Foreign investments

Over the last 50 years, the international community has developed effective remedies for recovery of private property rights. They have definitely promoted the transnational flow of capital.

The International Convention on the Settlement of Investment Disputes between States and Nationals of Other States, signed in Washington, D.C. in 1965 became the first key instrument. At the moment the Convention is in force for over 150 states worldwide, Russia joined the Convention as well. The International Center for the Settlement of Investment Disputes (ICSID) was established within the frames of this Convention. The Convention provides that no Contracting State should give diplomatic protection, or bring an international claim, in respect of a dispute which one of its nationals and another Contracting State should have consented to submit or should have submitted to arbitration under the Convention, unless such other Contracting State should have failed to abide by and comply with the award rendered in such dispute. The Convention provides that the Tribunal should decide a dispute in accordance with such rules of law as may be agreed by the parties. In the absence of such agreement, the Tribunal should apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable.

The Convention secures more efficient regime for the enforcement of awards rendered by the ICSID tribunal then other international treaty arbitrations. Each Contracting State should recognize an award rendered pursuant to the Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State.

Bilateral Investment Treaties provide significant protection for foreign investments. In recent time they have become particularly popular among states. Since its signature of the first agreement in 1959 up to now there are over 2,000 BITs in force worldwide. Russia is a party or successor of about 56 BITs, most of which (41) were signed namely by the Russian Federation during the period of 1992-2003. Every developed state and more than 90 developing countries is a party of at least one such agreement.

Moreover, five recent international regional multilateral agreements provide protection for investments' safety. Central American Free Trade Agreement (CAFTA) 2004, Agreement to Energy Charter (1994) in Europe, North American Free Trade Agreement (1992), Cartagena Free Trade Agreement (1994), and "Colony" Protocol of Investments in (MERCOSUR) (1994) in South America.