Multi National Enterprises (ICSID): An International Business Analysis

As globalization has increased so has trade and FDI. These changes have resulted in the reduction of barriers between countries and a growing change of the power structure of the international system. Multi National Enterprises (MNE’s) and other companies have been able to remove some of the power from the governments and gain more influence in how the world works. With how things stand in some countries today it is possible for a foreign company to sue its host country if that country adds governmental regulations like environmental restrictions that end up decreasing the companies’ profits. This ability by these companies is a fairly new idea and continues to change.
After the World Wars there were lots of new nations formed due to the ending

Here developing countries agreed to give up some of their power in disputes in order to further promote investors to come to their countries and invest. They created four “safety valves to protect their interests while also being able to satisfy potential investors” (Huiping 470). The four safety valves created were, “the exhaustion of local remedies… consent to arbitration on a case-by-case basis… domestic law of host country as one of the governing law… contracting state may notify ICSID at any time of the class or classes of disputes that it will submit to the jurisdiction of ICSID” (Huiping 470-471). This convention set clear lines for what would be protected and what wouldn’t, it maintained the states sense of authority while also allowing investors to be compensated or heard fairly if they truly had a case against a country. From 1966 to 1991 the ICSID only had 24 cases submitted to them (Huiping 471). For the most part this period of time helped establish trust and stability in the realm of international

government learned from NAFTA they developed the 2004 Model BIT. One of the concerns other than being sued was that “foreign investors enjoy more rights than domestic American investors since domestic investors cannot sue the US before an international tribunal” (Huiping 482). To help even out the problems found from NAFTA the U.S. introduced some changes that resembled the four safety valves that were previously used by developing countries. First deter frivolous claims by foreign investors by screening claims through preliminary courts and the losing party paid all legal fees (Huiping 483). The second states that domestic law is the governing law unless stated otherwise and that a commission’s interpretation is binding (Huiping 484). Third, the 2004 Model BIT affords contracting parties an opportunity to participate in and influence arbitral proceedings by oral or written submission, interim review, and an appeal mechanism so as to limit the tribunal’s discretion. (Huiping 485). Fourth, strengthen protection of state sovereignty and national security by limiting or excluding some items from ISDS; the 2004 BIT excludes nondiscriminatory public welfare policy measures taken by the host government to protect health, safety, and environment (Huiping