Investment

This chapter offers a concise analysis of the legal framework on the protection of foreign investment at the time of the League of Nations, in many respects a rather uncertain and turbulent period. Such legal framework was essentially composed of a rudimentary network of very heterogeneous bilateral treaties, some basic customary rules, and some broad general principles largely based on the notions of justice and equity. Many fundamental questions remain fiercely disputed and unsurmountable divergencies between States frustrated to a large extent the attempts to codify the international rules on the protection of foreigners and their property. Yet, the legacy of this period should not be underestimated. From a substantive perspective, State practice already demonstrated a certain convergence on some basic rules on the treatment of foreign investors, while some legal claims put forward by some States – including the so-called Hull formula concerning compensation for expropriation – failed to muster the general acceptance necessary to become legally binding rules. Regarding the settlement of investment-related disputes, an embryonic role for investors started to surface in this the period.