1. Bilateral investment treaties

Bilateral investment treaties deal primarily with the admission, treatment and protection of foreign investment. They usually cover investments by enterprises or individuals of one country in the territory of its treaty partner.

The conclusion of BITs has evolved from the second half of the 20th century onwards, and today these agreements constitute a key component of the contemporary international law on foreign investment. UNCTAD’s definition of BITs: “agreements between two countries for the reciprocal encouragement, promotion and protection of investments in each other's territories by companies based in either country”. While the basic content of BITs has largely remained the same over the years, focusing on investment protection as the core issue, matters reflecting public policy concerns (e.g. health, safety, essential security or environmental protection) have in recent years more frequently been incorporated into BITs.

Structure and contents. A typical BIT starts with a preamble that outlines the general intention of the agreement and provisions on its scope of application. This is followed by a definition of key terms, clarifying amongst others the meanings of "investment" and "investor". BITs then address issues related to the admission and establishment of foreign investments, including standards of treatment enjoyed by foreign investors (minimum standard of treatment, fair and equitable treatment, full protection and security, national treatment and most-favored nation treatment). The free transfer of funds across national borders in connection with a foreign investment is usually also regulated in BITs. Moreover, BITs deal with the issue of expropriation or damage to an investment, determining that – and in what manner - compensation be paid to the investor in such a situation. They also specify the degree of protection and compensation that investors should expect in situations of war or civil unrest. Another core element of BITs relates to the settlement of disputes between an investor and the country in which the investment took place. Such provisions usually mention the forums to which investors can resort for establishing international arbitral tribunals (e.g. ICSID, UNCITRAL or ICC) and how this relates to proceedings in host countries' domestic courts. BITs also typically include a clause on State-State dispute settlement. Finally, BITs usually refer to the time frame of the treaty, clarifying how the agreement is extended and terminated, and specifying to what extent investments conducted prior to conclusion and ratification of the treaty are covered.

2. Preferential Trade and Investment Agreements

Preferential Trade and Investment Agreements are treaties among countries on cooperation in economic and trade areas. Usually they cover a broader set of issues and are concluded at bilateral or regional levels. In order to classify as IIAs, PTIAs must include, among other content, specific provisions on foreign investment.

Definition of PTIAs: broader economic agreements among countries that are concluded for the purpose of facilitating international trade and the transfer of factors across borders.

Forms of PTIAs:

• economic integration agreements;

• free trade agreements (FTAs);

• economic partnership agreements (EPAs) or

• similar types of agreements that cover, among many other things, provisions dealing with foreign investment.

Structure and contents:

- The section dealing with foreign investment forms only a small part of the treaty, usually encompassing one or two chapters.

- Other issues dealt with in PTIAs are trade in goods and services, tariffs and non-tariff barriers, customs procedures, specific provisions pertaining to selected sectors, competition, intellectual property, temporary entry of people, and much more.

- PTIAs pursue the liberalization of trade and investment in the context of this broader focus.

- Frequently, the structure and appearance of the respective chapter on foreign investments is similar to a BIT.

Examples: NAFTA; the EPA between Japan and Singapore; the FTA between the Republic of Korea and Chile; the FTA between the United States and Australia.