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Bilateral Investment Treaties

Adolfo Durañona, Joaquín Kersman, Mario Pallaoro), International Mining Law and Investment in Latin America and the Caribbean (2005)

During the last years most of the countries of the region started to look for alternatives to promote foreign investments and to offer the developed countries or capital-exporting countries an attractive environment for their investment.

The treaty programs to protect foreign investment started after the second world war when capital-exporting countries began to be worried about the risk that its nationals were facing when investing abroad (expropriations, nationalization, currency restrictions, etc). United States, Germany, Japan and other countries put in place different insurance or guarantee mechanisms. For example, we can mention the Overseas Private Investment Corporation (Foreign Assistance Act 1948), issued by USA, or the Multilateral Investment Guarantee Agency.

These were country programs (OPIC) or multilateral programs (MIGA) where if nationals were expropriated or suffered any of the guaranteed risks, the USA government (OPIC) or Agency (MIGA) would pay the foreign investor and subrogate on its rights and initiate legal actions against the expropriating country.

The concept of the Bilateral Investment Treaties (“BIT”) is different since the host country provides specific protection to the foreign investments and accepts that the dispute be resolved through international arbitration.

The execution of BIT started during the last twe