainable development in terms of sustainable investment has
become at the forefront. It has been admitted that the development of the national and global
economy is possible only through sustainable investment. b) Sustainable investment begs for the
cooperation between foreign investors, their home states and host governments of the concerned
investment activity. c) The need for balance of rights and obligations in international investment
between foreign investors, their home states and the host states has become immense. d) IIAs are
146
Ibid at 76
147
T Allee and C Peinhardt ‘Evaluating three explanation for the design of bilateral investment treaties’ (2014)
66:1 World Politics 47-87 at 58.
148
Int’l Inst. for Sustainable Dev., IISD Model International Agreement on Investment (Apr. 2005), available at
http://www.iisd.org/pdf/2005/investment_model_int_agreement.pdf, (accessed on 23rd of January 2017).
35
required to reflect the principles of transparency, accountability and legitimacy for all
participants (investors, home states and host states) of FDI.149
Besides this, in June 2012, Member States of the South African Development Community
(SADC), an inter-governmental organization made up of fifteen African nations, completed work
on a Model Bilateral Investment Treaty Template and Commentary (Model BIT). Hopefully, the
Model BIT will guide member states in future investment treaty negotiations. The Model BIT
departs from traditional BITs in several respects, particularly by addressing investor rights as
well as investor obligations. Regarding investor obligations, some issues covered among others
include: Environmental and Social Impact Assessment (Article 13), Environmental Management
and Improvement (Article 14), Minimum Standards for Environmental sustainability (Article
15), Corporate Governance Standards (Article 16). The Model BIT also addresses the rights of
states and specifically addresses the Right of States to Regulate (Article 20) as well as the Right
to Pursue Development Goals (Article 21).150
The SADC Model BIT enshrines sustainable development concerns both under its preamble and
substantive provisions. The Model BIT provides for options the parties can resort to in the course
of drafting their investment agreements. In the preamble, the need to promote investment
opportunities that enhance environmental sustainability is acknowledged. It also recognizes the
right to regulate investment in explicit terms. 151 According to Article 1 of the SADC Model, the
objective of an investment agreement shall be to encourage and increase investments that support
the environmental sustainability of each party. With respect to FET, the SADC Model optionally
refers to customary international law. It states that “each State Party shall accord to Investments
or Investors of the other State Party FET in accordance with customary international law on the
treatment of aliens”. Pursuant to Article 6.7 of the SADC Model, a non-discriminatory measure
of a state party that is designed and applied to protect or enhance legitimate public welfare
objectives, such as public health, safety and the sustainability of environment, does not constitute
an indirect expropriation under this Agreement. The Model further requires investors to comply
149
Id at, Preamble
150
151
Ethiopia- Bilateral Investment Agreements, last published7/9/2019<https://www.export.gov/article?id= Ethiopia
Bilateral-Investment-Agreements>, accessed August 10, 2020
36
with environmental impact assessment under its Art. 13. Art. 14 (1) of the Model also requires
investments to implement a system of environmental sustainability in light of available
international environmental sustainability standards.152 By virtue of Article 14 (2) of the Model,
such environmental management system has to be improved and updated regularly. More
importantly, the SADC Model requires “investors and their investments not to establish manage
or operate investments in a manner inconsistent with international environmental obligations
binding on the host State or the home State, whichever obligations are higher.” Art. 22 of the
Model provide that each state party is permitted to adopt its own environmental standards and to
modify such standards where the need arises.153
The Indian Model agreement under Article 10.6 (ix) states that foreign investors and investments
are duty bound to develop and comply with policies to ensure timely and accurate disclosure of
material information relating to environmental impacts and management systems.154 This
obligation persists even in the absence of such obligation under the laws and regulations of the
host state. Furthermore, investors and their investment are obliged to comply with the
environmental laws of the host State applicable to the concerned investment by virtue of Art.
12.1 (iii) of the same Model. The other model BITs also gives due concern to environmental
sustainability at the time of agreement and aftermath too.155 From a developed country’s
perspective, it is an effective mechanism of extending security for any investment made by their
citizen in the host country. Before any investment has taken place the investors have in a better
position to dictate the terms and condition of the contract over the host state which is in need of
foreign investment for various reasons. However, after the investment is made the host state can
change the promise and commitments, single handle usually through domestic law. Thus, the
whole purpose of BITs for capital sending country is to avert this ‘credible commitment
152
SOUTHERN AFRICAN DEVELOPMENT COMMUNITY Published by the Southern African Development
Community. SADC Headquarters Plot No. 54385 Central Business District Private Bag 0095 Gaborone Botswana
,www.sadc.int SADC Model Bilateral Investment Treaty Template with Commentary July 2012.
153
Addis Ababa Ethiopia
154
Model Text for the Indian Bilateral Investment Treaty, (Indian Model BIT hereafter), Available at
https://www.mygov.in/sites/default/files/master_image/Model%20Text%20for%20the%20Indian%20Bilateral%20I
nvestment%20Treaty.pdf. (Accessed on 7th of November 2016).
155
Ibid at 66
37
problem.’156 The USA Model BIT reinforce this when it says ‘the importance of providing
effective means of asserting claims and enforcing rights with respect to investment under
national law as well as through international arbitration.’157 Despite seeking of security is
emerged as forefront reason, developed countries also look to enhance resource utilization, living
standard, environmental standard.158 Under the USA Model BIT, for instance, it is indicated that
the interference from the government should be ‘serious of action’ to categorize as indirect
expropriation. Despite the fact that, as to what constitute serious of action is assessed case by
case basis, the Model BIT provided three criteria that should be taken into account to determine
the seriousness: the economic impact of the government action on the economic activities of the
investor, an action should be unreasonable in relation to investors’ expectation and the character
of the government.159
Under ASEAN Model BIT what is meant by ‘character of the government’ is well flesh out to
mean ‘objective and whether the action is disproportionate to the public purpose. 160 Although
Indian Model BIT also recognized the fact that only serious actions of government are
considered as indirect expropriation, it employed the heavy-duty criteria as to the determination
of seriousness of an action.161 In this regard India Model BIT comes up with more
comprehensive yardsticks as to what means by like circumstance. As per footnote to Article 4(1)
of the Model BIT some of the criteria are: the goods and services consumed or produced by the
investment, the actual and potential impact of the investment on third person whether the
investment is public, private or state owned or control and the practical challenges of regulating
the investment. Likewise, the Draft Pan African Investment Code while tries to flesh out what
means by like circumstance state that the following criteria should be taken into account: the
effect on third person and local communities, its effect on the environment and health, the sector
in which the investment is active, the objective of the measure in question, the regulatory
process, company size and other factors which have directly related with the investment.162
156
T Allee and C Peinhardt ‘Evaluating three explanation for the design of bilateral investment treaties’ (2014) 66:1
World Politics 47-87 at 58.
157
USA Model BIT.
158
As above, the preamble.
159
Annex 2(4)(A) of the USA Model BIT.
160
Annex 2(3) of ASEAN Model BIT.
161
Article 5.2 of Indian Model BIT.
162
Article7(3)oftheDraftPanAfricaInvestmentCode(2016)availableathttps://au.int/sites/default/files/documents/32844
-doc-draft_pan-african_investment_code_december_2016_en.pdf( accessed 5 August 2019).
38
The 2009 Model BITs of Turkey has made a positive step and mentions in preamble that the
objectives of the BIT can be achieved without relaxation in relation to health, safety and
environmental sustainability measures of general applications. In its substantive part of Article
4,the Model BIT seems to be different from other BITs as it dedicates a whole part of the
provisions about the contracting states right to regulate (such a provision does not exist in 2002
Ethiopia-Turkey BIT). In Article 4(1)(b) ,the contracting states right to adopt ,maintain, and
enforce non-discriminatory measures for the sustainability of “human, animal or plant life or
health, or the environmental sustainability” has been recognized. Article 4(1) (b) stipulates this
measure also applies to the conservations of living or non living exhaustible natural resources.
This Model BIT seems to be appreciable and exemplary steps for the future potential BIT to be
signed.163 Unlike those Model BITs, under the Ethiopia’s BITs there are no clear criteria as to
what constitutes an indirect expropriation. This implies the investors can invoke an indirect
expropriation claim even for minor interference and insignificant and unsustainable effect on
their investment. This leads for investors claiming any conceivable breach of BITs under this
‘catch all phrase’ indirect expropriation claim and to make it worse in the absence of clear
environmental sustainability criteria in the BITs, which might adversely affect the host state.
As thing stands, even a measure which is pursued purely for legitimate purpose and bona fide
regulatory measures like public health, protection of antiquities, environmental sustainability and
safety might be constituted as indirect expropriation. This again leads to regulatory chill effect
for fear of possible violation of BITs obligations. Thus, the absence of hard and fast
environmental interest yardstick makes the whole process unpredictable. Therefore, the absence
of criteria for indirect expropriation becomes one source of violation of environmental
sustainability under Ethiopia’s BITs. As a result, it is recommended Ethiopia’s BITs to integrate
environmental sustainability in to its BITs.164
163
Submitted to the University of Pretoria in Partial Fulfillment of the Requirements for the Master’s of Law(LLM) in
International Trade and Investment Law in Africa Program, Yehualashet Tamiru,2019 pp 55-61
163
164
Environment: Race to The Bottom, HARAMAYA LAW REVIEW 6 (2017): 67-90
39
2.12. Bilateral investment treaties and sustainable development Nexus
Sustainable development is a comprehensive and integrated approach to economic, social and

political processes aimed at the sustainable use of natural resources of the earth and the
sustainability of the environment in which nature and human life as well as social and economic
development depend, and that seeks to realize the right of human beings to an adequate living
standard on the basis of their active, free, meaningful participation in development and in the fair
distribution of benefits resulting there from, with due regard to the needs and interests of future
generations. Notably, the Brundtland report primes development, acknowledges inherent
limitations of the environmental sustainability matters and roots for inter and intra-generational
equity.165 The 1992 Rio Declaration on Environment and Development clarifies that sustainable
development entails putting people at the centre of the development process. This means more
than just enabling people in poorer countries to have access to consumer goods. It means
empowering people to have greater control over decisions and processes that affect their lives,
including choices on the type of development and the development pathways pursued.
Structuring contracts to maximize sustainable outcomes recognizes that, from a host country
perspective, attracting investment is not an end in itself, but a means to an end. The ultimate goal
is to improve the living conditions and enable people to have greater control over their lives,
whilst respecting the environmental sustainability. Economic benefits among others, includes
and minimizing environmental damage from project implementation and promoting investments
in more environmentally friendly sectors such as renewable energy. But the main aim of bilateral
investment treaties are to protects the very economic interest of investors or companies whatever
negative consequence that economic activities may bring about to sustainability of
environment.166
The globalization protests against multilateral investment agreements were generated by the fact
that these agreements showed little concern for the environmental rights interests involved in
foreign investment. The charge was that investment agreements focused entirely on the
sustainability of the interests of the foreign investor and did not concern the interests of the rural
and urban communities of the world or the host state in the sustainability of the values that were
165
Ibid
166
Ethiopian investment guide, available at http://ethemb.se/wp-content/uploadsI2013/07/Investment Guide2012.pdf,
accessed on May 09 2019, p.8
40
of concern to them. These values generally involve the areas of environmental sustainability and
economic development interest among others. 167
2.13. Bilateral investment treaties and Environmental sustainability concerns
Environmental groups have regarded multinational corporations as having been responsible for
pollution caused particularly in developing countries, where environmental standards are lax. As
a result of lax laws, multinational corporations see developing countries as havens where they
may make profits without having to bear the costs associated with compliance with the strict
168
environmental regulatory standards they face in their home states. The argument has been
made that investment treaties secure the export of highly polluting or what is often called the
dirty industries into the developing world.169 For this reason, these groups have argued that
investment treaties should contain exemptions for interference by host states to protect the
environmental sustainability concerns. There are BITs that address the importance of protecting
the environment in their preambles. They not only have very similar wording, but also stress the
idea of compatibility between investment and environmental sustainability.170 An example as
given under the aforementioned section is the preamble of the BIT between the United States and
Rwanda, Canada and Benin, Switzerland and Mexico and et.al on the Promotion and
Sustainability of Investments which states: ….Agreeing that these objectives can be achieved
without relaxing health, safety and environmental measures of general application.
Bilateral Investment can be the engine of development and required to make a more sustainable
global economy possible. Yet, it has not moved to the center of the debate about sustainable
development. 171This may be due in part to the complexity of the BITs process. On the one hand,
investments depend on a range of public goods and services. On the other hand, private capital is
167
168
169
Environment: Race to The Bottom, HARAMAYA LAW REVIEW 6 (2017): 67-90
170
Ibid
171
41
at risk and consequently public authorities have a circumscribed role to play in relation to such
investment decisions. Beyond the inherent objective of investment protection that BITs pursue,
the vast majority not directly address specific development related issues. They do not/rarely
contain an obligation to promote environmental sustainability so as to this it is ‘self defeating
project.172
By and the large, current BIT practice does not, in general, expressly deal with development
matters. For most BITs concluded over the past decade, the striking feature is the multiplicity of
provisions they contain that are specifically designed to protect foreign investments, and the
absence of provisions specifically designed to ensure economic growth and not to mention
environmental sustainability. The need is, therefore, for further clarification of the
interrelationship between existing standards of investor and investment promotion, on the one
hand, and the best means by which public concerns like environmental sustainability can be
expressed in the future evolution of BITs, on the other hand.173
172
Ibid
173
The Legal and Institutional Frameworks of FDI in Ethiopia: The Shortcomings, Ethiopian Civil Service
University School of Diplomacy and International Relations, ABEBE NIGUSU, Addis Ababa, Ethiopia, February
2014
42
CHAPTER THREE
LEGAL REGIMES GOVERNING FOREIGN DIRECT INVESTMENT AND

ENVIRONMENTAL INTERETS IN ETHIOPIA
3.1. Introduction
Myriads of institutions such as the federal investment commission, regional investment bureaus,
sector ministries, the Ethiopian privatization agency, ministry of foreign Affairs, development
Bank of Ethiopia, ministries dealing with taxation, etc, take part in investment undertakings,
whether foreign or domestic, from licensing to production/service provision stages in Ethiopia.174
But directly involving bodies are the Ethiopian Investment Board; the Ethiopian Federal
Investment Commission hereunder referred to as EIC, Federal Government and Regional state
Administrations Investment Council (RSAIC) hereunder referred to as RSAICs and other special
arrangements such as consultation forums. Effective and efficient legal framework and
functional institutional setup are most important for FDI. 175
Ethiopia undertook varies legal and institutional reforms after 1992.176 The current legal regime
for FDI is attractive in terms of incentive packages it provides, the guarantees and protection it
ensures to the foreign investors.177 The institutional and legal framework for FDI promotion in
the country is organized both at federal and regional states level. However the principal agency
responsible for most aspects of FDI is Ethiopian Investment Board followed by Ethiopian
Investment commission (EIC).178 The Management of the environmental sustainability and
social effects FDI activities is assessed based on the existing environmental and social
management systems of Ethiopia. In order to assess the adequacy of Ethiopia’s legal and
regulatory framework in regulating FDI, it is important to looks at the relevant laws and
institutions for environmental and social impact assessment and management.179
174
Investment incentive could take various forms: reduction or elimination of tax, free land and employee’s share
from home country which otherwise were not permissible.
175
B Buchana ‘Market failure and political failure’ (1988) 8:1 Cato Journal 1-13 at 3.
176
protection, 2015.
177
Article 9(1) of the FDRE Constitution
178
S Mekohnen ‘Rights of citizens and foreign investors to agriculture land under the land policy and laws of
Ethiopia’(2012) 1 Haramaya Law Review 33-42 at 31
179
43
3.2. Legal Frame Work On FDI in Ethiopia
The Policy framework for Investment in countries like Ethiopia need sound policy to attract FDI
for their economic development. The policy change that favors the role of private sector in
general and investment in particular in the economy came about in the post-1991 Ethiopia. The
role of the private sector as engine of the economy was recognized in different documents
including the constitution by giving protections like guarantees of ownership of private property
and the protection against expropriation except in some cases (FDRE 1994 Constitution, articles
40 (6, 8).180 The transitional government of Ethiopia (TGE) has undertaken substantial reforms
in the country to lift the economy from low level development caused by natural catastrophe and
rigid macroeconomic policies of the previous regime. The role of foreign direct investment was
given paramount importance in the economic transformation of the country.181 Currently, there is
no single policy document exclusively dealing with foreign direct investment in the country.
However, major investment policy principles are scattered in different documents including
industrial development policy, agriculture development policy, urban development strategy
documents, the constitution, foreign affairs and national security strategy, etc. The more
important document among these policy documents that treat FDI better is the Industrial
Development Policy and Strategy published by the Ministry of Information in Amharic in
2004.182 The policy identifies possession of huge capital, market knowledge and network,
advanced technology, and modern management knowhow as strong sides of the foreign
investor.183
180
Article 40(6) state that’… government shall ensure the right of private investors to the use of land on the basis of
payment arrangements established by law…’ (My emphasis). Therefore, the right to investors still is to use and
collect the fruit i.e. usufractury right rather than owning the land.
181
2014
182
protection, 2015.
183
T Lencho, The Ethiopia income tax system: policy, design and practice’ (2014) PhD Dissertation (file with the
author) at 108.
44
3.2.1. FDRE Constitution
In Ethiopian investment law, there are important elements that are included in investment
184
definition. For example, expenditure of capital can be considered as essential element. The
term capital is defined under article 2(3) of proclamation no.1180/2020 "capital" means local or
foreign Currency, negotiable instruments, machinery or equipment, buildings, working capital,
property rights, Intellectual property right or other tangible and intangible assets. 185 Despite the
dissimilarity of economic policies, Ethiopia has her own history on formulation of investment
policy. Article 40 of the constitution has guaranteed the right to property which is one of the
basic democratic rights of the human being.186 The recognition of this right under the FDRE
constitution has opened a wide door for investment opportunities in different economic sectors.
Private investors (such as domestic and foreigners) have started to spend a lot of money and
capital in different investment sectors. The constitution is the supreme law of the land and any
law, customary practice and decision of officials contradict this grand norm, it will become null
and void. Although with the exception of Article 51(4) which empower the federal government
to come up with foreign investment policies and strategies, there is no provision which deal with
investment matters. 187
3.2.2. Subsidiary legislatives on investment in Ethiopia
Ethiopia, with the view to encourage and expansion of investment which in turn leads to
economic growth, put in place comprehensive investment laws. According to investment
proclamation, investment is defined as the expenditure of capital in cash or in kind or in both by
an investor to establish a new enterprise, or to acquire, in whole or in part, or to expand or
upgrade the one that already exist.188 For the purpose of differentiating from domestic investor,
184
Ethiopian investment guide, available at http://ethemb.se/wp-content/uploadsI2013/07/Investment Guide2012.pdf,
accessed on May 09 2019, p.8
185
Article 40(3 and 6) of the FDRE Constitution
186
Ibid
187
The Constitution of Federal Democratic Republic of Ethiopia, Ethiopia Pro.No.1/1995 Federal Negarit Gazeta,
Addis Ababa Ethiopia, see Article 51(4) cum Article 52(2)(d)
188
Ethiopian Investment proclamation No.1180/2020 Article 2
45
the investment proclamation defines foreign investor as a foreign nationals or enterprise in which
foreign nationals has an ownership stake etc. 189
The overall objectives of the investment are stated under article 5 of the investment
proclamation. Accordingly, "The investment objectives of the Federal Democratic Republic of
Ethiopia are designed to improve the living standards of the peoples of Ethiopia by realizing a
rapid, inclusive and sustainable economic and social development".190 Therefore, from this
investment objective one can consider that sustainable economic and social dimension
development are being given much emphasis and, ultimately, it is intended to improve the living
standards of people of Ethiopia by achieving these two dimensional goal. Furthermore, specific
investment objectives" are described under the same provision and it mainly focuses on the
economic dimensions. However, by critically looking up on these general as well as specific
objectives, it seems that sustainable ecological dimension is not given due consideration.
Among the Subsidiary legislatives that deal with investment issues, the following are some of the
laws and policies that deal with investors and investment activities of the country:
Investment Proc. No.1180/2020 as Environmental Sustainability law:-The ultimate goal of

investment is to accelerate the economic development of a country and improve the living
standards of its people.191 The specific objectives appear to capitalize on economic growth with
some reference to social aspect but the sustainability aspect is not clearly articulated. The new
investment proclamation 1180/2020 under art.5 (8) states that among the other investment
objectives of the proclamation is to improve the living standards of the people of Ethiopia by
realizing a rapid, inclusive and sustainable economic and social development and to encourage
189
protection, 2015.
190
Ethiopian Investment proclamation Number 1180/2020,Article 5
191
Accordingly, the economic dimension of sustainable development requires more than just growth in economy.
Rather, it is concerned more about the role that economic activities can play in alleviating poverty and inequality. It
demands economic activities to operate without affecting the environment and the livelihood of the local community.
In addition, the pursuit of economic growth, unchecked by social and environmental considerations, can accelerate,
among other things, topsoil losses, the scarcity of fresh water, the deterioration of grassland and deforestation. He
added that, Failure to extend the required credit for natural resource conservation in economic and public policies
puts economic growth efforts in conflict with natural environment In other words; Sustainability requires change in
quality of growth. (taken from lecture note, Ermias Ayalew, Ethiopian investment policy and Law, sustainable
development, Jimma university, school of law, postgraduate program, 18th January 2015)
46
socially and environmentally responsible investments.192 Additionally the proclamation prohibits
the participation of an investor among others on investment activities which are against public
health. This, new investment proclamation is relatively seems inclusive in light of environmental
sustainability.193 The ultimate goal of investment is to accelerate the economic development of a
country and improve the living standards of its people. The specific objectives appear to
capitalize on economic growth with some reference to social aspect but the sustainability aspect
is not clearly articulated. The new investment proclamation 1180/2020 under Article 5(8) states
that among others, investment objectives of the proclamation is, to improve the living standards
of the people of Ethiopia by realizing a rapid, inclusive and sustainable economic and social
development and to encourage socially and environmentally responsible investments.194 This
proclamation prohibits the participation of an investor among other things, on investment
activities which are against public health. The through reading of these provisions imply that any
of the investors/investment /companies act should be in compliance with the public
environmental interests. Investment activities of any investor must not affect the health of the
people of host state. If investment activities are in contrary to the environmental sustainability
objectives, it is contrary to the law of the land/constitution. All investment activities should be
designed in the way to realize sustainable development in which the environmental sustainability
interests are the main pillar. Investor should establish an environmentally responsible
192
Ethiopian investment proclamation, PROC. No.1180/2020, Specific investment objectives are clearly put under
art.5 of the investment proclamation. They are: "to accelerate the country's economic development; to exploit and
develop the immense natural resources of the country; to develop the domestic market through the growth of
production, productivity and services; to increase foreign exchange earnings by encouraging expansion in volume,
variety and quality of the country's export products and services as well as to save foreign exchange through
production of import substituting products locally; to encourage balanced development and integrated economic
activity among the regions and to strengthen the inter sectoral linkages of the economy; to enhance the role of the
private sector in the acceleration of the country's economic development; to enable foreign investment play its role
in the country's economic development; to create ample employment opportunities for Ethiopians and to advance
the transfer of technology required for the development ofthe country."
193
Ibid
194
Economical dimension promotes 'a form of development that is contained within the ecological carrying capacity
of the planet, which is socially just and economically inclusive. Moreover, It is concerned not just with
environmental protection and maintenance of the ecosystem, but with creating harmony between the later and
development objectives.
47
investment. That is, if an investor pollutes an environment in its investment activities, corrective
state regulatory measures can be taken including expropriation for that matter.195
Above all article 54(1) and (2) of the same proclamation stipulate that all investors shall carry
out their investment activities in compliance with the law of the country and shall give due
regard to social and environmental sustainable values including environmental sustainability
standards and social inclusion objectives in carrying out their investment projects.196 This
proclamation put an obligation on investor to observe the laws of the country in general and give
due regard to environmental sustainability in particular during carrying out its investment
activities. The provision put an obligation on investor to observe environmental sustainability
standards and abide by environmental sustainability values of the laws of the country.197 This is
clear enough to conclude that the investment proclamation is in an integrative design with the
environmental sustainability interest. It can be stated that this provision attaches greater
importance to environmental sustainability. Although it requires investors to observe all laws of
the country, it particularly requires them to give due regard environmental sustainable values
including environmental sustainability standards. Alternatively, investors can give due regard to
environmental sustainability only if they observe the laws pertaining to environmental standards.
At the moment, Ethiopia has many environmental sustainability laws. So, investors must observe
any of these laws which they find to be applicable in the course of doing their business”. Hence,
according to this understanding, it can be said that environmental sustainability is given due
regard in the new investment proclamation.198
As per the principle of legality in investment, in the absence of contrary obligation under
bilateral investment treaties and international obligation, investors must act in accordance with
the laws of host countries. So this proclamation is in compliance with this stipulation. Second,
the most recently introduced investment proclamation. Looking at the various enactments of
environmental laws, those before this proclamation show that the government’s stand on
prioritizing the environmental sustainability is appreciable. One may understand Article 54 of the
195
protection, 2015.
196
Ethiopian Investment Proclamation Number 1180/2020,Federal Negarit Gazetta,2020, Article 54( 1 and 2)
197
198
Supra note at 28
48
investment proclamation as the one that wants to oblige the investors to keep those various
environmental sustainability values in a better way than the laws preceding it since it is a
provision under investment law that obliges the investors to recognize environmental
sustainability values under environmental laws. Hence this new investment proclamation can be
taken as the law which has integrated environmental sustainability matters with investment
interest.199
The mining200 operation proclamation No.678/2010:-This proclamation is the one that clearly
stipulates environmental matters.201 This proclamation includes environmental sustainability
under its goal, starting from the preamble: “it is the obligation of the Government to protect the
environmental sustainability concerns for the benefit of present and future generations and to
ensure ecologically sustainable development of minerals”. 202
Transaction of Precious Minerals Proclamation No.651/2009: Regarding part two of the

proclamation that covers issues such as application, issuance, renewal and revocation of license,
one may say that it rightly prescribes the conditions and requirements for the issuance, renewal,
application and revocation of license.203 However, it does not provide for environmental
conditions as a requirement for the application, issuance, renewal and revocation of license. The
exception to this stipulation is Article 13(2) (c) which says, “Where the application is for
Crafting License, the application shall contain business plan including waste management”. In so
doing, the Proclamation has failed to make the connection between environmental protection
obligations and the content of license permits by making environmental sustainability
considerations as a precondition for the grant of a permit, or the failure to observe the
environmental laws of the country a possible ground for the revocation of a permit.204
199
Ethiopia Investment proclamation No.1180/2020 Article 54
200
"Mining" means any operation or activity directed at extracting minerals from a mineral deposit on or in the
earth and water, any residue deposit or residue stockpile by any method, and any operation incidental thereto, such
as storage, treatment, processing (excluding smelting and refining), transportation and disposal; the definition is
taken from art. 2(18) of the Mining operation proclamation, No. 678/2010
201
About Ethiopia, Embassy of federal democratic republic of Ethiopia, in the Russian federation, 20l3, available at,
http://www.ethiopiaembassy.ru/en/invest laws, accessed on May 12,2019
202
The mining operation proclamation, Proclamation No. 678/2010, Federal Negarit Gazeta of The Federal
Democratic Republic of Ethiopia, Addis Ababa 4th August, 2010.
203
Ethiopian transaction of precious minerals proclamation no.651/2009,Article 13(2) (c)
204
protection, 2015.
49
Energy proclamation No. 810/2013:-This proclamation contains different environmental
sustainability related provisions similar to mining operations proclamation No. 678/2010. The
core provision of the proclamation that relates to environmental sustainability matters is analyzed
as follows. Article 6(2) of the proclamation says, “Any person desiring to generate, transmit or
distribute electricity for non-commercial purposes shall notify the authorities in advance and
produce documents evidencing that he has fulfilled environmental protection and safety
conditions”.205
Petroleum and Petroleum Products Supply Operation Proclamation No. 838/2014:-Under

its preamble this Proclamation stipulates that “it is essential to ensure that the petroleum and
petroleum product supply operation carried out in the country comply with accepted international
safety and quality standards to safeguard human health, property and the environment”.206 This
means that petroleum products shall be produced in compliance with internationally accepted
environmental sustainability standards in order that the environment may suffice to meet the
present and future generation needs.207 Article 5(1) obliges any person who wants to engage in
petroleum supply operations to apply for a certificate of competence to the Ministry of Water,
Irrigation and Energy.208
3.3. Institutional framework for investment in Ethiopia
3.3.1. Ministry of Trade
One of the most important organs in the administration of investment is Ministry of trade.209 One
of its mandates is to provide commercial registration and license for investors in accordance with
the relevant law.210 However, after the license is issued it will be the mandate of the Ethiopia
205
Ethiopia Energy proclamation No.810/2013 , Article 6(2)
206
The proclamation defined petroleum operation as 'the operations involving and related to the exploration,
development, extraction, Production, field separation, treatment (but excluding refining), storage, transportation up
to the point of exportation or entry into a system for domestic consumption, and marketing of Petroleum, excluding
refining of Crude Oil, but including the processing of Natural Gas,' Art.2(9).
207
Petroleum and Petroleum Products Supply Operation Proclamation, Proclamation No. 838/2014,Federal
Negarit Gazetta Of Federal Democratic Republic Of Ethiopia, Addis Abeba,2014
208
M Belete and T Esmael ‘Rethinking ethiopia’s bilateral investment treaties in light of recent developments in
international investment arbitration’ (2014) 8:1 Mizan Law Review
209
Out of twenty five Ministry recognized under Ethiopia law, Ministry of trade is one of them. Please see Article
9(10) of Proclamation No. 916/2015
210
Article 22(6) of Proclamation No. 916/2015
50
Investment Agency to register and to revoke the license.211 On top of this, it is the mandate and
competency of Ministry of Trade to give approval when foreign investors desire to buy shares or
the whole enterprise of existing venture.212 The main objective of the Ministry is to establish
globally competitive trade sector.213 One key policy strategy to achieve this grand objective is
through implementation of effective domestic-foreign investor partnership.214
3.3.2. Ministry of Industry
The other key administrative organ which has many intersection points with investment is
Ministry of Industry.215 One of the main mandates of the Ministry is to enhance expansion of
216
industry and investment by way of supporting their investment. This is also recognized as a
mission of the Ministry when it said: ’promote and expand the development of industry by
creating conducive enabling environment for the development of investment.’217 (My emphasis)
Moreover, the Ministry has the final decision maker in the privatization process and public/
private partnership proposed by private investors.218
3.3.3. Ethiopia Investment Board
Ethiopia Investment proclamation number 1180/2020 Under Art.2(13) defines the Board as
“Ethiopia Investment Board” and empower the Board under Article 31 of the same
proclamation to exercise power and duties under the proclamation, Regulation to be issued and
other laws enacted to regulate the designation, operation and supervision of industrial parks. The
Board also has a power to supervise the activities of Ethiopia investment commission. This
imply that the commission has to be submitted to the board of it is aimed at dealing with any
211
Article 30(2)(e) of Investment Proclamation
212
Article 12(3) of the Investment Proclamation
213
This information is accessed from the official website of the Ministry which is available at
http://www.mot.gov.et/vision-mission-objectives( accessed 29 June 2019).
214
http://www.mot.gov.et/policies-and-strategies( accessed 29 June 2019).
215
249 This Ministry is well recognized under Article 3(9) of Proclamation No. 916/2015.
216
Article 21(2 and 14) of Proclamation No. 916/2015
217
http://www.moin.gov.et/-4( accessed 29 June 2019).
218
Ethiopia Investment Proclamation Number 1180/2020 Article 9
51
investment activities in the country. The Board also has a power to initiate policies on matters
pertaining to investment.219
The proclamation states that the federal investment board is entrusted with important powers and
responsibilities on investment matters in Ethiopia. Powers and duties of the board include:
Supervisory activities, the power of initiation and decisions on policy issues pertaining to
investments, legislative power, i.e. issuing directives on new incentives or amendment, decides
on the amount of service fees to be charged, giving information to investors to familiarize them
with newly introduced directives. The current arrangement boosted the power of the board in
areas like allowing additional incentives, opening some hitherto prohibited sectors for foreign
investors and deciding on appeals against the decision of the commission without forwarding
recommendations for council of ministers (1180/2020). This contributes to the speedy services to
the foreign investors. The board consisted of both private and government representatives. The
involvement of the private sector in the board will help to enhance credibility and objectivity to
the board and include private sector perspective in the whole decision making processes. 220 The
Board hears the investment complaints regarding the final administrative decisions of the
commission or other Federal Executive bodies submitted to it as grievances in accordance
existing procedures.221
Ethiopian investment board has a power to decide in consultation with relevant public and
private stakeholders to open to foreign investors those investment areas reserved for joint
investment with the government, or to domestic investors, or for joint investment between
domestic and foreign investors, as well as restrict foreign investment in areas open to foreign
investors where such decision is justified by public interest considerations. The board also (if
necessary) has a power to establish investment advisory committees, defines their mandates and
designates their memberships and chairpersons.222
219
Abebe Nugusu, The Legal and Institutional Frameworks of FDI in Ethiopia: The Shortcomings, A Thesis
Submitted to the School of Diplomacy and International Relations ETHIOPIAN CIVIL CERVICE UNIVERSITY,
2014, Ethiopia.
220
University School of Diplomacy and International Relations, Abebe Nigusu, Addis Ababa, Ethiopia, February 2014
221
Ethiopian Investment proclamation Number 1180/2020
222
protection, 2015.
52
3.3.4. Ethiopia Investment Commission
As per the investment proclamation, the Ethiopian Federal Investment Commission (EIC)
Ethiopian investment commission (EIC) is the autonomous Government institution
responsible for most aspects of FDI in Ethiopia which has the lead remit for promoting,
coordinating, managing and monitoring all types of inward investment including joint-ventures
EIC is accountable to the Board of Investment.223 The EIC serves as a nucleus for investment
matters in the country. The mandates of the commission are many and listed under article 38 of
proclamation No. 1180/2020.224 These major mandates are serving as the nucleus for investment
matters of investment and promote, serve as a liaison/relationship between investors and public
offices, issuing investment permits, monitoring the implementation of approved projects,
building the capacity of FGRSAICs by extending advisory service and technical support, which
is far less than sufficient, disseminate information by collecting, compiling and analyzing on
investment opportunities in the country, initiate policies and implementation measures,
negotiating bilateral investment treaties, serving as one- stop shop service, promote investment
by organizing exhibitions, trainings and seminars, advice and support investors although the
existence of qualified professionals in a required number in the commission is questionable.225
The major functions of EIC- image building, investment generation, policy advocacy and
investment services (licensing, registration, after-care).226
The Commission is the main organ entrusted to administer the day to day activities related to
investment.227 The Commission has jurisdiction competency, both in domestic and foreign
investors. 228 The Commission is led by the Investment Board, which in turn headed by the Prime
minister. It will cause the registration of foreign currency brought by foreign investors, a
technology transfer agreement and collaboration agreement between the foreign and domestic
investor.229 The Commission among other things is mandated to initiate policy and implement
223
This can be inferred from the close reading of Article 35 of the new Investment Proclamation
224
225
Ethiopian Investment proclamation Number 1180/2020
226
Article 35 of the new Investment Proclamation No.1180/2020
227
As Above
228
Article 38 of the new investment proclamation
229
53
any measures that create a conducive investment environment, to negotiate bilateral investment
agreements, serve as liaison between investors and other relevant organ and to provide advisory
service to investors. With the view to create conducive investment environment, the Commission
also provide a one-stop shop service.230
3.3.5. The Federal Government and Regional state Administrations Investment Council
(FGRSAIC)
States not only maintain investment promotion agencies at national level but also at sub-national
level. This often has led to the development of networks of sub national IPAs, which promote
regions, provinces or states within a country and this is most common in federal states.231 Some
of the sub national investment promotion Agencies are independent and not subsidiaries of the
national agencies and are entirely funded by local governments, while others are subsidiaries and
receive funding from national IPAs. National IPAs usually play a coordinating role vis-à-vis sub
national IPAs to avoid unnecessary competition and to direct investors to local agencies.232
As per the new investment proclamation Article 45, the Regional state Administrations
Investment Council (RSAIC) has a power to direct and oversee all aspects of horizontal
relationship and coordination between the federal government and regional states
administration., deliberate and decides on joint investment administration, establish an oversee
system that enables the workflow between two tiers of the government and render decisions or
put forth recommended solutions on fundamental grievances submitted by investors. The relation
of Regional state Administrations Investment Council (RSAIC) with the commission is
cooperative on investment matters. The Commission and the RSAIC have biannual joint forum.
The forum serves the commission and the RSAIC to reflect on the whole process of investment
activities within their respective purview.233
230
Article 38(17) of the new investment proclamation
231
UN Annual treports,2001
232
2014
233
Ethiopian New Investment proclamations Number 1180/2020 Article 45
54
3.3.6. National Forums for FDI in Ethiopia
Countries establish national investment advisory council for coordination of stakeholders with
the aim of improving the whole investment climate. Public-private advisory council is a way of
allowing the private sector to air its opinion on investment climate and bring its expertise to
improve promotion efforts.234 National Investment Advisory Council (NIAC) was established in
the 1990s in Ethiopia to coordinate different stakeholders in Ethiopia in which private
participation was strong. There is National Business and Economic Diplomacy Forum at national
level, with a separate FDI committee. It was established in 2003 E.C/2010 GC with the
objectives of Coordinating at national level, economic/trade negotiations, infrastructure and
technology transfer, promotion of foreign trade and tourism, and searching and importing foreign
capital for development and to facilitate coordination and support between government bodies,
NGOs and the private sectors.235
It also serves as a forum to solve challenges of economic and business diplomacy efforts.236
Under the forum, the FDI committee was established with the aim of facilitating and
coordinating the investment, especially foreign direct investment activities in the country. 237 The
committee consists of the government organs believed to have a great role in the whole process
of foreign and domestic investments. Few of them are Ethiopian Investment Commission,
Ministry of Industry, Ministry of Foreign Affairs, Ministry of Agriculture, Ethiopian Customs
Authority, Development Bank of Ethiopia, Ethiopian Road Authority, Ethiopian Electric Power
Corporation, etc.238 The above government organs participate very differently some participating
permanently, others take part sporadically and still others not participate at all. The committee is
characterized by frequent interruptions and unlikely to fulfill the mandates it was established to
accomplish fully.239
234
UNCTAD, 2011
235
2014
236
IPAs Forum Establishing Document, 2010
237
238
Interplay Between Investment Laws And Environmental Laws In Ethiopia With Regard To Environmental
Protection, Habtamu Lanjore, Jimma University,Ethiopia, 12 th June ,2015
239
Ibid
55
3.4. Legal and Institutional framework on Environmental Sustainability in Ethiopia
There are both national and international legal and institutional frame works on environmental
sustainability in the country.240 Ethiopia is member of different binding international
environmental sustainability treaties.241 The role of government institutions in Ethiopia must be
seen in light of the current decentralized Federal and Regional structures. Ethiopia, a country of
242
nation, nationality and people, has a federal system of governance. The power of governance
is shared between the central government and the state governments. The 1995 Constitution of
the Federal Democratic Republic of Ethiopia and the National Economic Policy and Strategy
have recognized and give due attention to environmental protection.243 Under article 51 of the
constitution, the power and function of the federal government stated that the Federal
government shall enact laws for the utilization and conservation of land and other natural
resource, historical sites and objects (FDRE Constitution Article 51(5)) and also article 52:2(d)
of the constitution gives the state government to administer land and other natural resources in
accordance with Federal laws. Both, the federal parliament and the state legislatures, derive their
powers from the Constitution.244 The Constitution casts an obligation on the State not only to
protect but, more importantly, to improve and maintain environmental sustainability and to
safeguard the forests and wildlife of the country. It also imposes a fundamental duty on the
citizen to protect and improve the natural environment, including forests, lakes, rivers and
wildlife, and to have compassion for living creatures.
Therefore, the duty to protect and enhance the quality of environment in Ethiopia is the duty of
the Federal, states and the local governments or citizens.245 The Environmental protection organs
establishment proclamation (Federal proclamation No. 295/2002) established institutions
responsible for regulation of pollution control.246 Among this, the Federal government organ is
240
Tsegai Berhane and Merhatbeb Teklemedhn, Environmental Law ,Teaching Material, Prepared under the
Sponsorship of the Justice and Legal System Research Institute,2009,p.1
241
Definition of Environment -New Age International “www.newagepublishers.com/sample chapter /001773.pdf”..
accessed April January,2019 environment
242
Addis Ababa Ethiopia, Article 45, 46 and 47
243
Ethiopia Environmental and Social Management Framework, 2017 page 11
244
Addis Ababa Ethiopia, Art.51, 52 and 92
245
Ibid at Article 92
246
I The Federal Democratic republic of Ethiopia Environmental proclamation No. 295/2002:
56
the first with the objective of formulating policies, strategies, and standards to ensure human
welfare and safety of the environment. Division of powers among the federal and regional states
is commonly used system with the objectives of environmental development and management
and, environmental protection, regulation and monitoring.247 That is why the Ethiopian
government shares the EIA administration to Federal and Regional level.248 Thus, the regional
environmental agencies are responsible for coordinating the formulation, implementation, review
and revision of regional conservation strategies, environmental monitoring, protection, regulation
in their jurisdiction and also ensuring the implementation of federal environmental standards or,
as may be appropriate, issue and implement their own environmental laws in no less stringent
standards.249 In the environmental impact assessment process the regional environmental
agencies or their equivalents are responsible to adopt and interpret federal level EA policies and
systems or requirements in line with their respective local realities, establish a system for EA of
public and private projects, as well as social and economic development policies, strategies,
250
laws, or programs of regional level functions (Federal proclamation No. 295/2002). Each of
the main federal agencies active in infrastructures or economic development is required by law to
have its own environmental unit. According to the Environmental Protection Organs
Proclamation, the Regional States are to create their own Regional Environmental Agencies.
These are to deal, amongst others, with EIAs for regionally managed infrastructure or
development activities.251
3.4.1. Ethiopia’s Legal frame work on Environmental sustainability
3.4.1.1. Ethiopia’s international Environmental sustainability conventions
Ethiopia has ratified several international/multilateral environmental conventions and many of

the principles and provisions in those conventions have been well addressed in the national
environmental policies and regulations.252 Some of these conventions include Convention on
247
Ibid
248
protection, 2015.
249
Ethiopia Environnemental protection organs establishment proclamation proclamation No. 295/2002, the
Preamble
250
The Federal Democratic republic of Ethiopia Environmental proclamation No. 295/2002: Article 6
251
The Ethiopian Environmental and Social Management Framework pact, 2017 page 12)
252
PhD (University of Oslo Faculty of Law); Assistant Professor, School of Law, Addis Ababa
57
Access to Information, Public Participation in Decision-making and, Access to Justice in
Environmental Matters, Done at Aarhus, Denmark, On 25 June 1998, Cartagena Protocol on
Bio-Safety to the Convention on Biological Diversity ,Convention on Biological Diversity, Rio,
5 June, 1992 , Kyoto Protocol to the United Nations Framework Convention on Climate Change
,United Nations Convention to Combat Desertification ,UN Framework Convention on Climate
Change ,Convention for the Protection of the World Cultural and Natural Heritage of Paris,23
November 1972.253 Ethiopia is a party to the four international conventions, which directly or
indirectly deal with human health and the environment.254 The first is the Persistent Organic
Pollutants of Stockholm Convention, which tries to completely eliminate organ chlorine and
other equally dangerous organ halogen chemicals from the earth. Secondly, Bamako Convention,
which prohibits the importation of hazardous wastes into, and their movement in Africa. The
third is Basel Convention, which strictly regulates the movement of hazardous waste globally.
Recently, it has incorporated the prohibition of the importation of hazardous wastes into
developing countries from the Bamako Convention. Lastly, The first Prior Informed Consent or
Rotterdam Convention, which tries to ensure that anybody buying a chemical has complete and
accurate information about the nature and impacts of that chemical before he/she decides and
notifies his/her consent in writing to the exporter.255
3.4.1.2. Ethiopia’s Environmental sustainability policies
Environmental Sustainability can be wide-ranging and touch upon many different issues. The
award in the arbitration regarding the Iron Rhine Railway noted that: “environment is broadly
referred to as including air, water, land, flora and fauna, natural ecosystems and sites, human
health and safety, and climate. The emerging principles, whatever their current status, make
reference to conservation, management, notions of prevention and of sustainable development,
and sustainability for future generations”. The Environmental Policy of Ethiopia was approved
by the Council of Ministers in 1997. It is comprised of 10 sector and 10 cross-sector components,
one of which addresses Human Settlements, Urban Environment and Environmental Health. The
Policy is based on the findings and recommendations of the National Conservation Strategy of
University; E-mail: ganeme@gmail.com.

253
See Marie-Lousie Larrson, ‘Legal Definitions of the Environment and of Environmental
Damage’, Stockholm Institute for Scandinavian Law, 2009, pp.156-157.
254
Ibid
255
Supra note at 38
58
Ethiopia. The Policy contains elements that emphasize the importance of mainstreaming socio-
ecological dimensions in development programs and projects.256 The goal of the Environmental
Policy of Ethiopia is to improve and enhance the health and quality of life of all Ethiopians and
to promote sustainable social and economic development through sound management of the
environment and use of resources so as to meet the needs of the present generation without
compromising the ability of future generations to meet their own needs. The Environmental
Policy provides a number of guiding principles that require adherence to the general principles of
sustainable development. In particular, the need to ensure that Environmental Impact Assessment
(ESIA) Considers impacts on human and natural environments Provides for early consideration
of environmental impacts in project and program design, Recognizes public consultation
processes as essential to effective management, includes mitigation and contingency plans,
Provides for auditing, monitoring, and a legally binding requirement.
In history, Ethiopia has been known with deep rooted poverty and starvation. Basic
Environmental challenges in Ethiopia include climate change, soil degradation, deforestation,
loss of biodiversity and ecosystem services, and pollution of land, air and water. Over the last
two decades, the Ethiopian government has put in place a number of policies, strategies and laws
that are designed to support sustainable development and the country is set to move towards a
257
greener economy. In 1990s, particularly since the 1992 Rio Declaration, the Ethiopian
government has made various strategies, policies, laws and institutional arrangements to bring
about an improved livelihood to the society and Ethiopia is gradually engaged in major
undertakings to ensure sustainable development. It developed the first comprehensive
conservation strategy and environmental policy both at national and regional levels. The
principle for sustainable investment activities requires the investment to be environmentally
sustainable too. The principle require investors to use natural resources, like land, energy and
water in the most sustainable and efficient ways, according to the existing knowledge,
256
Environmental Policy of Ethiopia (EPE), adopted by the Council of Ministers, 1997, Article 1.4
257
EPE, Article 2.1. Article 2.3 (f) provides that ‘When a compromise between short-term economic growth and
long-term environmental protection is necessary, then development activities shall minimize degrading and
polluting impacts on ecological and life support systems. When working out a compromise, it is better to err on the
side of caution to the extent possible as rehabilitating a degraded environment is very expensive, and bringing back
a species that has gone extinct is impossible’
59
technologies and capacity. Investors are also required to sustain ecosystems. Ethiopia enacted
various laws to ensure environmental sustainability in carrying out investment activities.258
International treaties ratified by Ethiopia that contain environmental rights are made up of
environmental treaties and human rights treaties at global and regional levels. At this juncture, it
is worth noting that Article 9(4) of the FDRE Constitution proclaims that all international
agreements ratified by Ethiopia are an integral part of the law of the land.259 Furthermore, Article
13 (2) of the FDRE Constitution provides that the human rights protected by the Constitution
shall be interpreted in a manner conforming to the principles found under international treaties
ratified by Ethiopia.260 The conservation strategy of Ethiopia (CSE) assesses the formulation of
policies and strategies, action plans and investment act to regulate them through law. It also
seeks to integrate environmental sustainability in cross sectors. The conservation Strategy strives
for the integration of the environmental sustainability standards with developmental interest.
Conservation strategy of Ethiopia is an umbrella framework that sets guidelines and strategies
for environmental management. It attempts to integrate Governmental planning in all sectors that
impinge on the environment. The overall goal of the Strategy is ‘to improve and enhance the
health and quality of all Ethiopians and to promote sustainable social and economic
development’ using natural resources and the environment. Furthermore, Ethiopia adopted the
environmental policy in 1997 after the Rio Declaration, which requires laws, and policies should
be harmonized with the principle of development policies.
FDRE constitution:-As constitution is a pillar of all laws of the country; it has incorporated
important environmental Sustainability policy frameworks. Hence, environmental Sustainability
issues has got important place of recognition. Accordingly, article 43 of the Constitution
incorporated essential environmental sustainability concepts. In here, sustainable development is
being considered as the right of the Peoples of Ethiopia as a whole, and each Nation, Nationality
258
Ibid
259
Addis Ababa Ethiopia, Article 9(4)
260
Addis Ababa Ethiopia,13(2)
60
and People in Ethiopia.261Under the FDRE Constitution as per Art.44, it recognizes the rights of
the people to live in clean and healthy environment.262
Growth and transformation plan: - After the lapse of the period of PASDEP the FDRE
government came up with the new strategic plan called GTP. As it is known, GTP had contained
ambitious plan with regards to different scopes like economic, social and environmental
dimensions.263 When we look its vision or objective parts it does not include environmental
sustainability issues. The non-inclusion of environmental Sustainability concerns into the GTP's
visions or objectives may not mean that the GTP does not recognize the significance of
environmental sustainability to the attainment of its goals. Having cognizance of the fact that
environmental conservation and Sustainability play a significant role in sustainable development,
it had become part and parcel of GTP. Building green economy and continuing implementation
of environmental law were among the key strategic directions to be pursued during the plan
period.264 To succeed with environmental conservation and to build green economy, the GTP
had emphasized on two issues (adaptation to climate change and mitigation of green house
gases). On top of all, there were attempts during GTP period to formulate and implement
policies, strategies, laws, and standards which fostered social and green economy development
so as to enhance the welfare of citizen and environmental sustainability as the main objective of
environmental healthy and climate change initiatives of GTP. Therefore, from these, one can
consider that, with regards to environmental Sustainability, Ethiopia has made an attempt to
formulate policies and made it part of GTP.265
Sectoral Environmental sustainability Policy of Ethiopia:-Apart from the aforementioned

environmental policies, in Ethiopia, there are also sector specific environmental policies. The
need to these sectoral environmental policies is multidimensional. Among others, it is mainly
based on the right to live in clean and health environment and to make possible sustainable
261
Addis Ababa Ethiopia, Article 43
262
Ibid
263
Ethiopia's Growth and Transformation Plan -nearing the half-way mark, available at
http://aigaforum.com/articles/eth-gtp-plan-half-way.pd, accessed on May 9, 2019, p.l
264
Growth and transformation plan volume one, ministry of finance and economic development, Addis Ababa,
November 2010, available at www.ethiopians.com/Ethiopia GTP ,accessed on 2 May 2019, p. 21
265
Growth and transformation plan volume one, ministry of finance and economic development, Addis Ababa,
November 2010, available at www.ethiopians.com/Ethiopia GTP ,accessed on 2 May 2019, p. 22
61
environmental condition and economic production systems through the acquisition of power by
communities to make their own decisions on matters that affect their life and environmental
sustainability. Accordingly, some of the sectoral environmental policies of Ethiopia are
described as: Policies on Soil Husbandry and Sustainable Agriculture, Policies on Forest,
Woodland and Tree Resource, Policies on Genetic, Species and Ecosystem Biodiversity, Policies
on Human Settlement, Urban Environment and Environmental Health and the likes. Each of
these sectors has their own specific policies. For example, 'Policies on Atmospheric Pollution
and Climate Change are to promote a climate monitoring programme as the country is highly
sensitive to climatic variability.
3.4.1.3. Ethiopia Environmental Sustainability laws
Throughout the world, a separate enactment of environmental laws is a recent phenomenon in

the history of making laws. In Ethiopia, there were laws which more or less incorporated issues
of environmental Sustainability. The famous Fetha Nagast (The Law of Kings) of the thirteenth
century had rules which dealt with environmental matters. However, due to various reasons, it
was not as such significant to consider. Apart from this, especially after the coming in to power
of EPRDF government, large amount of environmental Sustainability laws are enacted both at
federal and regional level of the government. Some of the current environmental laws are
discussed here in below.266
FDRE Constitution: - Under the FDRE Constitution as per Art.44, it recognizes the rights of
the people to live in clean and healthy environment. This refers that environment must be
protected so as to help the people to live in it in a better condition. Unless we protect the
environment, we cannot protect the rights of the people to live in clean and healthy environment.
Hence this constitution gives guarantee for such rights of the people. In addition to this as per
Art.92 and 9(2) of this Constitution, cumulative reading of both provisions, imposes obligations
on government, Associations, citizens, political bodies and other officials a duty to give due
concern to the environment. In particular the government of Ethiopia is duty bound to give
attention for the environment as per Art.92 (1) and 92(4). According to this provision, the
government shall endeavor to ensure that all Ethiopians to live in a clean and healthy
266
Proclamation No. 295/2002, A Proclamation provided for the establishment of Environmental
Protection Organs , Article 2(3)
62
environment.267 This implies that there may be different factors that pollute the environment in
the country like wastes of industries or from the investment activities. These environmental
polluting activities may change the healthy and clean environment to unhealthy and unclean. 268
The Environmental sustainability policies and objective provision obliges the government not to
participate on the projects in which the design and implementation of programmes and projects
of development damage or destroy the sustainability of environment. The FDRE constitution put
an obligation on the government and citizens of the country to protect the environmental
sustainability.269
Proclamation 513/2007, Solid Waste Management aims to promote community participation

to prevent adverse impacts and enhance benefits resulting from solid waste management. It
provides for preparation of solid waste management action plans by urban local governments. A
proclamation No.513/2007 is enacted in order to achieve the objective described under Art.3.
The objective of the proclamation is drawn from the preamble of the proclamation. On one hand
it has been necessary to promote the community participation so as to prevent the adverse effects
of solid waste, and on the other hand to enhance the benefit gain from solid wastes. The
proclamation put obligations on different stakeholders/ government officials, business men, and
community/. For example, Art.10 and 12 of the proclamation put an obligation on food industries
and restaurant, and construction enterprises respectively. Accordingly, restaurants and food
industries have an obligation to collect, store, and dispose solid waste in environmentally
sustainable manner. Furthermore, construction companies, together with urban administrators,
have an obligation to arrange appropriate place for waste disposal. Hence, it puts as a pre-
condition for issuance of construction permit.270
267
Addis Ababa Ethiopia,92
268
Proclamation No.1/1995, Proclamation of the Constitution of the Federal Democratic Republic of Ethiopia
(FDRE Constitution). The FDRE Constitution under Article 92 classifies some of the environmental rights as
national environmental objectives. Nonetheless, according to Article 85 of the Constitution the objectives are
obligations to be observed by federal and state governments when implementing the Constitution, other laws and
policies.
269
Proclamation No.1/1995, Proclamation of the Constitution of the Federal Democratic Republic
of Ethiopia (FDRE Constitution). The FDRE Constitution under Article 92 classifies some of the
Environmental rights as national environmental objectives. Nonetheless, according to Article 85
of the Constitution the objectives are obligations to be observed by federal and state governments
When implementing the Constitution, other laws and policies.
270
Proclamation 513/2007, Solid Waste Management aims, Article (3,10 and 12)
63
Proclamation 299/2002, Environmental Impact Assessment makes EIAs mandatory for
implementation of major development projects, programs, and plans. The Proclamation is a tool
for harmonizing and integrating environmental, economic, cultural, and social considerations
into decision-making processes in a manner that promotes sustainable development.
Proclamation No 9/1995, was enacted to establish Environmental policy Agency (EPA). After
the establishment of the agency, the 1997 environmental policy laid a foundation for
environmental administration in Ethiopia, and consequently this provided for the integration of
environment and development at policy, planning and management levels for an improvement of
decision- making. Environmental Impact Assessment Proclamation No.299/2002, when we read
its preamble; dictates about the Sustainability of environment in accordance with the FDRE
Constitution and it imposes obligations to conduct impact assessment on those who are interested
to conduct project on the environment on which there is a need of conducting environmental
impact assessment in the project.271
Proclamation 300/2002, Environmental Pollution Control requires developmental activities to

consider environmental impacts before their establishment. The proclamation requires ongoing
activities to implement measures that reduce the degree of pollution to a set limit or quality
standard. Thus, one of the dictates of the proclamation is to ensure, through inspection, the
compliance of ongoing activities with the standards and regulations of the country through an
environmental audit.272
Proclamation 295/2002, Establishment of Environmental Protection Organs establishes the

organizational requirements and identifies the need to establish a system that enables coordinated
but differentiated responsibilities of environmental protection agencies at federal and regional
levels. The proclamation indicates duties of different administrative levels responsible for
applying federal law. 273
Proclamation 159/2008, Prevention of Industrial Pollution Regulation: As a follow up to

Proclamation 300/2002, this regulation to prevent industrial pollution was developed by the
Federal Environmental Protection Authority to ensure compatibility of industrial development
271
Proclamation 299/2002, Environmental Impact Assessment, preamble
272
Proclamation 300/2002, Environmental Pollution Control, preamble
273
Proclamation 295/2002, Establishment of Environmental Protection Organs, preamble
64
with environmental conservation. This Proclamation includes comprehensive industrial pollution
standards for a range of industrial and mining activities274.
Guideline for Environmental Management Plan May 2004: This guideline outlines measures
for preparation of an Environmental Management Plans for proposed developments in Ethiopia
and institutional arrangements for implementation of Environmental Management Plans.275
Waste Handling and Disposal Guideline, 1997: The Waste Handling and Disposal Guidelines
have been in use by health facilities since 1997. The Guidelines are meant to help industry and
276
local authorities handle medical waste situation at the local level.
Proclamation on Expropriation of Landholdings for Public Purposes and Payment of

Compensation: Proclamation 455/2005: Prior to this proclamation, no specific legal
framework existed relating to expropriation and compensation. As a result, there have been
serious shortcomings in the processes associated with land expropriation, resettlement and
associated compensation payments in Ethiopia. The proclamation address issues related to Public
Domain Entitlement, Property laws, Land asset classification and valuation, customary laws,
Procedures for expropriation, Procedures for grievance redress. The proclamation establishes the
legal principles and framework for expropriation and compensation. 277
Regulation for the payment of Compensation for property Situated on Landholdings

Expropriated for public purposes: Regulation No. 135/2007:This regulation describes the
detail implementation procedures in settling issues related to Public Domain Entitlement,
Property laws, Land asset classification and valuation, customary laws, Procedures for
expropriation, Procedures for grievance redress. The regulation provides the procedures for
application of Proclamation No 455/2005.278
Rural Land Administration and Land Use Proclamation 456/2005: The Proclamation
regulates use and administration of rural land and recognizes farm, pastoral, semi-pastoral, and
communal landholdings. It outlines a grievance mechanism and dispute resolution system. The
274
Proclamation 159/2008, Prevention of Industrial Pollution Regulation, preamble
275
Guideline for Environmental Management Plan (draft), May 2004,preamble
276
Waste Handling and Disposal Guideline, 1997
277
Proclamation on Expropriation of Landholdings for Public Purposes and Payment of Compensation:
Proclamation 455/2005,preamble
278
Regulation for the payment of Compensation for property Situated on Landholdings Expropriated for public
purposes: Regulation No. 135/2007
65
law requires that all landholdings be issued a certificate in the name of both wife and husband or
279
the name of all joint holders and would be registered in a database. The law provides for the
obligation to pay compensation to landholders if the holder is displaced or to provide
replacement land with compensation for lost assets. The Proclamation requires that rural
landholders expropriated for federal projects must be compensated based on federal
compensation laws or, if displaced for regional projects, they must be compensated according to
regional regulations. The Proclamation also states that the holder of rural land who is evicted for
purposes of public use would be given compensation or would be given substitute land. 280
Proclamation 200/2000, Public Health Proclamation; Public Health Proclamation

comprehensively addresses aspects of public health including among others, water quality
control, waste handling and disposal, availability of toilet facilities, and the health permit and
registration of different operations. The Proclamation prohibits the disposal of untreated solid or
liquid hazardous wastes into water bodies or the environment that can affect human health. 281
Proclamation 189/2010, Ethiopian Food, Medicine and Health Care Administration

(FMHACA) and Control Authority Establishment Council of Ministers gives FMHACA the
mandate to protect consumer health by ensuring the standard of health institutions and the
hygiene and environmental health protection requirements for communities.282
National Health Care Waste Management (HCWM) Strategic Action Plan 2015/16-2019/20
focuses on thematic areas: Among others deals with Legal and regulatory framework to
provide guidance to health care managers on minimum operation requirements and the need to
standardize HCWM practices in all healthcare facilities in the country; and Process of
operational research in pollution reduction and adoption of environmentally friendly
technologies.283
Medicinal Waste Management and Disposal Directive, 2011 is applicable to (a) disposal of
medicinal waste, but not to medical equipment or management of other healthcare waste
279
Rural Land Administration and Land Use Proclamation 456/2005,preamble
280
Ibid
281
Public Health Proclamation, Proclamation Number 200/2000,preamble
282
Proclamation 189/2010, Ethiopian Food, Medicine and Health Care Administration (FMHACA) and Control
Authority Establishment Council of Ministers, preamble
283
National Health Care Waste Management (HCWM) Strategic Action Plan 2015/16-2019/20 focuses on thematic
areas, preamble
66
generated by health institutions; and (b) all governmental, non-governmental and private
organizations involved in medicinal waste handling and disposal. The Directive requires disposal
firms to have secured an appropriate disposal site depending on the Environmental Impact
Assessment conducted with support of the Federal Environmental Protection Authority. In
addition, a disposal firm is required to have all the facility and practice standards prescribed
284
under this Directive.
The Guideline for Waste Handling and Disposal in Health Facilities (2006) was developed
among others to prevent and control environmental pollution by waste carelessly disposed of
from health facilities; Provide technical support to health professionals and environmental health
workers engaged in day-to-day health inspection and control activities.285
Ethiopian Water Resources Management Proclamation Proclamation 197/2000 ensures that

the water resources of the country are protected and utilized for the highest social and economic
benefits of all citizens, to supervise that they are duly observed, and to ensure that harmful
effects of water are prevented and that management of water resources is carried out properly.
This Proclamation protects water bodies from improper disposal of medical waste.286
Public Health Proclamation; Proclamation number 200/2000, comprehensively addresses

aspects of public health including among others, water quality control, waste handling and
disposal, availability of toilet facilities, and the health permit and registration of different
operations. The Proclamation prohibits the disposal of untreated solid or liquid hazardous wastes
into water bodies or the environment that can affect human health.287
The new Criminal code of Ethiopia:-The new criminal code of Ethiopia has contained general
and special provisions which are divided in several parts. Article 519 prescribes penalty for
environmental pollution. Accordingly, the provision sets the maximum limit of penalty of
rigorous imprisonment not exceeding ten years in cases where pollution has resulted in serious
288
consequences on the health or life of persons or on the environment. Art. 521 of the code put
a penalty of simple imprisonment not exceeding one year in case where whoever, without
284
Medicinal Waste Management and Disposal Directive, 2011,preamble
285
The Guideline for Waste Handling and Disposal in Health Facilities (2006) was developed, preamble
286
Ethiopian Water Resources Management Proclamation proclamation 197/2000,preamble
287
Public Health Proclamation; Proclamation number 200/2000, preamble
288
The Ethiopian new Criminal code, Article 519
67
obtaining authorization from the competent authority, implements a project on which an
environmental impact assessment is required by law, or makes false statements concerning such
assessment.289 In the last the provision to consider is art.520 of the code.290 The provision
prescribes the amount of penalty, in case of mismanagement of hazardous waste and other
materials. It states that, whoever fails to manage hazardous wastes or materials in accordance
with the relevant laws of the country; or whoever, fails to label hazardous wastes or materials; or
whoever, illegally transfers hazardous wastes or materials, is punishable with a fine not
exceeding five thousand birr or rigorous imprisonment not exceeding three year or with both as a
condition determines.291
3.4.2. Institutional framework on Environmental sustainability in Ethiopia
For the nature of the composition of the Environmental Council (EC) of the Federal
Environmental Protection Authority of Ethiopia (FEPAE) will have a grain of contribution in the
evaluation of the rule making mandate of the EC and FEPAE.292 The position of the
Conservation Strategy of Ethiopia, the EC shall be chaired by an official delegated by the
government, and memberships shall be at the Minister or Commission level. Taking this policy
direction, legally the HPRE promulgated a law for its establishment in 2002, and practically it is
established in 2008 under the Organization of the FEPAE (FDRE, Proc! No. 295/2002 with the
Prime Minister or his designate (Chairman), by Members to be designated by the Federal
Government and A representative designated by each National Regional State, a representative
of the Ethiopian Chamber of Commerce, a representative of local environmental non-
governmental organizations, and, a representative of the Confederation of Ethiopian Trade
Unions, and The Director General of the Authority.293 Having the above institutional
arrangement, the Rules of Procedure for the Meetings of the Environmental Council stipulated
that the Council may designate a subsidiary body to submit expert opinion to it and the question
that the subsidiary body established under sub-article 1 of this Article will answer shall be
determined by the Council. According to this article, even if it has not yet established, any
question will be initiated only by the Environmental Council, and the final say will be with the
289
290
291
Ibid
292
Ethiopian Environmental Protection Authority proclamation, proclamation No.295/2002,preamble
293
Ibid
68
Environmental Council. So much so that it is safe to say the role of the Subsidiary Body in the
EC is nominal.294
Environmental Sustainability Organs Establishment Proclamation:-Under proclamation No.

295/2002, from Art.3 to Art.13 there are several provisions which has mainly dealt about powers
and duties of the prior environmental Sustainability agency. Art.6 sub-art 5 reads that, “where
projects are subject to federal licensing, execution or supervision or where they are likely to
entail interregional impacts, review environmental impact study reports of such projects and
notify its decision to the concerned licensing agency and, as may be appropriate, audit and
regulate their implementation in accordance with the conditions set out during authorization” this
sub-provision has come up with better expression as it gives power to ministry of environment
and forest to audit and regulate implementation of projects.295
A proclamation No.916 /2015:- This is a proclamation, which has enacted to define the power
and duties of executive organs of FDRE. In this proclamation, legal provisions which determine
the power and duty of environment, forestry and climate change are incorporated. Accordingly,
Art.30 of this proclamation has incorporated several provisions which deal about the powers and
duties of the ministry of environment, forestry and climate change. To begin with Art.30 (1) (a),
Ministry of environment and forestry shall have the power and duty to coordinate activities
which are important to ensure environmental objectives provided under constitution and the
296
basic principles set out in the environmental policies of the country are realized.
3.4.3. Law of sustainable development in Ethiopia
Sustainable development integrates economic, environmental, and social as well as human rights
and international sustainable development addresses the intersection among international
economic, environmental and social laws. Ethiopia law of sustainable development includes law
to integrate decision-making. Because Art.43 (1) of the FDRE constitution stipulates that the
people of Ethiopia as a whole, and each nation, nationalities and people in Ethiopia in particular
have the right to improved living standards and to sustainable development. The integration of
294
295
Ethiopian Environmental Protection Authority proclamation, proclamation No.295/2002,preamble
296
The proclamation to identify the power and duties of executive organs of Federal Democratic Republic Of
Ethiopia, Proclamation No. A proclamation No.916 /2015,Article 30(1)
69
multiple national objectives can be made through a variety of legal and policy tools like using
regulation to foster innovation; research and development; and tax policies.297 Integration across
levels of government and the law (of planning) should also be used. In addition, the preexisting
laws, in most cases, which are traditional environmental laws, could be used to promote
sustainable development by adopting them to the new concept; they can be used pervasively and
creatively as part of new sustainable governance. 298In Ethiopia, the given under Art 43(1) of the
FDRE constitution, the concept ‘sustainable development’ is defined nowhere in a clear manner.
299
However, we can discern that the meaning given by Brundtland is accepted in Ethiopia. The
Ethiopian Environmental Policy provides for the overall goal of the policy to promote
sustainable development by using natural, human made and cultural resources ‘... to meet the
needs of the present generation without compromising the ability of the future generations to
meet their own needs.’ This makes clear that the concept of sustainable development adopted by
the UN is accepted by Ethiopia.300 The principle of integration is the last principle of sustainable
development law that is incorporated under Ethiopian law. As stipulated in the environmental
policy, integrating the natural resource and environmental management in across all sectors and
vertically among all levels of organization is one of the key guiding principles.301
3.4.4. The principle of Environmental integration BITs and interrelationship in Ethiopia
Principle of integration and interrelationship among others, relates to social, economic and
environmental objectives. According to Chapter 39 of Agenda 21, States agree to focus on the
further development of international law on sustainable development, giving special attention to
the delicate balance between environmental and developmental concerns. The Principle of
integration is a commitment to integrate environmental sustainability into economic
developments, and to consider the needs of economic development in crafting, implementing and
interpreting environmental duties. Among others, the principle requires taking into account the
economic and environmental issues in decision-making. According to the principle, states must
ensure that social and economic development decisions take into account environmental
297
298
Ibid
299
300
Ibid
301
70
sustainability. Ethiopia law of sustainable development includes law to integrate investment and
environmental interest. Because, Art.43(1) of the FDRE constitution stipulates that the people of
Ethiopia as a whole, and each nation, nationalities, and people in Ethiopia in particular have the
right to improved living standards and to sustainable development.302
Besides to different laws and policies of the country that oblige the integration of the economic
and environmental interest, the new investment proclamation No 1180/2020, Article 54(1) and
(2) stipulate that all investors shall carry out their investment activities in compliance with the
law of the country and shall give due regard to social and environmental sustainable values
including environmental sustainability standards and social inclusion objectives in carrying out
their investment projects.303
302
Ethiopia constitution, Article 43 and 44
303
Ethiopia Investment proclamation ,Article 54(1and 2)
71
CHAPTER FOUR

4.1. Introduction
There is no disagreement as to the crucial role of investment in the economic development of a

given country.304 With the view to demonstrate they are investor-friendly and eventually to
attract FDI, developing countries enter into various BITs with developing and developed
countries, however, the adverse effect and the consequence attached to it is not well considered.
As the existing BITs are the result of a century old model of western countries, it is investors
oriented and crippled the policy space and sustainable development of the host state which
disregards the contemporary and vexing issues like environmental sustainability standards
305
among others. Although BITs are concluded between the host and home state, the investors
come as one of the most important beneficiaries of this bilateral arrangement. The main focus of
various BITs is investors’ rights rather than corresponding investors’ duties i.e. duty to maintain
environmental sustainability. It is true that the right to get safe and predictable system is believed
to be one of the integral parts of investment and investors rights, but also the host state has the
right and obligation to regulate the investment through various legal frameworks and enforced
the same through various institutional frameworks. 306
Ethiopia has concluded dozens of BITs (under 40) for the promotion and reciprocal sustainability
of the investments. The number cannot be under estimated when compared with the only 40
BITs that the USA signed up to the year 2005. These BITs are concluded hoping that they will
contribute to the development of the country. Over the past few years, industrial activities in
Ethiopia are attracting attention of not only the local communities but also of the government
because of their harm to the society and the environmental sustainability.307 In light of this, it is
important to consider the extent to which the existing BITs of Ethiopia integrate the
304
One may trace it back to Friendship commerce and navigation agreement of the USA.
305
This is emanated from John Locke social contract theory which advocate the establishment of positive law
guarded by government.
306
J Vandevelde ‘The bilateral investment’ treaty program of the united states’(1988) Cornell International Law
Journal 201-276 at 231.
307
J Vandevelde ‘The political economy of a bilateral investment treaty’(1998) 92 The American Journal of
International Law 621-641 at 627.
72
environmental sustainability with investment objectives. The Ethiopian Constitution explicitly
provides that the people of Ethiopia have the right to improved living standards and to
sustainable development (in which an environmental sustainability is the main pillar). It goes on
saying that all international agreements and relations to which Ethiopia is a party shall ensure the
country’s right to sustainable development. But within the ambit of this sub paragraph fails the
BITs concluded by Ethiopia. 308 Accordingly, it is a must that Ethiopian BITs be consistent with
the notion of sustainable development. The Constitution also declares that all persons have the
right to a clean and healthy environment. Ethiopia has also adopted various legislations, policies
and strategies in this regard. Furthermore, the country has become a party to numerous
Multilateral Environmental Agreements (MEAs) that strive to ensure sustainable development
among others, by maintaining environmental sustainability. 309
4.2. The Definition, Objectives and Scope of BITs in Ethiopia
Definitions of BITs of Ethiopia: - The definition of investment is crucial in any BIT as it

demarcates the scope of application of the treaty and it is also the base line for assumption of
jurisdiction where in case dispute arises. Investor can be either physical person (also known as a
natural person) or legal person. There are four different ways of defining investment: an open-list
asset-based approach, a closed-list asset based approach, enterprise-based approach and circular
or tautological approach as stated under chapter two above.310
Almost all Ethiopia’s BITs adopt open-list asset based definitional approach to the investment.
For instance, under Article 1(a) of Yemen-Ethiopia BIT provided that investment means “every
kind of asset invested by investors of one Contracting Party in the territory of the other
Contracting Party, in accordance with the laws and regulations of the latter and in particular,
though not exclusively includes”311 The only exception in this regard is Brazil and Ethiopia BIT,
in which enterprise based definitional approach to the investment312. Accordingly investment is
defined as’ a direct investment of an investor of one Contracting Party, established or acquired in
308
FDRE Constitution Article 43 and 44
309
UNCTAD World Investment Report 2018: investment and new industry policies (2018) at III.
310
Agreement between the Government of the Federal Democratic Republic of Ethiopia and the Government of the
People's Republic of China Concerning the Encouragement and Reciprocal Protection of Investments (signed 11
May 1998), Art. 1(1) and (2);
311
BITs Agreement between Ethiopia and Yemen,preamble,2018
312
BITs agreement of Ethiopia and Brazil,preamble,2000
73
accordance with the laws and regulations of the other Contracting Party, that, directly or
indirectly, allows the investor to exert control or significant degree of influence over the
management of the production of goods or provision of services in the territory of the other
Contracting Party. 313
Generally, under Ethiopia’s BITs there is no exclusionary clause of what do not constitute
investment. However, under Ethiopia-Brazil BIT it is indicated that the judgment of the court,
debt security, portfolio investment and claim of money that arise solely from commercial
contracts, shares or stocks that acquired for the sole purpose of speculation shall not constitute
investment. 314
4.3. Scope of Application of the BITs of Ethiopia
The treaty applies to investments made in the territory of either contracting party after the entry
into force of the agreement. A treaty normally gains force for application after it is ratified by the
legislative organ of a state. For example, Art 55(12) of the FDRE Constitution requires
international treaties to be ratified by the national Legislative body to form integral part the law
of the land. Mere signing of a treaty is not sufficient by itself.315 The BIT Ethiopia signed with
Russian Federation Art 11, with Tunisia Art 10, with Germany, Art 9, and with Israel Art 12,
contains a provision dealing with scope of application of the agreement. The repeated clause in
each BIT- "The treaty shall apply to all investments made after the ratification”. The treaty with
Germany specifically mentions the Agreement to apply to investment made after April 21, 1964.
The rest of BITs like the one with Art 11 China, Art 10 with the Sudan, and Art 10 with Yemen,
seem to have been copied verbatim from one another. The Agreement applies to investment
made prior to or after the entry into force.316 It shall not be applicable to claims arising out of
disputes which occurred prior to its entry into force.317
313
For exemplifying purpose, see the Ethio-Turkish BIT n, 177, Art. 1; the Ethio-Chinese BIT, n, 175, Art.1 ;
EthioUK BIT, n, 176, Art.1
314
Brazil Concerning the Encouragement and Reciprocal Protection of Investments (signed 11/04/ 2018), Art. 1
315
The constitution of the Federal Democratic Republic of Ethiopia (1995) proclamation No.1/1995, Negarit
Gazeta, 1 Year No 1, Article 55(12)
316
International Trade and Investment Law in Africa Program, Yehualashet Tamiru,2019pp 49
317
Ibid at 83
74
4.4. Objectives of the BITs of Ethiopia
Every Ethiopia bilateral investment treaty begins with a declaration as to the purpose of the
treaty. This is usually stated to be the reciprocal encouragement and sustainability of
investments. The statement disguises the important fact that the flow that is contemplated is in
reality a one way flow of investment from the developed state to the developing state. BITs start
with the preamble where the purpose of the treaty is set out. Parties to the treaty make a
reciprocal encouragement and sustainability to investment to be undertaken in their territories by
nationals of each state party.318 Both parties conclude the treaty with the belief that the flows of
foreign investment between them would bring about mutual benefits to the economic
development of each state. For example the preamble of bilateral investment treaties between the
Republic of Turkey and the Federal Democratic Republic of Ethiopia Concerning the Reciprocal
Promotion and Sustainability of Investments states: The Republic of Turkey and the Federal
Democratic Republic of Ethiopia hereinafter called the Parties: Desiring to promote greater
economic cooperation between them, particularly with respect to investment by investors of one
Party in the territory of the other party recognizing that agreement upon the treatment to be
accorded such investment will stimulate the flow of capital and technology and the economic
development of the Parties.319 Above all, Ethiopia’s BITs recognize that the promotion and
sustainability of investments and creating favorable conditions for investments are the central
objectives and sustainability of environment is none of its concern.320
4.4.1. Foreign Direct Investment promotion
Most of the BITs reviewed do not specify any promotional activities that should be undertaken
by the Governments of the BITs partners to encourage investment flows between the two
countries, either as host or home countries.321 The approach to promotion of foreign investment
taken by BITs is mainly indirect, relying in the first place on their protection provisions to create
318
Sornarajah, M. (1994), The International Law on Foreign Investment. Cambridge University Press, USA, P.218
319
BITs agreement between Ethiopia and Turkey,2005
320
Investment Policies and Bilateral Investment Treaties in Africa: Implications for Regional Integration, United
NationsEconomicCommissionforAfrica,2016,18,
<http://www.uneca.org/sites/default/files/PublicationFiles/eng_investment_landscaping_study.pdf> last accessed
15 June 2019
321
75
a favorable investment climate.322 This in turn is expected to deliver FDI flows. Thus, as in
earlier practice, and in spite of BITs clearly stated objective of promoting FDI flows between the
countries, there is only a vague and general commitment of the contracting parties to encourage
or promote investment, usually formulated in connection with the preamble, where the language
tends to be hortatory in nature, or with the admission provisions.323 For example, when we see
the preamble of Agreement between the Federal Democratic Republic of Ethiopia and the
Government of the People’s Republic of china concerning the encouragement and reciprocal
protection of investments they state as follows: Intended to create favorable conditions for
investments by investors of one contracting party in the territory of the other contracting party;
recognizing that the reciprocal encouragement, promotion and protection of such investments
will be conducive to simulating business initiative of the investors and will increase prosperity in
both states;324 Ethiopia’s BITs recognize that the promotion and protection of investments and
creating favorable conditions for investments as the central objectives.325
4.5. The Structures and Nature of BITs of Ethiopia
The structure of all BITs reveals a striking similarity. Ethiopia’s BITs all in all contain preamble
paragraphs in their first sections.326 In these pieces of the agreements, the contracting states, inter
alia, vividly show purpose of the agreements whereby they set forth their commitments of
reciprocal encouragement and sustainability of investment in each other’s territory.327 These
determinations show the contracting parties‟ believes that doing so enhances their mutual
investment desires and economic prosperity. Except for minor changes of terminologies, all of
the BITs of Ethiopia exhibit similar purposes.328 The second sections of the BITs contain
322
323
324
Agreement between the Federal Democratic Republic of Ethiopia and the Government of the people’s Republic
of china concerning the encouragement and reciprocal protection of investments(1998), Addis Ababa, p.1
325
Ibid at preamble
326
Agreement between the Republic of Turkey and the Federal Republic of Ethiopia Concerning the Reciprocal
Promotion and Protection of Investments ( signed 16 Nov 2000), Preamble,
327
International Trade and Investment Law in Africa Program, Yehualashet Tamiru,2019 pp 64
328
Agreement Between the Government of the United Kingdom of Great Britain and Northern Ireland and the
Federal Democratic Republic of Ethiopia for the Promotion and Protection of Investments ( signed 19 Jan 2009),
Preamble, Paragraphs II, I
76
definitional provisions which, among other things, sort out the types of investments and investors
protected. Similar to other states practices, such sections of the treaties reveal very broad and
illustrative lists of properties that would be owned by natural or legal persons of one party in the
territory of the other. A definitional section which identifies the types of property protected.329
The third sections of the treaties deals with the standard of treatment of the investor or the
investment, or both. These sections of the agreements have both substantive and procedural
rights. These include obligations on the part of the host state to guarantee international standards
of expropriation, prohibition of adopting measures that prevent repatriation and prohibition to
discriminate the investor against other investors of third states or the host state.330 They also
encompass FET, full sustainability and security (FSS) of the investments by the host state. These
standard contents in all the BITs are similar, but the wordings in which the statements are crafted
have variation. The issue of integration of environmental sustainability is not a concern to these
BITs as almost all BITs give ample concern to protect investors’ interests (profit). 331
Regarding the nature, Article one of all the BITs define basic concepts in the BITs. These terms
include investment, investor, returns, territory etc. Excepting some variations like in terms of
order, all the BITs contain such preliminaries to delineate what these terms stand for. The
country’s BITs recognize two kinds of investors, natural persons and legal entities. In all the
BITs, natural persons are defined before legal persons. Natural persons are the citizens of the two
contracting states the status of whom will be determined by the domestic laws of each party. If
we look at the BIT between Ethiopia and Turkey for example, natural persons are meant to be
the national of either contracting party in accordance with the applicable laws. The BITs
between Ethiopia and Malaysia, and Ethiopia and Israel however reveal some differences. These
332
treaties recognize a permanent resident of either state as investor. The Ethiopia-Chinese BIT
uses the phrase “economic entities” to stand for all economic undertakings. Some others
329
May 1998), Art. 1(1) and (2); Agreement between the Government of the Federal Democratic Republic of Ethiopia
and the Government of the State of Israel for Reciprocal Promotion and Protection of Investments (signed 26 Nov
2003), Art.1(1) and (5)
330
Ethiopia-Bilateral Investment Agreements, last published7/9/2019
<https://www.export.gov/article?id=EthiopiaBilateral-Investment-Agreements>, accessed August 10, 2020
331
332
Agreement between Malaysia and the Federal Republic of Ethiopia Concerning the Reciprocal Promotion and
Protection of Investments ( signed 1998), Preamble, Paragraphs two and three;
77
illustrate those legal persons recognized in the treaties. Few BITs make exhaustive list of those
legal entities as investors. The Ethiopia-Turkish BIT for example stipulates corporations, firms
or business associations incorporated or constituted under the law of either of the Parties and
having their headquarters in the territory of that Party. Besides, some of the BITs put state as an
investor while others make no distinction between those entities having legal personality and
333
those which do not have such status in the home states law. Some of the BITs give no regard
to whether the legal entities recognized in the BITs are profit driven or not. And finally, some
BITs manage to use company to represent all types of legal entities with no distinctions as to
personality and purpose. Some use enterprise instead of company or legal entities for the same
meaning. Except for literal differences the BITs signify similar nature/concept that is legal
entities of all kind. Some are too general without any list, while others make some
illustrations.334 On the other hand, the BIT between Ethiopia and Kuwait recognizes government
of each state as investor, whereas the BIT signed with Egypt does the same with respect to public
enterprises.335 But in all these phase of BITs starting from definitional part to the date of entry in
to force, there is no single provision that deals with the issues of environmental sustainability.336
4.6. Basic Characteristic Features of BITs Signed by Ethiopia
Bilateral investment treaties vary across countries, despite, similarity in features of defining
foreign investment and laying out various principles regarding treatment, transfer of funds,
expropriation and dispute settlement mechanisms. The central concern of BITs in Ethiopia are
the assurance it gives investors regarding their property rights, it is important to look more
closely at what these rights are.337 One common clause included in many BITs is the right of the
investors, to sue Ethiopia if actions undertaken by the government are deemed substantially
333
May 1998), Art. 1(1) and (2); Agreement between the Government of the Federal Democratic Republic of Ethiopia
and the Government of the State of Israel for Reciprocal Promotion and Protection of Investments (signed 26 Nov
2003)
334
Agreement between the Government of the Federal Democratic Republic of Ethiopia and the State of Kuwait
Concerning the Encouragement and Reciprocal Protection of Investments (signed 14 Sep 1998), Art.1 (2) (b)
335
336
Agreement between the Government of the Federal Democratic Republic of Ethiopia and the Egypt Concerning
the Encouragement and Reciprocal Protection of Investments (signed 27 July 2006),
337
78
expropriate the business of the firm. Two points should be highlighted: First, this right of an
individual investor to sue the government is in itself an expansion of investor’s rights. In most
cases, the government can claim sovereign immunity, leaving little recourse in the legal system.
Second, BITs outline the terms under which expropriation could be deemed lawful and
compensation would be due. The exact wordings of such clauses vary by signatory countries. But
there is broad agreement on the thrust of the terms.338
The preamble of BITs usually states that the purpose of such treaties is the reciprocal
encouragement and sustainability of investment flows between the two states. The preambular
part of BITs reflects the belief by their signatories that foreign investment promotes the
economic development of the states into which the investment flows. As a result, all BITs
include a prefatory declaration to the effect that such development takes place as a result of
investment flows. For instance the preamble of the Ethiopia-Israel BIT provides that: “... the
reciprocal promotion and sustainability of investments on the basis of the present Agreement will
be conductive to the stimulation of individual business initiative and will increase prosperity in
both States ...”339
4.7. Ratified and non ratified BITs of Ethiopia
Many countries have some sort of bilateral investment treaties. Ethiopia has larger market size,
strategic geopolitical location which enables investments in the country to reach in to East
Africa, North Africa and the Middle East.340 Because of these and other factors, the country’s
attraction of foreign investment is increasing since the late 1990s. China, India (despite latter
termination of BITs), Sudan, Germany, Djibouti, Italy, Turkey341, Saudi Arabia, the United
Kingdom, Canada and USA are the major capital exporting states to the country since 1992. The
country is also receiving increasing FDI from Middle East states such as Israel, Yemen and Qatar
338
339
Agreement between the Government of the Federal Democratic Republic of Ethiopia and the State of Israel
Concerning the Encouragement and Reciprocal Protection of Investments (signed March 22,2004), Art.1 (2) (b)
340
Asamnew D, Gizaw, Ethiopia’s Bilateral Investment Treaties and protection of the environment,April,7,2017
341
Agreement between the Federal Democratic Republic of Ethiopia and the Republic of Turkey (2000) Concerning
Promotion and Protection of investment, Done at Addis Ababa, Art.2
79
recently in various investment sectors.342 To fuel its increasing FDI ambitions, Ethiopia has
signed many bilateral investment agreements, near forty by now.343 Some of these treaties are
ratified while others are not. The country’s momentum of negotiating investment treaties is also
rapidly growing when compared to the developed states.344 For instance, the US which started to
sign treaties of Friendship Commerce and Navigation (FCNs) as early as in the eighteenth
century did not have as many treaties as Ethiopia does have in the early phase of these
agreements. 345
Ethiopia concluded bilateral investment promotion and sustainability agreements among others,
with Algeria, Austria, China, Denmark, Egypt, Germany, Finland, France, Iran, Israel, Italy,
Kuwait, Libya, Malaysia, the Netherlands, Kingdom of Belgium and Luxemburg, Russia, Sudan,
Sweden, Switzerland, Tunisia, Turkey and Yemen and the likes(as listed in the following
chart).346
The country has also other bilateral investment agreements which have not entered in to force
signed with, Brazil, Republic of Equatorial Guinea, India, UAE, Nigeria, South Africa, Spain,
Qatar, Morocco and United Kingdom. Ethiopia also signed a sustainability of investment and
property acquisition agreement with Djibouti. Currently, Ethiopia has more than ten BITs with
African states and near thirty BITs with states from other continents. Ethiopia concludes a
bilateral investment treaty with Djibouti Preferential Investment Facilitation and property
Acquisition Agreement. 347
342
Ethiopia- Bilateral Investment Agreements, last published7/9/2019<https://www.export.gov/article?id= Ethiopia
Bilateral-Investment-Agreements>, accessed August 10, 2020
343
344
Ibid
345
Study on the Impact of the Trade Related Issues in the Economic Partnership Agreement on Ethiopia (2011)
Final Report, 24 January 2011, Ministry of Trade of Ethiopia, p.30
346
Ibid
347
80
Char-t 1: Ethiopia’s ratified and non ratified signatures of BITs so far are listed as follows:
No Signatory Date of Date of Place of Duration Status

countries Signature entry adoption
into
force
1. Arab Republic July27,20 Cairo 10 years Ratified New Draft has
of Egypt 06 by been proposed
Ethiopia by the Egyptian
Feb 19, side for
2007 renegotiation
2. Federal Jan19, June Addis 10 years
Republic of 2004 25,2004 Ababa
Germany
3. French June August Paris 20 years
Republic 25,2003 7,2004
4. Great Socialist Jan27, June Addis 10 years
people’s 2004 25,2004 Ababa
Libyan Arab
Jamahiriya
5 Islamic Oct. Dec. Addis 10 years
Republic of 21,2003 15,2004 Ababa
Iran
6 Italian Dec. May 8, Addis 10 years
Republic 23,1994 1997 Ababa
7 Kingdom of Oct. May 1, Brussels 10 years
Belgium & 26,2006 2008 10 years
Luxembourg
8 Kingdom of Apr. August Addis 10 years
Denmark 24,2001 21,2005 Ababa
9 Kingdom of March 17, Madrid 10 years Not yet Ratified by
Spain 2009 ratified Ethiopia, July
10,2009
10 Kingdom of May 16, June 1, Addis 15 years
the 2003 2005 Ababa
Netherlands
11 Kingdom of Des. 10, August Addis 20 year
Sweden 2004 1,2005 Ababa
12 Malaysia Oct. 22, June 4, Kula 10 years
1998 1998 Lumpur
13 People’s June Nov. Addis 10 years
Democratic 4,2004 1,2005 Ababa
Republic of
Algeria
14 People’s May 11, May 1, Addis 10 years
Republic of 1998 2000 Ababa
81
China
15 Republic of Nov. July Vienna
Austria 12,2004 20,2005 10 years
16 Republic of Nov. Djibouti 20 years Ratified BY
Djibouti 348 18,2006
Ethiopia
Feb.19,2007
17 Republic of June Malabo Malabo Not yet Ratified by
Equatorial 11,2009 10 years 10 years Ratified Ethiopia,
Guinea Jan.14,20 10
18 Republic of Feb. 23, May Addis 20 years
Finland 2006 3,2007 Ababa
19 Republic of June 5, Addis 10 years Not yet Ratified by
India 2005
Abeba Ratified Ethiopia,August
11,2008
20 Republic of April Pretoria Pretoria Not yet Ratified by
South Africa 17,2008 15 years 15 years
Ratified Ethiopia, July
by south 10,200
Africa
21 Republic of March May Khartoum 10 years
Sudan 7,2000 15,2001
22 Republic of Nov. March Addis 10 years
Turkey 16,2000 10,2005 Ababa
23 Republic of Apr. April Sana’a 10 years
Yemen 15,1999 15,
2000
24 Russia Dec. Moscow 15 years Ratified New Draft has
Federation 10,2000
by been proposed
Ethiopia by the Russia
Jan. 3, Side for
2002 Renegotiati on
25 State of Kuwait Sep.14, October Kuwait 30 years
1996 12,1998
26 Swiss June Dec. Crans 10 years
Confederation 26,1998 7,1998 Montana
27 Tunisian Dec. Tunis 10 years Not yet Ratified by
Republic 14,2000
348
The Agreement with Djibouti pertains to “Preferential Investment Facilitation and property Acquisition
Agreement.” Concerning Agreement on Reciprocal Promotion and Protection of investment, there is only a MOU
signed on Dec. 12, 1993 in Addis Ababa.
82
Ratified Ethiopia, July
21, 2004
28 State of Israel Nov. March Jerusalem 10 years
349
26,2003 22,2004
29 USA350 Oct. March Addis 20 years
24,2000 4,2004 Ababa after
terminati
on
30 UK of Great Nov. Addis 10 years Not
Britain and 19,2009 Ababa
ratified
Northern
Ireland
31 Brazil 11/04/2018 Addis Not
Abeba ratified
32 Qatar 14/11/2017 Addis Not
Abeba ratified
33 United Arab 03/12/2016 Addis Not
Emirates(UAE) Abeba ratified
34 Morocco 19/01/2004 Addis Not
Abeba ratified
35 Nigeria 19/01/2004 Addis Not
Abeba ratified
Ethiopia in now a day has a desire to bring economic growth or development at country level.
Due to this it opens its destination for foreign investments. To perform such kinds of activities,
Ethiopia concludes treaty with a certain responsible body or state. This treaty which is concluded
between Ethiopia and other contracting state on the issue of investment will become the integral
part of the law of the land on the basis of Art.9 (4) of the FDRE Constitution through ratification
349
State of Israel for Reciprocal Promotion and Protection of Investments (signed 26 Nov 2003), Art.1(1) and (5)
350
The Agreement with USA concerns “Investment Incentive Agreement.” No Reciprocal investment Promotion and
Protection Agreement so far.
83
and enforced like other laws in Ethiopia. 351 The treaties which are not ratified are not immediate
in implementation as ratification is pre requisite to have binding effect on contracting parties.352
4.8. Bilateral Investment Treaties and Sustainable Development in Ethiopia
It is important for Ethiopia to note that, in many BITs concluded by the government the
preamble is drafted in narrow terms with lack of broader policy objectives. This may have
implications on sustainable development. Generally in the preamble parties state their intentions
and objectives when concluding the agreements.353For instance in Ethiopia-UK BIT the
preamble provides that:-Desiring to create favorable conditions for greater investment by
nationals and companies of one Contracting Party in the territory of the other Contracting
Party.354 In the Ethiopia-UK BIT there is absence of references to development objective and
interest goals in the preamble. It only shows the need for creating a favorable investment climate
and little else is stated. Parties to a BIT must insure that preamble take note of broader policy
objectives such as sustainable development, environmental sustainability or raising the standards
of living. The preambles play an important role in guiding the interpretation of the treaties where
treaties are ambiguity in the language. Lack of reference to development objectives goals
strengthens the case for investors to argue that the primary objectives of BITs are to protect
interests of investors. 355
The main objective of the Ethiopian Investment Proclamation is encouraging, promoting and
improving the conditions of investment with the view to accelerate the country’s economic
development in a sustainable manner. In relation with foreign investment, it aims at enabling
foreign investment increase the country’s foreign exchange earnings and foster transfer of
technical know-how, managerial skills and technology.356 As a poor country in dire need of
351
The constitution of the Federal Democratic Republic of Ethiopia (1995) proclamation No.1/1995, Negarit
Gazeta, 1 Year No 1, Art.9(4)
352
Ibid at Article 9(4)
353
J Dernbach & JA Mintz ‘Environmental laws and sustainability: An introduction’ (2011) Sustainability 53 -533
354
Agreement Between The Government of The United Kingdom of Great Britain And The Federal Democratic
Republic of Ethiopia For The Promotion And Protection of Investments(2009), Addis Ababa, Art. 3(1)
355
Ibid
356
Plan of Implementation of the World Summit on Sustainable Development calls for the ratification of existing
international instruments, particularly multilateral agreements (MEAs) to promote sustainable development.
However, not all MEAs and other multilateral treaties relevant to sustainable development have been successful in
attracting participation except the Vienna Convention on the Ozone Layer and its Montreal Protocol. M
84
attracting as much foreign investment as possible, Ethiopia has repeatedly amended its
investment laws. Between 1991 and 2020 alone, the investment laws have been amended for
about seven times to accommodate new progresses and provide competitive incentives for
investors.357 Many developing countries including Ethiopia in order to increase FDI flows and
promote sustainable development have significantly liberalized their investment regime to create
an enabling FDI regulatory framework. FDI flows occur within a complex of national and
international laws. The most significant recent development in the international FDI regulatory
framework has been the creation of BITs to promote and protect foreign investment. 358
The criticism of BITs in promoting sustainable development in host countries is often expressed.
For example academicians argue that unequal and exploitative investment agreements, which
prohibit the very policies developing countries, need to fight poverty, is no way to put trade and
investment at the service of sustainable development. Most Ethiopian BITs photo-up from
European models BITs provision. This model not contains the obligation of the investor to
promote sustainable development. It does not incorporate the sustainability of sustainable
development in host countries. To date, Ethiopia has bilateral investment treaties with around 40
sovereign states but the sustainability of environment only incorporate BITs between Belgium-
Luxembourg and Ethiopia, the rest does not incorporate the sustainability of sustainable
development. Therefore, most Ethiopia BITs does not promote sustainable development.359
4.9. The status of BITs on environmental sustainability in Ethiopia
Ethiopia has signed around 40 BITs.360 Most of the BITs are either first generations or second
generations of BITs as discussed above.361 Additionally, with regard to preamble part of BITs,
investment agreements can be divided in to traditional or non-traditional BITs. One of the
Pallemaerts ‘International law and sustainable development: Any progress in Johannesburg?’ (2003) 12 Review of
European Community & International Environmental Law 1 4-5.
357
Investment Proclamation, Pro. No. 1180/2012, Federal Negarit Gazeta, 10th year, No.29, preamble
358
359
Ibid at 33
360
Federal Democratic Republic of Ethiopia, Environmental Policy (1997) 2.1; Ethiopia send its representative to
Rio Conference and this energizes it to craft the environmental policy and laws on sustainable development. See
James and Ian, Knowledge 2000 Journal 0f Modern African Studies 103. It is incontestable that the Ethiopian
Environmental Policy has been influenced by the international principle of sustainable development. J Krueger et al
‘Environmental permitting in Ethiopia: No resistant on “unstoppable Growth”?’ (2012) 1 Haramaya Law Review
361
Ibid
85
prominent non-traditional BITs in case of Ethiopia is the Finland-Ethiopia BIT of 2007.362 The
first BIT signed by Ethiopia seems to be the 1964 BIT with the Federal Republic of Germany.
This BITs sole purpose was to “intensify economic cooperation between the two states”. 363 This
was to be accomplished by creating favorable conditions and according sustainability to the
investment by the national and companies of the contracting states. The BIT nowhere mentions
sustainability of the environment.364 This BIT in the preamble states that the contracting states
have agreed that the objectives of the BIT. That is greater economic cooperation and investment
sustainability, can be achieved without relaxing health, safety and sustainability of
environmental measures of general applications. This can be seen as a positive development in
the BITs signed by Ethiopia. However, such a statement does not create any legal obligation. 365
Despite being a third generation and a non-traditional BIT, this treaty does not have separate
provisions on the sustainability of environment in the substantive part of the BIT. 366 BITs may
not be direct in relation to recognizing the integration of environmental interests in to the BITs or
in regulating investments against environmental objectives and standards of domestic policy or
laws. A typical example in this regard is the Ethiopia-south Africa BIT of 2008. In the preamble
the BIT states that the contracting parties acknowledge “the right of the parties to regulate, on a
non discriminatory basis, the manner and the flow of the investment within their territories in
order to meet national policies objectives. In addition, the BIT also mentions that investment can
play an important role to bring about sustainable development when it has an appropriate
domestic policy platform. Moreover, the preamble talks about securing an overall balance of
rights and obligations between the investors and the host states. This makes the BIT a non-
traditional one in the preambular part since this regulatory power includes policy and legislations
362
363
Ibid
364
Study on the Impact of the Trade Related Issues in the Economic Partnership Agreement on Ethiopia (2011)
Final Report, 24 January 2019, Ministry of Trade of Ethiopia, p.30
365
366
86
regarding environmental sustainability.367 The statement does not oblige the contracting states to
have a stringent policy or law safeguarding the environmental sustainability. 368
In an interview made with the Ethiopian investment commission deputy director assures that
there is no cooperation/rare cooperation between Ethiopian Environmental Authority and
investment commission.369 At the time of bargain over the BITs, the stake holders of the
investment Commission and Environmental Authority do not work together and even if any, was
not in a consistent manner. The Ethiopian Environmental Authority directors also assure that the
investment commission did not cooperate with their offices at the time of bargain /signatures of
the BITs.370This can be depicted in the Switzerland-Ethiopian BIT of the 1998 is basically the
same and in the preambular part mentions the sole purpose of the BIT “to intensify economic
cooperation to the mutual benefits of the both states”. Economic reasons of investment were of
particular concern for the contracting parties. Nowhere in the BIT is mentioned about the
integration of sustainability of the environment with signed BITs.371Ethiopia –Denmark BIT of
2001, Ethiopia-Algeria BIT of 2002, Ethiopia Austria BIT of 2004, Ethiopia- Sweden BIT of
2004, Ethiopia- Netherlands BIT of 2003, Ethiopia -Turkey BIT of 2000, and Ethiopia -Germany
BIT of 2004, all belongs to first and second generations of BITs.372
Bilateral investment treaties to which Ethiopia is a party has the objective to promote investment
in contracting party’s country and protect investors. On the contrary, Ethiopian law imposes
obligations like environmental impact assessment and investing on sound technology to avoid or
reduce, to the required minimum, the generation of pollutant. Where an investor causes
367
See BIT between South Africa and Ethiopia. This agreement is available at
https://icsid.worldbank.org/en/Pages/resources/Bilateral-Investment-Treaties-Database.aspx#a55( accessed 26 May
2019).
368
This provision seems envisage the South African situation of Black Economic Empowerment (BEE) which aim to
address the power difference between historically disadvantaged majority black and white minorities. See R
Southall ‘Ten propositions about black economic empowerment in South Africa’(2006) 34 Review of African
Political Economy.
369
Interview with Ato Tewodros Tamiru, Deputy Director Legal Directorate in Ethiopian Investment Commission,
Intervened at his office, on Aug, 2019
370
Interview with Ato Kasahun Mulugeta, at the Ethiopian Environmental protection Authority, the Environmental
sustainability supervisor at Federal level, Interviewed at his office ,on Aug,2019
371
State of Switzerland for Reciprocal Promotion and Protection of Investments (June 26,1998), Art.1(1) and (5)
372
87
environmental pollution, they are obliged to clean up or pay the cost of cleaning up the polluted
environment. Moreover, it will be closed where the harm to the environment is great. This
indicates how the law is strict to protect the environmental sustainability373
Belgium, and Luxembourg –Ethiopian BIT of 2006 which is stated above can be considered as a
notable development in Ethiopia BITs. This BIT does not say anything about maintaining
environmental sustainability in its preamble. Though this BIT has not entered in to force, Article
5 ensures environmental sustainability and reads as follows:
Article 5 of Belgium, and Luxembourg –Ethiopian BIT of 2006, 374
1.Recognizing the right of each contracting party to establish its own levels of domestic
environmental sustainability and environmental development policies and priorities, and to
adopt or modify accordingly its environmental legislations ,each contracting party shall strive to
ensure that its legislation provide for high levels of environmental sustainability and shall strive
to continue to improve this legislations.375
2. The contracting parties recognize that it is inappropriate to encourage investment by relaxing

domestic environmental sustainability legislations. Accordingly, each contracting party shall
strive to ensure that it does not waive or otherwise derogate from, or offer to waive or otherwise
derogate from, such legislations as an encouragement for the establishment, maintenance or
expansion in its territory of an investment.376
3. The contracting parties reaffirm their commitments under the international environmental
sustainability agreements, which they have accepted. They shall strive to ensure that such
commitments are fully recognized and implemented by their domestic legislations.377
4. The contracting parties recognize that cooperation between them provides enhanced
opportunities to improve environmental sustainability standards. Up on request by either
373
Supra note at 68
374
Agreement between the Belgian-Luxembourg Economic Union, on the one Hand, and the Federal Democratic
Republic of Ethiopia, on the other Hand, on the Reciprocal Promotion and Protection of Investments(2006)
Brussels, Art.5
375
Ibid at Article 5(1)
376
Brussels, Art.5(2)
377
Ibid at Article 5(3) of the BIT
88
contracting party, the other contracting party shall accept to hold expert consultations on any
matter falling under the purpose of this Article.378
The Ethiopia-Finland BIT of 2006 has also been very important in Ethiopia’s BIT regime. In its
preamble, the BIT has the following paragraph:
AGREENG that these objectives can be achieved without relaxing health, safety and
environmental sustainability measures of general applications.
This Ethiopia–Finland BIT seems to be the first Ethiopia’s BIT that expressly stated the
importance of environmental sustainability standards. This would make this BIT the first third
generation of the BIT in Ethiopia’s history of international investment agreements. 379 However,
it does not impose any legal duty on Ethiopia and Finland. From the reviews of these Ethiopia’s
BIT, it is easy to conclude that they are all in pursuit of free movement of capital and prosperity
through investment. These features of the BITs show that they are “quintessentially liberal
documents”. Their sole purpose was the promotion and sustainability of investment. In addition,
they all assume that this free movement of capital will lead to prosperity in the contracting
states.380 As given above, Article 5(2) of Ethiopia and Belgium Luxembourg BIT provides that,
the contracting parties “shall strive to ensure that it does not waive or otherwise derogate from,
or offer to waive or otherwise derogate from such legislation as an encouragement for the
establishment, maintenance or expansion in its territory of an investment. This provision is
virtually identical in its substance with the Finland –Ethiopia BITs. The wording in this sub-
provision again reflects the aspiration, not the legal obligation; of the contracting parties as can
be inferred from the word strive. This Article 5 has its origin in the 2002 Belgian Model BIT. It
is still part of the 2010 Belgian Model BIT. This shows that Model BITs are relevant that they
can be proposed for negotiation with potential contracting states. In contrast, Ethiopia does not
have its own Model BITs so far.381
378
Article 5(4) of BIT between Ethiopia and Belgium- Luxembouge Economic Union.
379
State of Switzerland for Reciprocal Promotion and Protection of Investments (June 26,1998), Art.1(1) and (5)
380
381
Brussels, Art.6
89
The Egypt-Ethiopia BIT of 2006 (which entered into force in 2010) and the UK-Ethiopia BIT of
2009 are relatively recent BITs signed by Ethiopia. The first BIT has nothing to say about
environmental sustainability despite being recent BIT. The UK-Ethiopia BIT traditional in the
sense that it does not even have anything in relation to the environmental sustainability even in
the preamble.382 The substantive part is also devoid of any of such objectives, aspirations or
obligations on the contracting parties to maintain environmental sustainability. It has been held
that “despite being one of the UK’s more recently agreed deals, the BIT contains no language to
entertain environmental sustainability concerns or it has no aim at integrating investment
objectives with the sustainability of environment. The UK-Ethiopia BIT is one of the old
fashioned BITs seen in light of its preamble and generations of BITs. This has been signed but
has not entered into force and there are oppositions against its ratifications in the UK.383 These
two BITs, although are from the 21st century , both do not afford any kind of defense in
maintaining environmental sustainability or they have zero aim of integrating environmental
sustainability in to the BITs as it only focus on realizing and securing their/investors potential
economic gains. The BIT has been signed but has not entered in to force and there are
oppositions against its ratifications in the UK. It is clear that the BITs belong to the traditional
category and the first generations of BITs despite the fact that they are signed after 1995. 384
Turkey is one of the biggest sources of the FDI for Ethiopia. The 2000 Ethiopia-Turkey BIT
does not mention the right of the contracting parties to regulate, and hence a reference to
regulatory autonomy on matters of environmental sustainability is lacking. 385 From the
considerations of all the BITs Ethiopia signed, it is clear that virtually all of them have the sole
purposes of attracting foreign direct investment and affording investment security to
382
382
Supra note at 56
383
BIT Between UK and Ethiopia. This agreement is available at
https://icsid.worldbank.org/en/Pages/resources/Bilateral-Investment-Treaties-Database.aspx#a55 (accessed 26 May
2019).
384
It is quite difficult to interpreted what are public security or public interest means. This difficulty is well noted in
one of the old England Court in a case between Richardson v Mellish when the judge said’ public policy;-it is a very
unruly horse, and when once you get astride it you never know where it will carry you.’ The full judgment is
available at http://www.uniset.ca/other/css/130ER294 .html(accessed 26 May 2019). For more elaborated
discussion on vagueness of public policy see HT Edwards ‘Judicial review of labour arbitration awards: The clash
between the public policy exception and the duty to bargain’(1988) 64 Chicago-Kent Law Review.
385
BIT agreement between Ethiopia and Turkey,2005
90
investors/investments/companies of the other contracting states. The absence of Model BIT,
Ethiopia, may be a manifestation of the unambiguous policy on the intricate matters of the
investment and assurance of environmental sustainability interest.386The Ethiopia-France BIT
was concluded on 25th June 2003. To start with its preamble, it aims at creating favorable
conditions for investments by the investors of one contracting Party in the territory of the other
contracting Party.387 It reads: Desiring to strengthen the economic cooperation between both
States and to create favorable conditions for French investments in Ethiopia and Ethiopian
investments in France, Convinced that the promotion and sustainability of these investments
would succeed in stimulating transfers of capital and technology between the two countries in the
interest of their economic development. This preamble also lacks the regulatory space through
which states could impose measures to protect the environment.388 The Ethiopia-China BIT was
meant to create favorable conditions for the investment activities and to bring economic
prosperity. A close look at the Ethiopia-China BIT’s preamble illustrates that the Parties’ sole
interest to encourage investment activities. No single word is inserted, which recognizes other
non-economic interests of the contracting Parties including the need to protect the environmental
389
sustainability.
Recently, Ethiopia concluded a BIT with the United Arab Emirates on 3rd of December 2016.
The BIT recognizes the interests of the host country in terms of environmental sustainability
among others. Its preamble attempts to reconcile problems related to investment sustainability on
one hand and police powers on the other. In addition, it omits FET standard. Furthermore, Art.
11 (2) of the BIT obliges investors and their investments to contribute to the development
objectives of the host State and to the benefit of the local community in which the investment is
made. The BIT acknowledges the need to protect the environmental sustainability under its Art.
12. Accordingly, the hosts State can adopt, modify and implement environment-unfriendly laws
386
Ibid at 65
387
Agreement between the Government of the Federal Republic of Ethiopia and the Government of the Republic of
France for the Reciprocal Promotion and Protection of Investments, signed on 25/6/2003, Art 6(3)
388
Ibid
389
Agreement between the Federal Democratic Republic of Ethiopia and the Government of the People ’s Republic
of china concerning the encouragement and reciprocal protection of investments (1998), Addis Ababa, Art.3(1)
91
and policies without transgressing its obligations to protect investment. Unfortunately, this BIT
has not entered into force yet.390
The 1998 Ethiopian -Malaysian and the Ethiopian-Kuwait BIT of 1996 are also the same in light
of absence of integration of environmental sustainability. This trend seems is continuing till to
the 21st century since the Ethiopia-China BIT of 1998.the Ethiopia-Yemen BIT of 1999(both
entered in to force in the year 2000),and Ethiopia-Sudan BIT of 2001 don’t say anything in
relation to the integration of the economic and environmental interest. 391 Nothing is different in
the Ethiopia-France BIT of 2004, the Ethiopia-Israel BIT of 2004, Ethiopia Libya BIT of 2004,
Ethiopia-Iran BIT of 2003, and Ethiopia-Tunisia BIT of 2000 in maintaining environmental
sustainability.392
The Ethiopia-Sudan BIT was signed on 7 March 2000 and entered into force on 15 May 2001.
Just like other BITs to which Ethiopia is a Party, the preamble of the BIT focuses on the sole aim
of protecting foreign investments. It reads: Desiring to strengthen their traditional ties of
friendship and to extend and intensify the economic relation between them and in particular to
create favorable conditions for investments by Investors of one Contracting Party in the territory
of the other Contracting Party; Recognizing the need to protect investments by Investors of the
Contracting Parties and to stimulate the flow of investments and individual business initiative
with the view of promoting the economic prosperity of the Contracting Parties.393
As one can deduce from these treaties, BITs of Ethiopia lack provisions that impose parallel
obligations on investors with respect to environmental sustainability. In the absence of such
provisions in BITs, a resort to only domestic environmental rules and regulations may not
effectively address environmental sustainability concerns. This is attributable to two reasons.
First, the sustainability offered to investors may limit the ability of governments to regulate
390
391
392
Ethiopia- France BIT, Ethiopia-United Kingdom BIT, Ethiopia-Israel BIT and Ethiopia-Brazil, See supra note
12, 13, 14 and 15
393
Agreement between the Federal Democratic Republic of Ethiopia and the Government of the People ’s Republic
of Sudan concerning the encouragement and reciprocal protection of investments (signed on 7 March 2000 and
entered into force on 15 May 2001), Khartoum
92
investment for the sustainability of the environment, natural resources and other social goods,
and to ensure that foreign investment contributes to overall national development goals. Any
attempt by the host state to impose measures for environmental sustainability could result in
violation of its obligations under BITs. Second, by virtue of the Vienna Convention on the Law
of Treaties, states are precluded from invoking their domestic laws as a defense for the breach of
their treaty obligations. As such, for the host state’s environmental measure to be justifiable
without constituting treaty violation, the measure must first get an equal status with the
obligation to protect and promote foreign investment under the applicable treaty.394
Although this provision seems to grant Ethiopia the right to adopt any environmental legislation,
investor might bring an arbitration claim for violation of BIT and from prior arbitration ruling
the chances are very high host state found to be in violation of the treaty. 395 One of the cases
which involve BIT and environment is the case between Techical Medioambientales Tecmed,
S.A v The United Mexican State case. The issue of which were the claimant won a bid in
Mexico, which enable it to access land and other assets to operate a hazardous waste landfill in
one of the provinces in Mexico, Hermosillo.396 The tribunal by cross refer to previous decision
held that: Expropriatory environmental sustainability measures – no matter how laudable and
beneficial to society as a whole – are, in this respect, similar to any other expropriatory
measures that a state may take in order to implement its policies: where property is
expropriated, even for environmental purposes, whether domestic or international, the state’s
obligation to pay compensation remains.397
4.10. Environmental mainstreaming in Ethiopia’s BITs projects
Efforts to balance the enhancement of investment and environment sustainability do not involve
a choice between the two, but rather target at a balanced attainment of both.398 That is why
394
Ibid
395
396
Ibid
397
398
Legality of the treaty or use of nuclear weapons advisory opinion(1996) ICJ Reports at 241 as quoted by D
Benedetto International Investment Law and the Environment(2013) Edward Elgar Publishing Limited at 19.
93
399
environmental sustainability issues need to be integrated with investment pursuits. This is
known as environmental mainstreaming which requires “the informed inclusion of relevant
environmental sustainability concerns into the decisions of institutions that drive national, local
and sectoral development policy, rules, plans, investment and actions”.400Environmental
sustainability assets (e.g. fertile soil, clean water, biomass and biodiversity) yield income, offer
safety nets for the poor, maintain public health, and drive economic growth.401 But conversely,
environmental hazards (e.g. pollution, environmental damage, and climate change) all threaten
livelihoods and development. 402
Environmental mainstreaming, inter alia, aims at “integrated
solutions that avoid ‘investment and environmental sustainability’ arguments, institutional
tensions, and associated costs, and “improving the productivity, resilience and adaptability of
403
local, sectoral, national and indeed global social and economic systems. To this end,
environmental mainstreaming requires collaboration, integration of environmental sustainability
and investment interests and ideas, not just environment being forced into development.
Environmental Mainstreaming installs criteria/indicators and accountability mechanisms to
ensure monitoring and continuous improvement in environmental sustainability-investment/BITs
integration. Under such integrated approach, the economic performance of an investment project
is not measured by short-term and unsustainable profit margins, but by demonstrating how it
converts its resources into wider economic, social and environmental sustainability benefits.404
4.11. The need to integrate environmental sustainability within the BITs of Ethiopia
The fundamental reasons of integrating environmental sustainability interests with in the BITs
can be argued that the regimes of BITs are in crisis mode or at cross roads amid BIT
proliferations in the 21st century. Any investment activities are conducted on the environment.
399
AB Murch ‘Public concern for environmental pollution’(1971) 35:1 The Public Opinion Quarterly at 100.
400
D Hunter Introduction to international environmental Law: international treaties and principles protect the
environment and guard against climate change(file with the author) at 1.
401
Environmental reflection The Anthropocene: The beginning of the End?(2017) available at
https://environmentalreflections.wordpress.com/2017/11/01/the-anthropocene-the-beginning-of-the-end/( accessed
22 July 2019).
402
Legality of the treaty or use of nuclear weapons advisory opinion(1996) ICJ Reports at 241 as quoted by D
Benedetto International Investment Law and the Environment(2013) Edward Elgar Publishing Limited at 19
403
Ibid
404
94
The law that governs environment and investment are supervised under different institutions.405
In integrating environmental concerns in to the BITs, it is easy to regulate and follow the day to
day activities of investors and it is reasonable to punish an investors if one act against
environmental tranquility.406 For FDI to contribute to economic development and environmental
sustainability in the host state requires ‘...to establish an explicit interface between policies and
laws designed to encourage inflows of FDI and promoting environmental sustainability and
socioeconomic development.’407 Article 43(3) of the same constitution also imposes the duty on
the government to make sure that all international agreements that are signed by the country to
be in line with the right of the country to sustainable development. 408 Environmental policy of
Ethiopia is underpinned by sustainable development. It is the type of development policy that
assures the sustainability of both present and future generations.409This concept convey the
messages that for sustainable development to exist, there has to be integration of environmental
and investment interest in a single instruments to be supervised by single and/or interrelated
authorities to tackle the possible environmentally unsustainable acts of investors.410
All the purpose of investment laws of Ethiopia, including its BITs, is to promote economic
growth and development. For instance, the new Investment proclamation 1180/2020 in the
preamble states that the reason deter of investment proclamation is to strengthen the domestic
production capacity and thereby accelerate the economic development of the country and
improve the living standards of its peoples. Therefore, the whole assumption behind Ethiopian
investment policy and laws is that FDI will lead to economic growth and development. However,
405
406
Ibid
407
Environmental reflection The Anthropocene: The beginning of the End?(2017) available at
https://environmentalreflections.wordpress.com/2017/11/01/the-anthropocene-the-beginning-of-the-end/( accessed
22 July 2019).
408
FDRE Constitution, Article 43(3)
409
410
Ibid at 79
95
the relationship between FDI promotion and environmental sustainability has been a bone of
contention.411
4.12. Ethiopia BITs and obligations to regulate Environmental sustainability
As stated above, the FDRE constitution, stipulates, for the right of all persons to a clean and
health environment. Article 43(3) of the constitution also imposes the duty on the government to
make sure that all international agreements that are signed by the country to be in line with the
right of the country to sustainable development.412 As per Article 9(4) of the constitution, all
BITs which are ratified by Ethiopia are part and parcel of the law of the land.413 Therefore it can
be generalized that the government has the duty to make sure that the BITs that it signs and
ratifies should have sustainable development goals.414 This is also means that the BITs should
contain safeguard mechanisms which affirms the right to regulate in important policy areas like
realization of environmental sustainability.415There has been growing number of investment
claims by investors on the grounds of environmental legislations and measures of the host states
where Ethiopia is not different. Hence, it has been stated that international investment treaties
which are supposed to create certainty for investors are becoming the sources of uncertainty for
host states environmental sustainability regulations and measures. Most of the reviewed BITs of
Ethiopia do not incorporate the principles of sustainable development which also demands a
strong regulatory powers and clear policy of the state. Hence, the Ethiopia obligation of assuring
environmental sustainability of the country lies on the duty of it in enforcing constitutional
provisions and other similar environmental sustainability laws and policies.416
411
University School of Diplomacy and International Relations, ABEBE NIGUSU, February 2014 Addis Ababa,
Ethiopia
412
413
414
FDRE constitution, Article 43(3) and 9(4)
415
Ibid
416
96
4.13. The Draft Model BITs of Ethiopia
Currently, there is an attempt to adopt a model BIT which incorporates the notion of sustainable
development. More specifically, it explicitly refers to environmental sustainability and also
acknowledges the need to promote corporate social responsibility. The preamble of the draft
model adopts the need to promote and protect investment on the one hand and the need to protect
the environment on the other. The national treatment provisions of the draft model also introduce
some qualifications. For instance, Article 4 (4) of the draft Model provides that the extension of
financial assistance or measures taken by a Contracting Party in favor of its investors and their
investments in pursuit of legitimate public purpose including the sustainability of public health,
safety and the environment shall not be considered as a breach of National Treatment(NT). In
addition, the draft provides for environmental exception to the MFN treatment. Accordingly, any
non-discriminatory regulatory measure taken by a Party to protect or enhance legitimate public
welfare objectives, the sustainability of environment does not constitute a breach of the MFN
treatment. The draft model also omits the FET obligation. This will enable to take regulatory
measures for environmental sustainability whenever necessary. The expropriation provision
acknowledges that measures taken to safeguard the environmental sustainability shall not
constitute indirect expropriation. What is more appreciable is that the draft model incorporates a
separate provision concerning environmental sustainability. Pursuant to Article 14 of the draft,
Ethiopia as a host State of a foreign investor has wide regulatory space that permits the
regulation of FDI. It recognizes the right to adopt one’s own standard of environmental
sustainability policy and to freely modify such standards when desired without the fear violating
FET and indirect expropriation provisions.417 More importantly, any alleged violation of the
provision on the environment (Art. 14) shall not be subjected to the dispute settlement provision
of the draft model BIT. This shows the country’s need not to take away the adjudicatory power
concerning disputes involving environmental sustainability measures from domestic judicial
organs. 418
417
Ibid at 81
418
97
CHAPTER FIVE
CONCLUSSION AND RECOMMENDATION
5.1. Conclusion
Foreign capital moves from home to abroad with profit object, and has a very long history. This
movement of capital entails a wide issues ranging from economic objectives of parties involved
in the relations to balancing investment with environmental concern in the hosting country. In
this view, environmental sustainability is main pillar of Sustainable development and is a
fundamental principle of International Law.
In order to safeguard investor’s property interest, basically there are different international
sources of laws: customary international law, Bilateral and Multi-Investment Treaties. Among
these different sources, recently BIT’s is the most important one which commonly known for the
provisions of different guarantees and protection of investment in the foreign land. Bilateral
investment treaties (BITs) have been negotiated since the late 1950s. Though the history of
investment is as old as human beings, the proper use of the term to extend protection by a home
state to the foreign investors was employed in friendship commerce and navigation (FNC) treaty.
As far as the international trends in the protection of foreign investment the need to introduce a
comprehensive legal regime to protect foreign investors were no pressing issue before the
Second World War. This is because; the capital exporting countries exert their leverage on the
capital importing countries either in the form of colonization or use of force. However, after the
Second World War most countries got their independence and begin to exercise their
sovereignty, which include expropriation of foreign investors’ property. As a result of this new
development, countries began to conclude BITs. From capital importing countries’ perspective
the main justification for concluding BITs is to attract FDI. Whereas, for capital exporting
countries, the main reason for singing BIT is to secure permanent protection for their investment
and investors in the host state. Despite the fact that, there is tremendous growth in BITs amongst
state, there is no consensus as to the impact of BITs on FDI. Some argue that conclusion of more
BITs implies the country’s willingness to extend protection to foreign investors and this will help
FDI to flock to the host state. Some others argue that, the host state by engaging in serious of
commitment expose itself for narrowing its policy space which has a negative impact.
98
Hosting states are traditionally welcome to foreign investment for a variety of reasons. Bilateral
investment treaties (BITs) are said to be useful tool in creating a welcoming environment for
companies seeking to invest in foreign countries. The main policy justification behind the
conclusion of BITs is quite different from developing and developed countries’ perspectives.
From capital exporting countries, home state, the main driven motive is security of investment
and investors; whereas the rationale behind for capital importing countries, host state, is to attract
FDI. There is no consensus among scholars as to the impact of BITs in attracting FDI. Since the
late 1980s, BITs have come to be universally accepted instruments for the promotion and legal
sustainability of foreign investments. Though everyone agrees on the importance of investment
to exploit the natural resource and to facilitate the economic growth, it should not come at the
expense of the host state right to regulate and sustainable development.
Different institutions such as the federal investment commission, regional investment bureaus,
sector ministries, the Ethiopian privatization agency, ministry of foreign Affairs, development
Bank of Ethiopia, ministries dealing with taxation, etc, take part in investment undertakings,
whether foreign or domestic, from licensing to production/service provision stages in Ethiopia.
But directly involving bodies are the Ethiopian Investment Board; the Ethiopian Federal
Investment Commission hereunder referred to as EIC, Federal Government and Regional state
Administrations Investment Council (RSAIC) hereunder referred to as RSAICs and other special
arrangements such as consultation forums. Effective and efficient legal framework and
functional institutional setup are most important for FDI.
Ethiopia undertook varies legal and institutional reforms after 1992. The current legal regime for
FDI is attractive in terms of incentive packages it provides, the guarantees and protection it
ensures to the foreign investors. The institutional and legal framework for FDI promotion in the
country is organized both at federal and regional states level. However the principal agency
responsible for most aspects of FDI is Ethiopian Investment Board followed by Ethiopian
Investment commission (EIC). The Management of the environmental sustainability and social
effects FDI activities is assessed based on the existing environmental and social management
systems of Ethiopia. In order to assess the adequacy of Ethiopia’s legal and regulatory
framework in regulating FDI, it is important to looks at the relevant laws and institutions for
environmental and social impact assessment and management.
99
Developing countries, including Ethiopia, mostly reject the old notion of minimum customary
international law standard, which content was the need to provide adequate, prompt and effective
compensation for foreign investors whenever there is expropriation. Ironically, the same
countries which reject this standard concluded BITs which have more drastic and far reaching
consequence. In this sense, BITs signed by the country have either suffered problem of
adequately or totally failure to deal with the burning issues of environmental sustainability. To
make thing worse, the stand taken by international arbitration tribunal reveals that measure
Ethiopia as a host state might take to comply with international treaty standards of environmental
sustainability agreement, will be construed as a violation of stabilization and indirect
expropriation entitlement. Despite the fact that an investor needs protections and entitlement,
some of these protections provided to investor are so illusive and broader, which make it difficult
to preciously define neither its content nor the term.
Investment and investors are well regulated under the Ethiopian legal system. Although the
grand norm of the country’s legal system, the Constitution, does not explicitly address the issue
of investment and investors, it deals private property protection of nationals which is positive
implication for property interest of investor. The issue of protection of foreign investment is
well regulated under subsidiary law principally investment proclamation, Proclamation No.
1180/2020. On top of legal framework, institutional framework for investment also put in place.
The principal institution which follow-up and provide assistance is the Ethiopia Investment
Commission, which is headed by the prime minister. Ministry of trade and the Ministry of
industry also have a role to play in regulating and facilitating investment and investors.
Over the last two decades, the Ethiopian government has put in place a number of policies,
strategies and laws that are designed to support sustainable development and the country is set to
move towards a greener economy. These policies are put in different policy documents
including FDRE Constitution. International treaties ratified by Ethiopia that contain
environmental rights are made up of environmental treaties and human rights treaties at global
and regional levels. At this juncture, it is worth noting that Article 9(4) of the FDRE Constitution
proclaims that all international agreements ratified by Ethiopia are an integral part of the law of
the land. Furthermore, Article 13 (2) of the FDRE Constitution provides that the human rights
protected by the Constitution shall be interpreted in a manner conforming to the principles found
100
under international treaties ratified by Ethiopia. The other subsidiary environmental laws and
policies also give due concern to environmental sustainability other than BITs.
Environmental Sustainability must not be seen as an easy task and role; rather it must be seen
seriously and protected effectively. Environment should not be seen as an ordinary thing rather it
is everything and our life one or in another thing depends on. If we degrade, pollute or
contaminate our environment, then our health and the right to live in a clean and healthy
environment will be in question. Hence the responsible organs/bodies particularly the
government should be care regarding standing to the Sustainability of the environment. This is
because environment may be highly polluted by different factors particularly from the wastage of
the investment activities such leather fabric, cement fabric in Ethiopia are the major fabrics that
bring environmental pollution. Multilateral environmental agreements (MEAs) are based on the
political recognition that global action must be taken on trans-boundary or global environmental
problems that cannot be tackled adequately solely through national actions. Such issues include
biodiversity loss, desertification, climate change, ozone layer depletion and acid rain.
As one of the least developed country, Ethiopia with the view to attract FDI and enhance
economic growth concludes various BITs with both developing and developed countries. Like
other countries’ BITs there is a high similarity in terms of taxonomical pattern amongst
Ethiopia’s BITs. Basically, Ethiopia’s BITs addressed the main and core issue of investment
protection, including: defining of investment and investors, providing standard of treatment,
expropriation and compensation, besides settlement of disputes and repatriation of profit. In
contrast to the closed listed asset based and enterprise approach of the definition to investment,
most Ethiopia’s BITs adopt open-list asset based definition of investment. Under Ethiopia’s
BITs, in principle the host state is prohibited from expropriating the property of investors in the
form of either direct or indirect. Only in case of public purpose, in due process of law, in a non-
discriminatory manner and with payment of compensation, this should be prompt, adequate and
effective to the investor, that expropriating investor’s property is allowed. Moreover, be aware of
the fact that the main motivate of the investor is to get profit from the investment and repatriate
the profit to the home state, under Ethiopia’s BITs in the principle repatriation of profit is
provided as of right.
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To date, Ethiopia has bilateral investment agreements and treaties with around 40 sovereign
states. Some of them are China, Denmark, Italy, Kuwait, Malaysia, Netherlands, Russia, Sudan,
Switzerland, Tunisia, Turkey, Yemen, Egypt, Germany, French, Libya, Iran, Belgium, Spain,
Sweden, Algeria, Austria, Guinea, Finland, India, South Africa, Israel, Britain, USA, and with
Djibouti. Ethiopia concluded a bilateral investment treaty with the United States, a treaty of
investment incentive agreement. Ethiopia has also concluded a bilateral investment treaty with
Djibouti etc regarding preferential investment facilitation and property acquisition agreement.
The existing Ethiopian BITs are photo copied from European model that mainly focus on interest
of foreign investors. Although they establish equal rights and duties for both sides, capital flows
from one side only. It does not care for public interest as it does not integrate environmental
sustainability matters into BITs. Except agreement between the Belgian-Luxembourg Economic
Union, the BIT’s signed by the country failed to integrate environmental concern in the content.
Viewed from this angle, the Ethiopia-Belgian-Luxembourg and Ethiopia-Finland BITs
incorporate a separate provision for environmental sustainability in its substantive part. This is
to show that most Ethiopian BITs do not integrate environmental sustainability with bilateral
investment treaties in Ethiopia. Furthermore, the Ethiopia-United Arab Emirates BIT adopts
environmental interest both in its preamble and substantive parts.
Ethiopian BITs have no adequate regulatory space to protect the environmental sustainability.
All in all, the existing Ethiopia’s BITs are asymmetry in a sense they till much towards
investors’ rights and the host state obligation and hence failed to balance with the right of the
host state with obligation of investors. There are also some other BITs which make a specific
reference to environmental regulatory measures. Save for few scenarios, the preambles of
Ethiopia’s BITs are mute on integrating environmental sustainability issues within it in
particular. There is no a single formula for inserting environmental sustainability clauses in
investment agreements. With that said, Ethiopian BITs should recognize the sustainability of the
environment as its objective and must also reflect the right of the States to regulate
environmental sustainability matters. The BITs must also be capable of ensuring the continuing
duty of States to promote and enforce environmental sustainability measures. It has to be noted
that environmental sustainability issues will be fully addressed when all States cooperate avoid
the race to the bottom. This has to be followed by inserting explicit obligations on foreign
investors and the host State to protect the environment in BITs.
102
In sum, Ethiopian BITs have no adequate regulatory space to integrate/protect environmental
sustainability. Save for these few scenarios, the preambles of Ethiopia’s BITs are mute on the
right to regulate in general and on environmental issues in particular. There is no a single
formula for inserting environmental sustainability clauses in BIT agreements. Instead, a holistic
approach i.e. a reference in the preamble, main text, annex or separate agreement could produce
a better result. With that said, Ethiopian BITs should recognize the integration of environmental
sustainability as its objective and must also reflect the right of the States to regulate
environmental matters. The BITs must also be capable of ensuring the continuing duty of States
to promote and enforce environmental sustainability measures. It has to be noted that
environmental issues will be fully addressed when all States cooperate avoid the race to the
bottom. To introduce a bottom-up approach, it is important that the concerned government office
of Ethiopia develop a model BIT that guides the negotiations and renegotiations. So as to
introduce new generation of BITs, it is advisable to amend or terminate the existing BITs of
Ethiopia that lack room for the regulatory power of the state. This should be indicated in
different parts of BITs. Therefore, the research observed the existing Ethiopian BITs has no
room to accommodate environmental sustainability. Most of the Ethiopia’s BITs are there to
promote the inflow of FDI and protect investors /it is to benefit the nationals or the companies of
other contracting states. There is no concrete evidence to convince one that Ethiopian BITs have
been effective in realizing and implementing the objectives of Ethiopian investment policy and
Environmental sustainability laws.
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5.2. Recommendations
Based on the above major findings, the following points can be recommended.
1. Amendment of BIT’s
Investment treaties of our time are more of mechanisms through which a small and typically
powerful set of private actors can change the substantive content of the law outside the normal
domestic legislative and judicial frameworks. In order to tackle this problem, BITs need to be re-
negotiated to accommodate environmental sustainability which is the main public interest. In this
regard, one may question whether capital importing countries have the leverage to influence the
capital exporting countries in determining the terms and conditions of BITs. This has a lot to do
with the bargaining power of the Parties while making the treaties. In addition, capital importing
nations need to be selective enough when potential investments tend to override environmental
sustainability concerns. This way, it is possible to reform and extend the scope of the current
BITs. In this respect only very few BITs of Ethiopia permit amendment by the mutual consent of
the Parties and in writing the BITs of the country. BITs concluded with Algeria (Art. 11),
Denmark (Art. 13), Malaysia (Art. 11), Turkey (Art. 9 (3)), can be cited in a somewhat different
language, Art. 11 of the Ethiopia-Malaysia BIT provides that amendment by mutual consent is
possible without prejudice to the rights and obligations arising from the BIT prior to the date of
such alteration or modification until such rights and obligations are fully implemented. On the
other hand, the BITs Ethiopia signed with Austria, China, Finland, France, Germany, Iran, Israel,
Kuwait, Libya, Netherlands, Sudan, Sweden, Switzerland, Tunisia and Yemen do not permit
amendment to the agreements. Accordingly:-
1. The preambles to the BITs of Ethiopia shall be restructured/ renegotiated in a way that
acknowledges the Parties’ interest to ensure sustainable development through integration
of environmental sustainability concerns with economic interest of investors.
2. Implement or enforce the laws to achieve sustainability of the Environment. Ethiopia has
adopted number of BITs. But they are not properly bargained. The Ethiopian Government
must work on the effective regulation on implementation of environmental laws so as to
achieve sustainable development since ineffective implementation of Environmental laws
discourages investors and this decreases investment activities itself.
104
3. The Ethiopia –Finland BIT was positive in that it underlined that objectives of the BIT
would be achieved without lowering environmental sustainability standards. All other
BITs should follow such experience through amendment and/or termination for that
matter as public interest should prevail over individual investor /investment interest of
economic gains.
4. There is a clear need for Ethiopia to review its BIT frame work as existing BITs are copy
from European model that mainly focuses on interest of foreign investors from developed
countries. Ethiopia should learn from other countries such as South Africa which have
already undertaken a review of their own BIT commitments and Ethiopia should prepare
its own bilateral investment treaty model.
2. Termination
If re-negotiation attempt is not successful, termination is another alternative to end up

unfavorable agreement. Termination of BITs is the other means by which the Parties reconcile
the discrepancy between economic and non-economic objectives. However, a State could be
better-off where termination is followed by renegotiation to introduce new generation of BITs.
Practice envisages that countries have terminated BITs to minimize the unnecessary effects of
such agreements. According to UNCTAD, at least 110 BITs were renegotiated by the end of
2006. For instance, in 2005, China renegotiated BITs with Belgium Luxembourg, the Czech
Republic, Portugal, Slovakia and Spain, while Germany renegotiated BITs with Egypt and
Yemen. It has to be noted at this point that the termination of BITs could differ from the
termination of other treaties. For instance, it is not easy to terminate BITs before the date of their
expiry. By the same token, the Ethiopian BITs stipulate that the agreements will remain
effective for certain fixed period of time like ten, fifteen, twenty or thirty years. Once the initial
period is over, either of the contracting parties may cause termination upon giving written notice
to the other party. Upon termination, prior investments will receive protection under the
terminated BIT for additional period of time. To avert such setbacks;
1. Ethiopia BITs should not promote and protect investments in generic terms but only
those responsible to the society and the environmental sustainability.
2. All most, all of the Ethiopian BITs are against the concept of sustainable development
where both economic, environmental and human rights interest are interdependent and
one is not less important than any of the other. FDRE constitution recognizes
105
international instruments as the part and parcel of the law of the land and any law or
customary activities which is in contrary to the constitution has no effect. It also gives
express recognitions to the concept of sustainable development. Any agreements
regarding BITs which are against this concept of the law of the land is voidable. Hence
the Ethiopian BITs which are not in compliance with environmental sustainability
interest has no legal effect/void.
3. Adopting New Model BIT
Another key development has been making a separate environmental sustainability provisions in
the BITs as Model. Ethiopia experience in this regard seems to be a weak as the country does not
have clear policy as to the content of the BIT it signs. The lack of consistency in the content of
BITs is manifestation of these problems. Most of the BITs signed by Ethiopia are against the
FDRE constitution as almost all of the BITs do not have provisions in integrating economic
interest with environmental sustainability maters. Hence Ethiopia BIT regime is very old one that
does not afford integrating principles of environmental sustainability matters as it does not affirm
the regulatory autonomy of the country on environmental sustainability interest. Therefore, there
must be express inclusion of the provisions that guaranty both the economic and environmental
interests in the BITs signed in equal footing. Currently, there is an attempt to adopt a model BIT
which incorporates the notion of sustainable development. The preamble of the draft model
adopts the need to promote and protect investment on the one hand and the need to protect the
environment on the other. A separate provision is adopted concerning environmental protection
under the draft model. Ethiopia has to ratify this separate side agreement of BITs to protect the
environmental sustainability interests which makes it easy to come-up with all necessary details
towards environmental objectives.
106
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112
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113
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D. Domestic Laws and Bilateral investment Treaties
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investments
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114
Agreement between the Federal Democratic Republic of Ethiopia and the Kingdom of
Denmark Concerning the promotion and reciprocal protection of investments
Agreement between the Federal Democratic Republic of Ethiopia and the State of Kuwait
for the encouragement and reciprocal protection of investments
Agreement between the Federal Democratic Republic of Ethiopia and the Great Socialist
people’s Libya Arab Jamahiriya concerning the encouragement and reciprocal Protection
of investments
Agreement between the Federal Democratic Republic of Ethiopia and the government of
Malaysia for the Promotion and Protection of Investments,
Agreement between the Federal Democratic Republic of Ethiopia and the Kingdom of
Spain on the Promotion and reciprocal protection of investments
Agreement between the Federal Democratic Republic of Ethiopia and the Government of
Republic of the Sudan on the reciprocal promotion and protection of Investments
Agreement between the Federal Democratic Republic of Ethiopia and the government of
the Kingdom of Sweden on the Promotion and reciprocal Protection of Investments
Agreement between the Federative Republic of Brazil and the Federal Democratic
Republic of Ethiopia on Investment Cooperation and Facilitation
Agreement between the government of Federal Democratic Republic of Ethiopia and the
government of the people’s Republic of China Concerning the encouragement and
reciprocal protection of investments
government of the Russian Federation on the Promotion and reciprocal protection of
investments
government of the Republic of Tunisia for the Promotion and reciprocal Protection of
Investments
Government of Republic of Yemen on the reciprocal promotion and protection of
investments
Agreement between the Government of South Africa and the Government of the Federal
Democratic Republic of Ethiopia
115
Agreement between the government of the Federal Democratic Republic of Ethiopia and
The Government of the People’s Democratic Republic of Algeria on the reciprocal
promotion and promotion of Investments
the Government of the Republic of France for the reciprocal promotion and protection of
investments
the government of the state of Israel for the reciprocal promotion and protection of
investments
Agreement between the Government of the Republic of Finland and the Government of
the Federal Democratic Republic of Ethiopia on the promotion and protection of
investments
Agreement between the government of the United Kingdom of Great Britain and
Northern Ireland and Federal Democratic Republic of Ethiopia for the Promotion and
Protection of Investments
Agreement between the Republic of Austria and the Republic of Ethiopia for the
Promotion and Protection of investments
Agreement between the Republic of India and the Federal Democratic Republic of
Ethiopia for the reciprocal promotion and protection of investments, Terminated
Agreement between the Republic of Turkey and Federal Democratic Republic of
Ethiopia concerning reciprocal Promotion and Protection of Investments
Agreement between the Swiss Confederation and the Federal Democratic Republic of
Ethiopia on the Promotion and reciprocal Protection of Investments
Agreement for the promotion and protection of investments between the Arab Republic
of Egypt and the Federal Democratic Republic of Ethiopia
Agreement on encouragement and reciprocal protection of investments between the
Federal Democratic Republic of Ethiopia and the Kingdom of Netherlands
Agreement on reciprocal promotion and protection of investments between the
government of the Federal Democratic Republic of Ethiopia and the government of
Islamic Republic of Iran
Commercial Registration and Business Licensing Proclamation, Proclamation No.
980/2016, Fed. Neg. Gaz. 22nd Year No. 101, Addis Ababa 5th August 2016.
116
Commercial Registration and Business Licensing Proclamation, Proclamation No.
980/2016, Fed. Neg. Gaz. 22nd Year No. 101, Addis Ababa 5th August 2016
Ethiopian Investment Board and the Ethiopia Investment Commission Establishment
Council of Ministers Regulation, Regulation No. 313/2014, Fed. Neg.Gaz., 20th Year
No. 63, Addis Ababa, 14th August, 2014.
Federal Democratic Republic of Ethiopia Constitution, Proclamation No. 1/1995, Fed.
Neg. Gaz., Addis Ababa, 1st Year No. 1, 21st of August, 1995
Federal Income Tax Proclamation, Proclamation No. 979/2016, Fed. Neg. Gaz., 22nd
Year No. 104, Addis Ababa 18th August, 2016
Industrial Parks Council of Minister Regulation, Regulation No. 417/2017, Fed. Neg.
Gaz., 23rd Year No. 93, Addis Ababa, 15th September, 2017.
Industrial Parks Proclamation, Proclamation No. 886//2015, Fed. Neg. Gaz., 21th Year
No. 3, Addis Ababa, 9th April, 2015
Investment Incentives and Investment areas Reserved for domestic investors Council of
Ministers Regulation, Regulation No.270/2012, Fed. Neg. Gaz. 19th Year No. 4, Addis
Ababa, 29th November, 2012
Investment Incentives and Investment areas Reserved for domestic investors Council of
Ministers Regulation, Amendment Regulation No.312/2014, Fed.Neg.Gaz. 20th Year No.
62, Addis Ababa, 13th August, 2014
The Commercial Code of the Empire of Ethiopia, Proclamation No. 16/1960, Neg. Gaz.,
Year 19, No. 3, Addis Ababa, 5th May, 1960.
Treaty between the Federal Republic of Germany and the Empire of Ethiopia concerning
the promotion of Investments, Terminated
Treaty between the Federal Republic of Germany and the Federal Democratic Republic
of Ethiopia concerning the encouragement and reciprocal protection of investments
Vienna Convention on the Law of Treaties, of 1969
Other documents
Ethiopia Investment Guild 2010, 2010
Overview of Ethiopian Investment Policy (2013)
Public statement on the International Investment regime: 2010
T Abate Investment Law: teaching material (2009) Justice and Legal System Research In
situation
117
E. WEBSITES
http:/ I www.worldbankorg/icsid/treaties/i-1-htm
http://www.roma1.infn.it/~mirabelQuaderni/Archivio/World_Bank.html
http://www.unctad.org/en/docs/webiteiit20052_en.pdf
http://WWW.iisd.org,
http://www.globefield.com/havana.htm.
www.iisd/investment.
F. INTERVIEW
Interview with Ato Tewodros Tamiru, Deputy Director Legal Directorate in Ethiopian
Investment Commission, Intervened at his office, on Aug, 2019
Interview with Ato Kasahun Mulugeta, at the Ethiopian Environmental protection Authority, the
Environmental sustainability supervisor at Federal level
118

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ARSI UNIVERSITY

GRADUATE PROGRAM (LLM PROGRAM)

LAW AND DEVELOPMENT STREAM

INTEGRATION OF ENVIRONMENTAL SUSTAINABILITY UNDER ETHIOPIA’S

By: Musa Hussen

Advisor: - Abayneh Adane ( PhD)

Advisor: Abayneh Adane (PhD)

Arsi University, School of Graduate Studies,

Integration of Environmental Sustainability under Ethiopia’s Bilateral Investment Treaties

Student: Musa Hussen ………………………….

Student No: SM/GS/172/2009

Approved by Board of Examines

Abyneh Adane (PhD) There is invisible signature on 17th May 2021

Advisor Signature Date

…………………………………….. …………………… ……………………..

Examiner Signature Date

………………………………….. …………………… ……………………..

Examiner Signature Date

ACP-African, Caribbean and Pacific

BITs- Bilateral Investment Treaties

CSE-Conservation Strategy of Ethiopia

EIA-Environmental Impact Assessment

EIC- Ethiopian Investment Commission

EPA-Environmental policy Agency

EPA-Environmental Protection Authority

EPRDF-Ethiopian People Revolutionary Democratic Front

FDI- Foreign Direct Investment

FDRE-Federal Democratic Republic of Ethiopia

FET- Fair and Equitable Treatment

FEPAE -Federal Environmental Protection Authority of Ethiopia

FGRSAICs-Federal Government and Regional State Administrations Investment Councils

FTA-Free Trade Area

GATT-General Agreements on Trade and Tariff

GTP-Growth and Transformation Plan

HPRE-House of Peoples Representatives of Ethiopia

ICSID-International Convention for Settlement of Investment Disputes

IIAs-International Investment Agreements

IPAs-Investment Promotion Agencies

MFN-Most Favored nation

MIGA -Multilateral Investment Guarantee Agency

MITs- Multilateral Treaties

NIAC-National Investment Advisory Council

NHCWM-National Health Care Waste Management

NT- National Treatment

OECD- Organization for Economic Co-operation and Development

OECD-The Organization for Economic Co-operation and Development

SADC- The South African Development Communities

TNC- Transnational Corporation

TNC- Transnational Corporation

UN- United Nations

UNCITRAL-United Nations Commission on International Trade Law

UNCTAD- United Nations Conference on Trade and Development

WB- World Bank

WTO-World Trade Organization

1.8. Research Methodology ___________________________________________________11

1.9. Scope of the research _____________________________________________________11

1.10. Structure of the Study ___________________________________________________12

GENERAL OVERVIEW ON BILATERAL INVESTMENT TREATIES__________ _____13

2.1. History and concept of investment treaties __________________________________ ___13

2.1.1. Introduction_________________________________________________________ ___13

2.2. Origins and Historical Evolution of Bilateral Investment Treaties____________________15

2.4. Reasons for Bilateral Investment Treaties______________________________________22

2.5. The Salient features of bilateral investment treaties_______________________________23

2.6. The impact of BITs on Foreign Direct Investment _______________________________24

GENERAL OVERVIEW ON BILATERAL INVESTMENT TREATIES______ _13

2.1. History and concept of investment treaties ________________________________ _13

2.1.1. Introduction_______________________________________________________ _13

3.4.1. Ethiopia’s Legal frame work on Environmental sustainability________________ _56