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The promotion and protection of foreign investments (Master thesis)

Δεμέναγα, Χριστίνα/ Demenaga, Christina

This paper attempts to present the evolution of foreign investments under the ECT and the BITs in the Southeast Mediterranean with an emphasis on Greece and Cyprus. Foreign investments contribute to strengthening the competitiveness of the countries of origin of the investors and to the economic development of the countries receiving the investment inflows. Incentives are introduced to promote investments which, depending on their effectiveness, create a favorable environment for investment and drastically reduce risk. Incentives that degrade health, safety and environmental standards are not encouraged. The incentives are mainly economic, fiscal, administrative and institutional measures.Realized investments are subject to equal and fair treatment by the host states or no less favorable than the national treatment or the treatment to other investors originating from a third state. The host states guarantee the non-expropriation of foreign investments if not only for a public purpose, by legal procedure, in a non-discriminatory manner and with prompt, adequate and effective compensation.Investment disputes are resolved amicably or settled by national courts or arbitration. Arbitration is a judicial mechanism surrounded by trust and chosen for the efficient, fair and expeditious settlement of disputes.Under the Energy Charter Treaty, the BITs and the conditions of free market and competition, the following developments are noted in foreign investments in the Energy Sector: The detailed provision for the settlement of disputes acts as a deterrent for the host states to violate their contractual obligations. Host states' sovereignty over their own resources does not in itself justify the expropriation of foreign investment. International Arbitration Courts accept the legality of expropriation and do not seek full reparation in order to avoid challenging the host state's sovereignty. The state of origin is disengaged from the difference which is depoliticized. Foreign investors have an independent right to protection even if they are residents of a third country with citizenship of the host country or even if they are minority shareholders of a subsidiary company established under the national law of the country of origin. Host states partially waive state immunity by accepting the investor's recourse to arbitration without requiring the investor to exhaust host state remedies. There has been an increase in the number of DSPs and institutional changes since the entry into force of the Convention.