In recent times, foreign investors have challenged a broad range of government measures that impact negatively on their investments through the Investor-State Dispute Settlement (ISDS) mechanism. Certain controversial investor-state disputes have led to allegations that the International Investment Regime (IIR) is another model of a modern-day manifestation of imperialism. These manifestations can be seen, for instance, in the regime’s sole focus on investor protection, its lack of responsiveness to the impact of investor activity on the local communities and the environment of the developing host states, and the categorization of some public policies as treaty violations.
The last couple of years have witnessed a global debate on the need to address the imbalance embedded in the IIR. New international investment treaties and policies are currently being introduced and implemented globally. How then do developing countries wish to address this bias in IIR? The important questions to ask are, what type of foreign investment protection rules would best suit the interests of developing countries? Most importantly, in what ways can developing countries avoid the consequences of the earlier signed treaties? What is the most effective way to approach the reform? These questions are of great importance because presently, the world is witnessing a power-bases shift in the investment regime, the developing states are becoming capital-exporting states, and unlike during the twentieth century, they are now able to influence the development of a balanced IIR.
This paper employs the Third World Approaches to International Law (TWAIL) as a tool in analysing the IIR and its impact on the developmental needs of third world countries. The main contention in the paper is that the Bilateral Investment Treaties (BITs) and the ISDS system were originally designed to favour foreign investors who are mostly from developed countries thereby creating a bias against developing countries in the IIR.
Therefore, it is suggested that, rather than using a piecemeal approach, the key to ensuring consistency and addressing the deficiencies in the IIR is through more harmonised efforts by policy makers at the regional and continental levels to actualise developing countries’ desire for a balanced investment regime. The MERCOSUR State Parties’ Protocol on Investment Cooperation and Facilitation and The African Union’s African Continental Free Trade Area (AfCFTA) provide the right opportunity for developing countries to address the bias in the IIR and they also serve as good templates for other developing countries to adopt at the regional or continental levels.
