Existing multilateral investment instruments

MIGA

In 1985 the Convention for establishing the Multilateral Investment Guarantee Agency (MIGA) was concluded at the World Bank. MIGA was established in April 1988. It is a multilateral development agency and a member of the World Bank. In October 2000 MIGA counted 154 member countries, of which 22 industrialised countries (including all EU member states) and 132 developing countries.

According to the Convention, the mission of MIGA is to enhance the flow to developing countries of capital and technology for productive purposes under conditions consistent with their development needs, policies and objectives, on the basis of fair and stable standards for the treatment of foreign investment.

This objective can be reached through the following activities:

• supplementing national and private agencies that support FDI through their own investment insurance programmes;

• providing viable alternatives in investment insurance against non-commercial risks in developing countries, thereby increasing investment opportunities in developing countries;

• providing technical assistance to improve the environment for FDI to developing countries, by dissemination of information on investment opportunities, enhancing national investment promotion capabilities and the provision of programmes.

The products and services of MIGA can be split into two categories:

1. The provision of investment guarantees against certain non-commercial risks (i.e., political risk insurance) to foreign investors in developing member countries. MIGA provides insurance coverage up to 15 year against the following risks:

• Transfer Restriction: protection against losses arising from an investor's inability to convert local currency into foreign exchange for transfer outside the host country.

• Expropriation: protection against loss of the insured investment as a result of acts by the host government that may reduce or eliminate ownership of, control over, or rights to the insured investment.

• Breach of Contract: protection against losses arising from the host government's breach or repudiation of a contract with the investor.

• War and Civil Disturbance: protection against loss from damage to, or the destruction or disappearance of, tangible assets caused by politically-motivated acts of war or civil disturbance in the host country, including revolution, insurrection, coups d'état, sabotage, and terrorism.

Investment projects under MIGA must be financially and economically viable, environmentally sound, and consistent with the labour standards and other development objectives of the host country. MIGA also complements national and private investment insurance schemes, through coinsurance and reinsurance arrangements to provide investors with more comprehensive investment insurance coverage world-wide.

2. The provision of investment marketing services to promote FDI in member developing countries and economies in transition. The Investment Marketing Services department of MIGA performs services in three broad areas:

• Capacity building: provision of training in marketing and management techniques to develop and enhance skills, knowledge and tools available to investment intermediaries.

• Information dissemination: provision of information on investment opportunities, business operating conditions and business partners. MIGA uses two instruments for the dissemination of information: an on-line investment market place (IPAnet, the Investment Promotion Network) and an on-line marketing service on privatisation in emerging markets (PrivatizationLink).

• Investment facilitation: promotion of FDI through bringing together foreign investors, host governments, and project sponsors through thematic and sector conferences.

For more information see the MIGA website

For more information on IPAnet, see the IPAnet website

For more information on PrivatizationLink, see the PrivatizationLink website

ICSID

The International Centre for Settlement of Investment Disputes (ICSID) was created in 1966 by the World Bank. The World Bank believed that an institution designed for the facilitation of the settlement of investment disputes between governments and foreign investors could help to promote increased flows of international investment. Before 1966, the World Bank itself often assisted in mediation or conciliation of investment disputes. While ICSID has close links with the World Bank, it is an autonomous international organisation. In September 2000, 148 states had signed the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, and 133 states had deposited their instruments of ratification.

ICSID performs the following activities:

• It provides facilities for the conciliation and arbitration of disputes between member countries and investors that are nationals of other member countries.

• It has Additional Facility Rules that allow ICSID to administer certain types of proceeding which fall outside the scope of the Convention, like proceedings involving non-members, non-investment proceedings and fact-finding proceedings.

• The Secretary General can act as the appointing authority of arbitrators for ad-hoc (i.e. non-institutional) arbitration proceedings.

• It carries out advisory and research activities relevant to its objectives.

The first activity (providing facilities for dispute settlement) is the main task of ICSID. Recourse to these facilities is voluntary, but once parties have consented to ICSID arbitration, no party can unilaterally withdraw its consent. All ICSID contracting States, even if they are not involved in the dispute must recognise and enforce ICSID arbitration outcomes.

In some investment laws and in a large number of Bilateral Investment Treaties (BITs) governments have made advance consents to submit investment disputes to ICSID arbitration.

For more information see the ICSID website

ICSID also provides an overview of Bilateral Investment Treaties from 1959-96