IIAs

International Investment Agreements (IIAs) are legally binding treaties between states that govern the treatment and protection of foreign investments within a host country. IIAs aim to encourage cross-border investment by providing a predictable legal framework, clear protections for investors, and mechanisms to resolve disputes.

IIAs come in several forms, most commonly as bilateral investment treaties (BITs) between two countries or as investment chapters within multilateral or regional trade agreements. Typical provisions define what counts as an investment, establish minimum standards of treatment (such as national treatment and most-favored-nation treatment), and protect against unlawful expropriation or nationalization. They may also secure guarantees for transfer of funds related to investments, ensure fair and equitable treatment, provide full protection and security, and address exclusions or limitations on certain regulatory measures. Some IIAs include stabilization clauses, performance requirements limitations, and specific investor protections.

Dispute settlement under IIAs often involves investor-state dispute settlement (ISDS), allowing foreign investors to bring claims against host states before international arbitral tribunals, such as those operating under ICSID or UNCITRAL procedures. Awards typically involve compensation and the enforcement of tribunal rulings across borders.

The IIA landscape has grown substantially since the mid-20th century, with a notable expansion in recent decades. More recent or “new generation” IIAs increasingly emphasize sustainable development, preserve governments’ policy space, and incorporate environmental and public health safeguards. Critics contend that IIAs can constrain regulatory autonomy and expose governments and taxpayers to arbitration costs, while supporters argue they are essential for reducing investment risk and attracting capital.