Bilateral Investment Treaty

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A Bilateral Investment Treaty (BIT) is an agreement establishing the terms and conditions for private investment by nationals and companies of one state in the state of the other. This type of investment is called Foreign direct investment (FDI). BITs are established through trade pacts.

Most BITs grant investments made by an investor of one Contracting State in the territory of the other a number of guarantees, which typically include fair and equitable treatment, protection from expropriation, free transfer of means and full protection and security. The distinctive feature of many BITs is that they allow for an alternative dispute resolution mechanism, whereby an investor whose rights under the BIT have been violated could have recourse to international arbitration, often under the auspices of the ICSID (International Center for the Resolution of Investment Disputes), rather than suing the host State in its own courts.^[1]

There are currently more that 2500 BITs in force, involving most countries in the world.^[2] Influential capital exporting states usually negotiate BITs on the basis of their own "model" texts (such as the US model BIT).

1 BITs involving the U.S.
2 U.S.-Panama BIT as an example
3 Notes
4 External links

[edit] BITs involving the U.S.

Up to date as of November 1, 2006

In force

Albania: signed January 11, 1995, entered into force January 4, 1998
Argentina: signed November 14, 1991, entered into force October 20, 1994
Armenia: signed September 23, 1992, entered into force March 29, 1996
Azerbaijan: signed August 1, 1997, entered into force August 2, 2001
Bahrain: signed September 29, 1999, entered into force May 30, 2001
Bangladesh: signed March 12, 1986, entered into force July 25, 1989
Bolivia: signed April 17, 1998, entered into force June 6, 2001
Bulgaria: signed September 23, 1992, entered into force June 2, 1994
Cameroon: signed February 26, 1986, entered into force April 6, 1989
Democratic Republic of the Congo (Kinshasa): signed August 3, 1984, entered into force July 28, 1989
Republic of the Congo (Brazzaville): signed February 12, 1990, entered into force August 13, 1994
Croatia: signed July 13, 1996, entered into force June 20, 2001
Czech Republic: signed October 22, 1991, entered into force December 19, 1992
Ecuador: signed August 27, 1993, entered into force May 11, 1997
Egypt: signed March 11, 1986, entered into force June 27, 1992
Estonia: signed April 19, 1994, entered into force February 16, 1997
Georgia: signed March 7, 1994, entered into force August 17, 1997
Grenada: signed May 2, 1986, entered into force March 3, 1989
Honduras: signed July 1, 1995, entered into force July 11, 2001
Jamaica: signed February 4, 1994, entered into force March 7, 1997
Jordan: signed July 2, 1997, entered into force June 12, 2003
Kazakhstan: signed May 19, 1992, entered into force January 12, 1994
Kyrgyzstan: signed January 19, 1993, entered into force January 12, 1994
Latvia: signed January 13, 1995, entered into force December 26, 1996
Lithuania: signed January 14, 1998, entered into force November 22, 2001
Moldova: signed April 21, 1993, entered into force November 25, 1994
Mongolia: signed October 6, 1994, entered into force January 1, 1997
Morocco: signed July 22, 1985, entered into force May 29, 1991
Mozambique: signed December 1, 1998, entered into force March 3, 2005
Panama: signed October 27, 1982, entered into force May 30, 1991. Amendment: signed June 1, 2000, entered into force May 14, 2001
Poland: signed March 21, 1990, entered into force August 6, 1994
Romania: signed May 28, 1992, entered into force January 15, 1994
Senegal: signed December 6, 1983, entered into force October 25, 1990
Slovakia: signed October 22, 1991, entered into force December 19, 1992
Sri Lanka: signed September 20, 1991, entered into force May 1, 1993
Trinidad and Tobago: signed September 26, 1994, entered into force December 26, 1996
Tunisia: signed May 15, 1990, entered into force February 7, 1993
Turkey: signed December 3, 1985, entered into force May 18, 1990
Ukraine: signed March 4, 1994, entered into force November 16, 1996
Uruguay: signed November 4, 2005, entered into force November 1, 2006

Not yet ratified

Belarus: signed January 15, 1994, not yet ratified
El Salvador: signed March 10, 1999, not yet ratified
Haiti: signed December 13, 1983, not yet ratified by Haiti or the U.S.
Nicaragua: signed July 1, 1995, not yet ratified by the U.S.
Russia: signed June 17, 1992, not yet ratified by Russia
Uzbekistan: signed December 16, 1994, not yet ratified
Pakistan: negotiations announced September 28, 2004, began February 7, 2005

Note: Many countries that do not have BITs with the U.S. are instead covered by free trade agreements.

[edit] U.S.-Panama BIT as an example

The Bilateral Investment Treaty (BIT) between the governments of the United States and Panama was signed on October 27, 1982.^[3] It was the second BIT ever to be signed by the U.S., with the Egypt treaty resolved only a month prior. The 1982 Treaty protects U.S. investment and assists Panama in its efforts to develop its economy by creating conditions more favorable for U.S. private investment and thereby strengthening the development of its private sector.

Here are some of the Treaty’s key areas:

TREATMENT OF INVESTMENTS.

The nations are to maintain favorable investment conditions for each other. Each country shall treat the other’s investments as if they were made by their own nationals or companies. Each country is allowed to have exceptions to this treaty which are listed in the Annex section. These exceptions may arise from laws or regulations which are enforced in either of the countries, and they must be disclosed before the BIT is signed. The investment of nationals and companies will receive fair and equitable treatment under protection and security of that country. The protection and treatment of the investments will fall under national and international law. Neither country will impose conditions of performance requirements which specify that goods or services must be purchased only in that country.

COMPENSATION FOR EXPROPRIATION.

It is said that no investment should be expropriated or nationalized by the government unless this is done for a public purpose, is not discriminatory, done under due process of law, and offers proper compensation, equivalent to the fair market value of that investment. In the event that a national or a company of one of the countries suffers a loss in its investment in the territory of the other country because of war or other type of armed conflict, it shall not be treated less favorably, with regard to restitution or other payments for such loss, than nationals or companies of such other country.

TRANSFERS.

This guarantees the rights of an ivestor to conduct all transfers related to the investment, in and out of the country without delay. Such rights include: returns, compensations, contract payments, management expenses, dispute payments, license royalties, proceeds from liquidation and sale, etc.

INVESTMENT DISPUTE SETTLEMENT.

This part of the treaty provides ways of settling investment disputes between a foreign investor and a government. The treaty suggests initial efforts to be through negotiation and consultation but if this fails then the dispute would be settled through procedures upon which the foreign investor and the government agreed.