BILATERAL INVESTMENT TREATIES AS A MEANS FOR ADVANCEMENT OF FOREIGN DIRECT INVESTMENT

The aim of the analysis of BITs as a method for advancement of foreign direct investment is to cover several important topics. Those are: defining the term and the concept, determining its historic development, explaining its basic characteristics, analyzing their features and the reasons for concluding them. BITs serve a purpose of advancing the economic linkages of the signatory parties, with an ultimate objective of development or economic advancement. From the eighteenth century onward the forerunners of the modern BITs were the historic so-called Friendship, Commerce and Navigation (FCN) agreements that were concluded by the major colonial powers as well as the USA. The key difference between the FCN treaties and modern BITs is that the FCN instruments were designed at a time when international commerce largely consisted of trading in goods by merchants. Irrespective of the number of BITs concluded, their basic characteristics are more or less the same - they are designed to cover the following five substantive areas: (i) definition of investment and investor; (ii) admission of foreign investors; (iii) fair and equitable treatment of investors; (iv) compensation in the event of expropriation; and (v) methods of settling disputes. Formally, BITs regulate FDI-related issues such as admission, treatment, expropriation, and the settlement of disputes at the bilateral level. Several important features are relevant for BITs: are concluded between capitalexporting states and capital importing states, are differentiated phases of pro-investor attitude and phases of state-centred thinking, cover mechanism to expand international standards and to codify lex specialis, arises the question whether exhaustion of local remedies is required. One important reason to conclude BITs being analyzed is certainly the fact that they have instilled a sense of security in foreign investors. Finally, the reasons for concluding BITs are being presented.