The progress clause in foreign investment contracts

Abstract

This study aims to reflect on the principles to be followed in the concrete consideration of the interests of the contracting parties in foreign investment contracts. The purpose of this reflection is to achieve a fundamental reference framework that can serve as a basis for decision-makers, judges or arbitrators faced with the task of resolving disputes arising from foreign investment contracts. The most common mechanism for settling disputes in this venue is international arbitration. In this research we analyse the phenomenon of arbitration as a paradigm in the solution of the emerging foreign investment litigation, its benefits and its contribution to greater legal certainty in the economic relations between the parties and in the social progress of the host state. Considering the legal concepts and the most relevant problems in the relations between the investing State and the host State, we intend to establish a logic based on equity, proportionality and the right balance between the interests of both. We try to find a meeting point between the economic interests of the investor and the social progress of the host State. International arbitration under the umbrella of ISCID, complemented by bilateral treaties (BITs) and investment contracts, requires an approximation of the two main objectives of foreign investment: efficiency in the return of investment and technological and social progress of the host State.