1. The designation ‘Latin American countries’ has been used for different groups of countries. In this study we include the 20 countries listed in the appendix, i.e., countries which are traditionally referred to as Latin American countries and where a languague descended from Latin is spoken (Spanish, Portuguese, French). Cf., the Concise Oxford Dictionary of Current English, 7th edn. (1982) under ‘Latin’. This coincides with the 20 Latin American membersof the Economic Commission for Latin America (ECLA), as established in 1948.

2. See Chapter IV on Fundamental Rights and Duties of States as included in the Charter of the Organization of American States, April 30, 1948, 119 UNTS (1952) p. 3; see also the Convention on Rights and Duties of States, signed in Montevideo, December 26,1933,165 LNTS, p. 19.

3. Cf., Shihata, L.F.I., ‘Towards a Greater Depolitization of Investment Disputes: The Roles of ICSID and MIGA’, ICSID brochure (1992).Google Scholar

4. Calvo, C., Derecho international teórico y práctico de Europa y América (1868);Google ScholarLe droit international théorique et pratique, 5th edn. (1896).

5. On the international minimum standard see Schwarzenberger, G., ‘The Standard of Civilization in International Law’, 8 Current Legal Problems (1955),CrossRefGoogle Scholar and his book Foreign Investment and International Law (1969). See also Seidl-Hohenveldem, I., International Economic Law (1989), in particular chapter XIII on ‘Property rights of aliens’.Google Scholar

6. For a mote extensive review, see Verwey, W.D. and Schrijver, N.J., ‘The Taking of Foreign Property under International Law: A New Legal Perspective?’, 15 NYIL (1984) pp. 1–96, at pp. 22–27.CrossRefGoogle Scholar

7. Art 24 of the Constitution of Bolivia (1967); text in Paeslee, A.J., Constitutions of Nations, vol. IV, rev. 3rd edn. (1985) p. 105.Google Scholar

8. Art. 27 of die Constitution of Mexico (1917, as amended); text in Paeslee, , op. cit. n.0 7, pp. 900–901.Google Scholar

9. Constitution of the Republic of Peru, as amended in 1979; text in Blaustein, A.P. and Flanz, G.H., eds., Constitutions of the Countries of the World (1986) p. 69.Google Scholar

10. Art 127 of the Constitution of Venezuela (1961); text in Paeslee, , op. cit. n. 7, p. 1309.Google Scholar

11. See n.2 supra.

12. American Treaty on Pacific Settlement, concluded in Bogotá, April 30,1948.Text in 30 UNTS (1949) p. 55.Google Scholar The US made a reservation to this provision: ‘The Government of the United States cannot accept Article 7 relating to diplomatic protection and the exhaustion of local remedies. For its part, the Government of the United States maintains the rules of diplomatic protection, including the rule of exhaustion of local remedies by aliens, as provided by international law.’

13. Decision 24 was adopted on December 31,1970 by the Andean Commission, established by the Cartagena Agreement (1969). The latest version of Decision 24 as regularly amended appeared in 16 ILM (1977) p. 138.Google Scholar

14. Cf., the regular reports and publications by various institutions, including ICSID, IFC, the UN Centre on Transnational Corporations and UNCTAD.

15. Text in 27 ILM (1988) p. 974.Google Scholar

16. Common Code for the Treatment of Foreign Capital and on Trademarks, Patents, Licenses and Royalties. Text with Introductory Note in 30 ILM (1991) p. 1283.Google Scholar

17. Text as quoted in Shea, D.R., The Calvo Clause. A Problem of Inter-American and International Law and Diplomacy (1955) p. 200.Google Scholar

18. García-Amador, F.W., ‘Calvo Doctrine, Calvo Cause’, in Bernhardt, R., ed, Encyclopedia of Public International Law, Instalment 8 (1985) p. 63.Google Scholar

19. Far an extensive review see Shea, , op. cit. n. 17, pp. 194–230.Google Scholar

20. Arbitral Awards (Reports of international arbitral awards), vol. IV, p. 29.Google Scholar

21. Ibid., p. 32.

22. Brownlie, I., Principles of Public International Law, 4th edn. (1990) pp. 546–547.Google Scholar

23. GA Res. 626 (VII), December 21,1952.

24. E/C.4/L.24, April 16, 1952. This text has been substantially modified during the negotiations and occurs in Art 1 of both Human Rights Covenants as they were finally adopted in 1966.

25. GA Res. 1803 (XVII), December 14, 1962.

26. 28 UN Yearbook (1974) pp. 401–403.Google Scholar For a general discussion of CERDS see Meagher, R.F., An International Redistribution of Wealth and Power. A Study of the Charter of Economic Rights and Duties of States (1979).Google Scholar

27. Bulajić, M., ed., Ten Years of the UN Charter of Economic Rights and Duties of States (1986);Google ScholarChatterjee, S.K., ‘The Charter of Economic Rights and Duties of States: An Evaluation After 15 Years’,40 ICLQ (1991) pp. 669–684.CrossRefGoogle Scholar

28. UN Doc. E/1990/94 containing the text, as proposed by the Chairman, of the Draft Code of Conduct on Transnational Corporations. The Chairman's text deviated on several points from earlier drafts of the Committee as a whole. These texts were critically discussed at the symposium referred to in the note at the beginning of this article and a consensus has not yet been reached on all of them. Outstanding issues include references to international law, dispute settlement, national treatment and transfer of payments. The differences of opinion on these few remaining questions of sovereignty, the primacy of international law and the need of international dispute setdement are fundamental; this may explain why it has not been possible to reach agreement so far. See also E/C10/1991/8 containing a report of the UN Secretary-General on the progress made in the work on the code of conduct.

29. In previous versions of a draft Code there was one paragraph which clearly deviated from the Calvo doctrine, namely die last sentence of para. 52 (E/1988/39/Add.l):

‘Nothing in mis paragraph should be construed as excluding the right of the host country to grant such special incentives and facilities to transnational corporations as may be considered necessary in its national interest’

It is notable that this paragraph has been deleted from the 1990 draft text of the Code. This deletion, as proposed in the two papers on which this article is based, was supported by a number of participants in the Peace Palace symposium held in September 1989.

30. The International Centre for the Settlement of Investment Disputes (ICSID) was established under the 1965 Convention on the Setdement of Investment Disputes Between States and Nationals of Other States.

31. See Shihata, L.F.I., ‘ICSID and Latin America’, I News from ICSID (1984) no. 2, pp. 2–3.Google Scholar

32. The notifications from Jamaica (1974) and Saudi Arabia(1980) exclude disputes relating to the natural resources sector. Papua New Guinea ‘will only consider submitting those disputes to die Centre which are fundamental to the investment itself’ (1978), while Turkey (1989) will only consider doing so with respect to investments diat have been approved. Moreover, Turkey specified that ‘the disputes, related to the property and real rights upon the real estates are totally under the jurisdiction of the Turkish courts and therefore shall not be submitted to jurisdiction of the Center’. See the section on ‘Notifications Concerning Classes of Disputes Considered Suitable or Unsuitable for Submission to die Centre’ in Doc. ICSID/8-D, entided ‘Contracting States and Measures Taken by them for the Purpose of the Convention’, October 1992. Guyana and Israel withdrew dieir earlier notifications.

33. Schedule A to the Convention provides a classification of die individual countries. All Latin American participants belong to Category Two (together with several OECD member States: Greece, Portugal, Spain, Turkey).

34. Art 12, para. (d).

35. Cf., Art. 23(b)(ii).

36. Shihata, L.F.I., MIGA and Foreign Investment. Origins, Operations, Policies and Basic Documents of the Multilateral Investment Guarantee Agency (1988) p. 264.Google Scholar Sbihata also points out that submission to international arbitration of disputes concerning financial transactions between an international financial institution and a Member State is accepted, among others, in loan agreements of the World Bank and the later-American Development Bank.

37. One of these (US/Nicaragua) was later denounced (by the US, in 1985). For information that became available after 1 July 1992, see n. 43 below.

38. The Belgo-Luxemburg Economic Union (BLEU), Canada, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden, Switzerland, the UK and the US. The number is 13 if Belgium and Luxembourg are counted separately.

39. The position of Mexico is ambiguous; in 1990 it concluded an economic treaty (no. 37) with Spain, dealing with investment among other matters, but the text does not follow the internationalist line of most of the investment protection treaties on matters such as expropriation and arbitration; it merely provides in Art. 2 that the parties ‘shall study’ the possibility of establishing measures for reciprocal protection of investments, without even indicating whether national or international measures are contemplated. In a different context, however, viz., as part of the North American Free Trade Agreement (NAFTA), concluded with the US and Canada, Mexico has accepted the principle that no NAFTA country may expropriate investments of NAFTA investors without paying the market value. But settlement of disputes by binding arbitration has not been accepted, even in the NAFTA context See Latin American Regional Reports, London 24 September 1992, RM-92–08. Spain's treaty of 1990 with Chile (no. 43) is only slightly more specific man the Mexican treaty with Spain by providing in Art. 10 that the parties ‘shall negotiate’ an agreement on reciprocal guarantees for investment. Treaties 32 and 34 (Argentina with Italy and Spain) also lack the usual protection and arbitration provisions. It is noted, however, that other recent Argentinian and Chilean BITs do include such provisions and there is no doubt therefore that Argentina and Chile are prepared to follow the internationalist line. The reluctance or hesitation to accept the protection and arbitration clauses thus appear to lie with Spain as well as with Mexico. However, Bolivia/Spain (no. 38) does include some of the usual protective clauses although not one on arbitration between host country and investor.

40. Dominican Republic 1960, Cuba 1961.

41. The dates indicate day, month and year, in that order.

42. Nos. 8,39,41,45,48 and 49.

43. Since this list was completed, the following additions have come to our notice: Paraguay/Switzerland 31.01.92, nif, P; and Bolivia/Netherlands, 10.03.92, nif. The total number of treaties concluded has thus risen to 58 and that of treaties known to be in force to 29.

44. Denounced by the US in 1985 and terminated as of 01.05.86.

45. = most-favoured-nation treatment

46. If the investor is given national treatment, there is no question of discrimination in his favour.

47. The term is often used in a rather different sense, namely to indicate the right of the foreign national to make new investments in the host country on the same terms as apply to the host country's own nationals. See, e.g., treaty 20 (Panama/US), Art. 2. In most of the treaties here discussed, however, national treatment does not entail a right to invest, but a post-investment right See, for example, para. 1 of die Protocol to treaty no. IS (Haiti/Germany: ‘Tant que les dispositions légales our réglementaires d'une Partie Contractante exigent… une procédure d'agrément ou d'admission, les dispositions du présent Traité ne s' appliqueront à un investissement de capitaux déterminé qu'après que la procédure… y relative aura ét7eacute; accomplie. A dater de l'agrément ou de l'admission, cet investissement de capitaux jouira de l'entière protection du présent traité‘. Similar provisions are made in letter exchanges accompanying treaties 16 and 17 (El Salvador/France and Paraguay/France).

48. Treaty 1 (Costa Rica/France) provides that the exercise of civil law rights in the host country (the right to own goods, to dispose of them, etc.) is subject to mfn treatment, but not to national treatment. Here the underlying philosophy may have been that nationals in matters of ownership of real estate have, and should keep, stronger rights than foreigners ought to have. Similarly, treaty 16 (El Salvador/France) grants mfn treatment but no national treatment (Art 3); the same applies to treaty 42 (Bolivia/Sweden) and to treaty 54 (Argentina/Sweden).

49. Cf., Art. 7 (on mandatory rules of law) of the European Convention of 1980 on the law applicable to contractual obligations.

50. Treaties 35 (Uruguay/Netherlands), 40 (Venezuela/Italy), 44 (Argentina/UK), 46 (Argen-tina/Switzerland), 50 (Venezuela/Netherlands), 51 (Argentina/Canada), 52 (Chile/Switzerland), 54 (Argentina/Sweden) and 55 (Peru/Switzerland); all except 35 and 50 specifically refer also to the pertinent rules of conflict.

51. There are similar provisions in treaties 17 (Paraguay/France), 26 (Costa Rica/France), 35 (Uruguay/Netherlands), 43 (Argentina/UK), 47 (Uruguay/Canada), 51 (Argentina/Canada) and 53 (Argentina/US).

52. The same clause exists in treaty 27 (Haiti/France). As to treaty 21 (Panama/France), it is interesting mat it also refers to international law in its preamble: ‘Souhaitant développer la coopération économique entre les deux Etaxs dans le respect du Droit International’. The use of capital letters—unusual in French and Spanish—is no doubt a mark of the respect invoked. No other references of this kind have been found in preambles.

53. Similarly treaty 23 (Panama/Switzerland): ‘…un traitement juste et équitable, conformément à sa jurisdiction interne et aux normes du droit international’ (Art 2).

54. The same clause is found in other German treaties, e.g., nos. 10, 15, 24, 29 and 30 (with Ecuador, Haiti, Panama, Bolivia and Uruguay) and in two Dutch treaties (nos. 35 with Uruguay and 50 with Venezuela).

55. A similar clause is ircluded in treaty 53 (Argentma/US). Treaty 51 Argentina/Canada), on the other hand, refers to international law in the clause on die right to compensation for losses caused by revolution or civil strife, but not in connection with expropriation.

56. With the exception of treaty 22 with Panama.

57. Viz., treaties 4 to 7 (the Japanese treaties with Cuba, Peru, Argentina and El Salvador).

58. This applies to treaties 2, 5, 6 and 7.

59. In treaty 6 (Argentina/Japan) die second sentence is somewhat more specific: ‘Awards duly rendered … shall be deemed conclusive in enforcement proceedings brought before the courts of competent jurisdiction of either Party, and shall be entitled to be declared enforceable by such courts, except where found contrary to public policy. When so declared, such awards shall be entitled to privileges and measures of enforcement appertaining to awards rendered within the territory of such Party’. In connection with the Peruvian treaty, it is interesting to recall an incident which caused much excitement at the 1974 ILA conference in New Delhi. Mr Andrew Freeman drew attention there to the arrest in Peru of the president and other leading members of the Lima Bar Association, the closure by the Peruvian Government of some magazines and the exile of a number of journalists, all in connection with an international arbitration clause in a contract between Japanese and Peruvian companies, which was deemed to be an infringement of Peruvian sovereignty., Cf., Report of the 56th Conference of the ILA (1976) p. 519.Google Scholar In the light of treaty 5 it is difficult to understand the excitement, unless it is assumed that the treaty itself—which clearly allowed international arbitration in the circumstances—was an infringement of the Constitution.

60. See the quotation from the Argennna/Japjan treaty in the previous note. Perhaps, however, there is no inroad at all, namely if public policy is interpreted as including the Calvo doctrine as a whole. In that case awards would be enforceable in Japan, but not in Argentina. However, according to Shea, op.cit. n. 17, Argentina ‘does not adhere to the use of the Calvo clause’, nor is the Calvo doctrine applied in business affairs as far as is known.

61. Treaties 16 to 20 and no. 50 contain a straightforward ICSID clause; nos. 24, 26, 29, 30, 31, 35, 36, 39a, 40, 46, 47, 51, 54 and 55 provide in the first instance for ad hoc or UNCTTRAL arbitration, with ICSID as an alternative, or vice versa (nos. 52, 53 and 54); no. 25 provides for ICC arbitration; no. 28 for UNCITRAL or ICC; finally, there are 7 treaties—nos. 21, 22, 23, 27, 33, 42 and 44—which designate the UNCITRAL rules without alternatives. Treaties 32, 34, 37 and 38 have no provision for arbitration at the level of the investor.

62. A number of other treaties have similar provisions, e.g., treaties 9, 16, 18, 19, 40, 44, 47, 51, 52 and 53.

63. A time-limited local remedies role is included in treaties 9, 10, 18, 19, 30, 35, 36, 40, 44, 46, 47, 51 and 55. In 18 and 19 a three-month period is set aside for ‘exhaustion’ of local remedies; this can be little more than token exhaustion. In nos. 30, 35, 36, 40, 44, 46, 47, 51 and 55, this period is 18 months and in some treaties (e.g., nos. 35 and 36) appeal or cassation proceedings are excluded.

64. Treaties 40 and 46 contain such a clause calling for ‘désistement de l'instance judiciaire’.

65. One would have expected the conjunction ‘and’ here.

66. Later Swiss treaties, nos. 13 and 23, contain the same or even more specific clauses. Thus, Art 4 of treaty 23 enumerates four conditions which must be fulfilled for expropriation to be allowed: reasons of public utility or social interest; the measures must be non-discriminatory; they must be in accordance with the law in force; and there must be effective and adequate compensation; the latter, moreover, must be established at the time of expropriation.

67. Viz., all treaties analyzed, from no. 9 onwards, with the exception of nos. 22, 32, 34, 47 and 5l.

68. The words ‘qui ont été convenues’ appear in the Spanish text of treaty 12 (Honduras/Switzerland) as ‘convenidas anteriormente’. Thus it appears that this Spanish clause safeguards only pre-treaty investment contracts, but not post-treaty contracts and it is therefore a rather inadequate pacta servanda clause. The authentic English text (which is the prevailing text) of some more recent Swiss BTTs (treaties 52 and 55) refers to ‘more favourable provisions which have been or may be agreed’, thus removing any doubt with regard to post-treaty contracts. In addition, these recent treaties have a separate clause under which the host country is obliged constantly to guarantee the observance of any commitments it has entered into with respect to the investments (cf., the UK clause).

69. The words ‘obligation entered into’ are ambiguous. They could be construed narrowly as referring only to an obligation which the host country has entered into vis-a-vis the home country, i.e., the other Contracting Party of the BIT in question. Thus obligations entered into by the host country (or its instrumentality) vis-a-vis the investor would not be covered by this clause. Such a narrow interpretation clearly was not intended by the drafters of the British model clause.

70. This wording is subject to the same ambiguity as that discussed in the previous note.

71. The other conditions precedent are: public purpose; due process of law; not discriminatory; and ‘accompanied by prompt, adequate and effective compensation’.

72. Costa Rica/France 1955, Colombia/Germany, Ecuador/Germany and Haiti/Germany.

73. In one case (Bolivia/Sweden) only mfn treatment; in two cases (Costa Rica/France 1955 and Paraguay/UK) only national treatment In the other 27 treaties the investor is entitled to both, that is to say to whichever is most beneficial to him.

74. The first-mentioned 5 treaties are nos. 18, 19, 25, 28 and 33(the UK BITs with Paraguay, Costa Rica, Haiti and Bolivia; and Haiti/US). The last-mentioned four treaties are nos. 21, 26, 27 and 31 (the French BITs with Panama, Costa Rica and Haiti; plus Bolivia/Switzerland). It may well be that the latter ‘absolute’ clause—which is more favourable to the investor than any of the others—can be invoked by investors from most of the other countries involved, on the basis of the mfn treatment to which they are entitled. This point came up in an interesting ICSID arbitration (AAPL v. Sri Lanka, 30 ELM (1991) p. 577, para. 54), where the arbitrators, however, rejected AAPL's argument based on an mfn clause.

75. Also Venezuela in 1990, but no longer in 1991.

76. Cf., the Judgment of the ICJ in the Elsi case, i.e., the Case concerning Elettronica Sicula SpA (US v. Italy), ICJ Rep. (1989) p. 15.Google Scholar See Peters, P., ‘Dispute Settlement Arrangements in Investment Treaties’, 22 NYIL (1991) p. 134 at fn. 123.CrossRefGoogle Scholar The following remarks in section 3.6 of mat article are relevant to the point under discussion here: ‘The question is whether it is in the best interests of the parties to adopt a procedure whereby a dispute is first dealt with by the courts of the host State and thereafter is submitted to arbitration elsewhere. From the point of view of the investor recourse to the local courts will be seen as a waste of time, effort and money. Such waste also applies to the host country of course. There are two further reasons which may make a duplicated procedure unattractive to the host country: the acrimony caused by public proceedings in the courts may harm the investment climate (more so than arbitral proceedings, which are held in private); and it is embarrassing if the verdict of the highest court of the host country is subsequently quashed by “foreign” arbitrators. Historically there is a certain logic in the requirement to exhaust local remedies; only after such exhaus-tion could the State be held responsible for any injustice. Nevertheless it is doubtful whether the sa-tisfaction derived from sticking to historically and constitutionally important principles will outweigh the practical disadvantages outlined above. Although the Elsi Judgment (discussed above) seems to breathe some new life into the local remedies doctrine, the trend in a long line of BITs indicates that in the field of international investment law doctrinal views increasingly make way for practical considerations. It is not surprising therefore that the vast majority of BITs do not require any recourse to the courts’(p. 134).