Americanization of the BIT universe

SSRN | 13 August 2013

Americanization of the BIT Universe: The Influence of Friendship, Commerce and Navigation (FCN) Treaties on Modern Investment Treaty Law

by Wolfgang Alschner


Friendship, Commerce and Navigation (FCN) treaties are more than a historical precursor to international investment agreements (IIA) and continue to influence and inspire modern investment treaty design. Until the 1960s, FCN treaties were the American conceptual alternative to the European BIT model. FCN treaties were comprehensive and complex agreements covering trade, intellectual property and even human rights in addition to investment disciplines. BITs, in contrast, were short, simple and focused on investment protection only. Furthermore, while FCN treaties were designed to govern symmetrical investment relations between like-minded developed countries, BITs targeted an asymmetrical relationship between developed capital exporting states and developing capital importers. Even after the US shifted from FCN to BITs in the early 1980s, FCN treaties continued to impact investment policy-making. First, key FCN features such as pre-establishment commitments, non-conforming measures and investor rights survived the US policy-shift and have since found their way into IIAs around the world. Second, as conceptual alternative to simple and specialized European BITs, FCN treaties have inspired a new generation of IIAs that are complex and comprehensive in nature containing a fine-tuned mix of rights and obligations and treating investment alongside other policy concerns. Third, the spread of FCN-inspired treaties coincides with the demise of European-style BITs. As policy-makers turn to the United States instead of Europe for investment policy innovation, we observe an Americanization of the IIA universe.

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source: SSRN