September 1, 2025
One of the most apparent consequences of globalization is the spread of foreign capital through multinational corporations outside of their “home” country. However, foreign investors are subject to adverse, potentially capricious action, by the host state. This has given rise for the need to protect foreign capital led by these capital-exporting countries. The most common method of satisfying this protectionist need, post-World War II, has been through investment agreements that provide for arbitration. The inclusion of a relatively innocuous sounding provision in private international law has emerged as one of the most contentious forms of protection. At its most basic form, the provision requires a state to treat foreign investors in a fair and equitable manner, one prominent example being Article 3 of the Belgium Luxembourg Economic Union-Tajikistan BIT (2009), which provides: “All investments made by investors of one Contracting Party shall enjoy a fair and equitable treatment in the territory of the other Contracting Party.”