The purpose of investment treaties has been to accord investor protection considering the unabated regulatory powers of the state. The international trade regime of the world has been built upon a multilateral basis, whilst the investment regime has been structured on a bilateral basis. The realm of investment law also provides for contradictory theories on foreign investment, which propound a dichotomy to the host state’s interests. The classical theory maintains foreign investment as wholly beneficial whilst the dependency theory advocates no economic development through investment. Thus the calibrated impact on the host state’s economy involves a combination of benefits and deleterious effects on the market forces of the economy. Similarly the investment arbitration regime has seen the schism of the public and private rights, through the ideological hostility of the regulatory space of developing countries. This scenario can be represented in the conflict between the United States and the Latin American States, disputing the Hull formula and the Calvo doctrine against the core issue of the limits of state sovereignty. The aggrieved foreign investor tends not seek recourse under the domestic laws, due to the sceptical nature of fairness and quality of justice under the host country. The customary nature of investor rights has evolved out of the law of state responsibility for the injury to alien property. This has led to the creation of the international minimum standards, which reflect the obligatory duties of host states in exercising their regulatory powers.

Rajiv Gandhi National University of Law, Punjab

Sidhuwal - Bhadson Road,  Patiala, Punjab - 147006

ISSN(O): 2347-3827

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