PROTECTING FOREIGN INVESTMENTS USING THE CALVO DOCTRINE

Abstract

In a globalised world, investment relations between states are fundamental for the growth of countries. Therefore, there is no question on the significance of foreign investments on economic development. As such, protection of foreign investments has occupied a position at the core of international law since its very inception. Historically, the protection of investors and their property in foreign states was the direct responsibility of the home State of the investor. However, the expansion of trade and investment increased attention to the legal status of foreign nationals abroad and to the protection of their property. Capital exporting States advanced the view that foreign nationals and their property were entitled to a minimum standard of treatment. The capital importing States instead advocated for the National Treatment Standard embodied in the Calvo doctrine. This standard required that foreigners and their property be accorded treatment no more favourable than that accorded to the nationals of the host State. Over time, Bilateral Investment Treaties emerged with the aim of granting international legal protection to foreign investments. This protection in turn increased the flow of foreign investment, which is one of the key forces of economic growth and development