A largely unheralded feature of modern international business law is the emergence of thousands of bilateral investment treaties (BITs) and fair-trading agreements (FTAs) that give investors the right to pursue international arbitration if their investments are mistreated by the foreign host governments. Although investor-state arbitration is separate (indeed, often deliberately insulated) from litigation before national courts, the explosion of BIT and FTA arbitral jurisprudence during the past 15 years has been felt in the U.S. courts.
BITs or FTAs usually aim to foster favorable investment conditions by creating a package of substantive and procedural rights for investment flows among the respective countries. Chapter XI of the North American Free Trade Agreement (NAFTA), for example, guarantees that foreign investments of NAFTA nationals will be treated on a nondiscriminatory basis, will receive minimum standards of fair and equitable treatment and will be granted protection against expropriation. The Dominican Republic/Central American Free Trade Agreement (DR-CAFTA) provides similar guarantees, as do the numerous FTAs and BITs between the United States and other countries (e.g., Argentina, Colombia and Ecuador).
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