What Can Best Explain the Prevalence of Bilateralism in the Investment Regime?

This article seeks to explain a key characteristic of the investment regime. Indeed, a closer look at the regime’s treaties clearly reveals a “lateralism paradox.” On the one hand, most of the attempts to conclude a comprehensive multilateral agreement on the protection of foreign investment have failed (Schrijver 2001: 21–25; Young and Tavares 2004: 2). Although some multilateral investment instruments exist, none of these provides compulsory rules for the liberalization and protection of investment as does Chapter 11 of the North American Free Trade Agreement (NAFTA), effective since 1994. This is not because there have been no attempts. The investment chapter of the 1948 Havana Charter, the 1959 AbsShawcross Convention on Investments Abroad, the 1967 Organization for Economic Cooperation and Development (OECD) Convention on the Protection of Foreign Property, and the 1998 Multilateral Agreement on Investment (MAI) were never adopted. The launch of investment negotiations was initially on the Doha agenda of the World Trade Organization (WTO), but a package deal adopted in July 2004 provided that investment issues were not to be negotiated in the Doha Round of trade negotiations. On the other hand, the very same countries that have resisted any multilateral agreement on investment have signed bilateral investment treaties (BITs). Today, there are more than 2,400 BITs involving more than 175 countries (United Na