Prescribed Reading

• Sangwani Patrick Ngambi 2017 Understanding

Investment Law in Zambia. JUTA’s Pocket
Companion. Juta and company: South Africa
 Prescribed Reading
• Chapter 1 Rudolf Dolzer and Christoph Schreuer.
2008 Principles of International Investment Law 2nd
Edition. OUP: Oxford
• Krista Nadakavukaren Schefer. 2016. International
Investment Law. Text, Cases and Materials 2nd
Edition. Edward Elgar Publishing Inc: USA
• M Sornarajah. The International Law on Foreign
Investment 4th edition. 2017. Cambridge University
Press
•
 Introduction to investment law
• Schefer- The goal of foreign direct investment
is the protection of foreign property by the
government of the state in which it is found
• Terms to take note of:
• Host state is the state in which the foreigner
has made his investment
• Home state is the state from which the
investor comes from
 Definition of foreign direct investment
• United Nations Conference on Trade and
Development (UNCTAD) defines it as
• ‘an investment involving a long term
relationship and reflecting a lasting interest
and control by a resident entity in one
economy. . . In an enterprise resident in an
economy other than that of the foreign
investor.’
 Elements
• Ngambi (2017) notes the following:
• There must be transfer of assets from one
jurisdiction to another
• Investment must be made to acquire a lasting
interest in an enterprise operating in an
economy other than that of the investor
• Investor must have effective control of the
management of that enterprise
 Application of investment law
• Schefer pp2-3 Applies to commercial activities
• Long term relationship between the foreign
investor and the government in which
negotiating power shifts between the
negotiating stage and the project
implementation stage
• Government attracts a private person to put
money, time and effort into its relationship
with the government
 Nature of investor and host country
relationship
• Host country attracts investment. Has the right to
regulate all resources within the territory including
foreign capital. It may have the power to limit
access to capital, tax the profits or take the
property away
• Good faith may govern these actions even though
the investor may not see it that way. Investor may
see profits diminish
• Can the investor take the matter to court? This is
the question that the law of investment addresses
 Examples of foreign direct investment in
Zambia
• Extractive industries like mining in Zambia
• Facilitated by creation of concessions or development
agreements
• These agreements allow the investor to exploit the
host country’s natural resources and obliges it to pay
taxes and royalties out of the profits gained
• The host country can affect the investor’s business
negatively or positively. It’s the mitigation of the
negative effects imposed by statute and other
measures that are the subject matter of this course
Sources of International investment law
• Schefer observes that: International investment
law is a specialised area of international
economic law and international economic law
is a specialised area of international law.
• This is particularly significant because there are
sources of international law that apply to
investment law and others that are unique or
of special interest to those affected by
international investment law
 Sources of international law
• International conventions
• (i) international law governing treaties- Vienna Convention
on the law of Treaties (VCLT)- Most of its terms are accepted
as a codification of customary international law
• Breach of a treaty is treated as a ‘wrongful’ act in
international law and results in ‘responsibility’ for the
violating state the consequences depend on the terms of the
treaty.
• Treaties can be on any subject matter, reflect wishes of the
party however parties cannot agree to bind themselves to do
something prohibited by JUS COGENS NORMS e.g slave trade
is prohibited
 Treaty making process
• Schefer p.20 5 stages
• Negotiation phase- the parties identify the needs and
goals and work on the text of the agreement
• Signature phase- the negotiating states signing of draft
treaty authenticates its text. This signifies an intention to
move towards ratification and puts an obligation of good
faith on the signator not to act in a way that is meant to
frustrate the object of the treaty
• If ratification is not required then signing indicates consent
to be bound and good faith obligation not to frustrate the
object of the treaty
 Treaty making process contd
• Ratification phase- A formal deposition with the
official depository of an instrument committing to
bind one’s state. It may require a national
constitutional process to precede the deposition
• Accession/ Acceptance/ approval phase- indication
by a non signatory to be bound by a treaty
• Entry into force phase- Provisions become effective
for all states that have given their consent to be
bound; upon coming into force
 ii. Customary international law
• Schefer notes at page 21- Customary
international custom, as evidence of a general
practice accepted as law.
• That which the states have always done
becomes the law even if it is nowhere written
down and even if states have not intentionally
agreed to it
 Qualifications for customary law
• Schefer continues:
• Requires consistent, widespread and long term practice
• Requires that this is consistent widespread and long
term practice which is combined with opinio juris sive
necessitatis
• The first element is objective measuring the extent of
state practice as observable
• The second is subjective looking at qualitative evidence
of states belief in the rule as implied by their
statements and behaviour
 Opinio juris sive necessitatus
• Legal obligation rather than moral obligation
or political expediency
 How to determine the existence of opinio
juris
• Ngambi cites Hunter Salzman and Zaelke
• Diplomatic correspondence
• Government policy statements
• Press releases
• Opinions of official legal advisers
• Official manuals on legal questions
• Comments by governments on drafts produced by the International Law
Commission
• National legislation
• International and national judicial decisions
• Legal briefs endorsed by the State
• Pattern of treaties in the same form
• Resolutions and declarations by the united nations and other evidence
 Effect of customary law
• If custom is established it is binding whether
or not a state was involved in its formation
 Iii Soft Law
• Outside Art 38 of the Vienna Convention
• Not legally binding
• Notable instruments:
 Numerous non binding statements from the United
Nations General Assembly
 Declaration on Human Rights
 Declaration on the Human Environment
 Guiding Principles on Business and Human Rights
 OECD various sets of Guidelines
 Bank of International Settlements Basel Committee Rules
 Unilateral acts
• When a state makes a declaration or promise
or otherwise performs an action that is not
reciprocal then we speak on a unilateral act
• If it is made publicly and manifesting the will
to be bound it may create legal obligations for
that State
 Jus cogens
• Fundamental principles to which states must
adhere. Also called ‘peremptory norms’ of
international law
• Read Art 53 of the Vienna convention on the
law of treaties
• There is no justification to depart from these
norms
• Read Article 41 of the Articles on State
Responsibility for the breach of these norms
 Examples of Jus Cogens
• ICJ has named the following examples:
• Aggression
• War crimes
• Crimes against humanity
• Torture
• Racial discrimination
• Slavery
• Slavery like practices e.g. piracy and genocide
 Sources of International Investment Law

• Schefer p17 notes the following by citing Article 38

of the Statute of the International Court of Justice
 International conventions – rules expressly
recognised by the contesting states
 International customary law as evidence of a general
practice accepted as law
 General principles of law recognised by states;
supplemented by
 Judicial decisions and teachings by scholars around
the world as subsidiary sources
 International Conventions
• This comprises treaty law
• A treaty is defined in Art 2 of the Vienna
Convention as:
• ‘an international agreement concluded by
States in written form and governed by
international law whether embodied in a
single instrument or in 2 or more related
instruments and whatever its particular
designation.’
 Other Terms for treaty
• Agreement
• Convention
• Pact
• Covenant
• Or other similar name
Observations from the definition of treaty

• Ngambi observes that:

• Treaty can only be entered into by states
• Treaties can be multilateral or bilateral
• Must be in writing. There are exceptions to
this rule. However, these exceptions are not
governed by the Vienna convention but
general principles of international that are
equally binding
Observations from the definition of treaty

• Vienna convention does not govern

agreements between State and non state
actors
• ICJ now recognised the personality of certain
international organisations. As a result there is
a 2nd Vienna convention that allows for
treaties between these entities and between
states and these entities
 ICSID
• Dlozer and Another notes that: One of the major
multilateral agreements is the Convention on the
Settlement of Investment Dispute between States and
Nationals of other States
• It provides a procedural framework for dispute
settlement between host states and foreign investors
through conciliation and arbitration
• Does not contain standards of protection for investments
• Participation in ICSID not consent to resolution by
arbitration
 Bilateral Investment Agreements
• Most important source of international
investment law
• BITs contain obligations that the host has as
regards foreign investors it is 2 states that
conclude the treaty
• BITs provide guarantees for the investments of
investors from one of the contracting states in
the other contracting state
 General Principles of law
• Principles found in most jurisdictions
• Ngambi refers to a quotation attributed to
Lord Philimore which states:
• ‘the general principles referred to. . . Were
those accepted by all nations in foro
domestico such as certain principles of
procedure, the principle of good faith and the
principle of res judicata, etc’
 Read:
• Chorzow factory case the Permanent court of
international justice noted’ it is a general
conception of law that every violation of an
engagement involves an obligation to make
reparations.’
• Sealand Service v Iran the tribunal stated that the
concept of unjust enrichment is widely accepted
as having been assimilated into the catalogue of
general principles available to be applied by
international tribunals
 Judicial Precedents
• Both Domestic and international precedents
• International decisions do not have a binding
effect. Read Art 59 of the Statute of ICJ
• However they play a significant role in the
development of international law
 Writings of EXperts
• No independent force
• Help states discern what the law is
• Thus scholars help or influence the evolution
of international law