FDI UNDER SCRUTINY

Few areas of law seem to excite as much controversy nowadays as the law of foreign investment. It is a fast-growing sector in which elements and ideas in the spheres of law, economics, political science, international relations and other related fields – increasingly environmental rights and human rights too – interact. It is also a sector in which approaches to the many existing problems oft en seem to be at once appropriate and contradictory. Furthermore, it is a sector subject to the growing scrutiny of governments, politicians, the media and citizens, in which a paradigm shift is currently taking place: increasingly, the promotion of investment and the protection of investors as the main – in some cases only – goal has to be balanced with the necessary recognition of the right of the state to promote and implement some public policies and interests.

Globalisation is an increasingly negative concept for many people in Western countries, as is free trade, and this has a direct and growing impact on the approach of some national governments to foreign direct investment (FDI). The traditionally rather innocuous area of investment law is nowadays under pressure, not only in relation to inwards FDI but also as regards outwards FDI. How ironic then that it appears that those developed countries that have supported free trade and free movement of investment since the restrictive 1970s, during which anti-FDI feelings ran high, are now leading a ‘backlash against FDI and trigger[ing] a roll-back of investor protection and liberalization’.

The amount of FDI worldwide has increased, while at the same time, its patterns are changing and many well-established paradigms of all kinds are starting to collapse. Developing countries and emerging economies are now investing heavily in developed countries, and some of the latter's major companies and areas of economic activity are now controlled by foreigners. The distinction between developed capital-exporting countries and developing capital-importing countries has been blurred. This fact, among others, has a direct impact on the assessment of free trade and free flow of FDI in many countries, especially developed ones.