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State Enterprises as Organs of the State and BIT Claims

State Enterprises as Organs of the State and BIT... 1. INTRODUCTION While the recent explosion of claims under bilateral investment treaties (BiTs) has been well documented,' the number of claims alleging that host States breached their BIT obligations through the acts of companies the State owned and controlled has not received as much attention. Of the approximately 68 published BIT decisions,2 at least 83 impugned the actions of such a State enterprise.4 There are two reasons for the high number of BiT claims impugning the actions of State enterprises. First, States are increasingly delegating their functions to State enterprises as part of a global trend to smaller government.5 As entities "clothed with the power of government but possessed of the flexibility and initiative of a private enterprise", as former U.S. President Franklin Roosevelt once put it,6 State enterprises are attractive destinations for such delegated functions. Within President Roosevelt's quote lies the second reason for the high number of BIT claims impugning the actions of companies owned and controlled by the State. This same combination of features that makes State enterprises so effective also makes them particularly likely to act inconsistently with a State's BIT obligations. State enterprises can exercise the flexibility and initiative of a private enterprise http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of World Investment and Trade Brill

State Enterprises as Organs of the State and BIT Claims

Journal of World Investment and Trade , Volume 7 (5): 19 – Jan 1, 2006

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Publisher
Brill
Copyright
Copyright © Koninklijke Brill NV, Leiden, The Netherlands
ISSN
1660-7112
eISSN
2211-9000
DOI
10.1163/221190006X00388
Publisher site
See Article on Publisher Site

Abstract

1. INTRODUCTION While the recent explosion of claims under bilateral investment treaties (BiTs) has been well documented,' the number of claims alleging that host States breached their BIT obligations through the acts of companies the State owned and controlled has not received as much attention. Of the approximately 68 published BIT decisions,2 at least 83 impugned the actions of such a State enterprise.4 There are two reasons for the high number of BiT claims impugning the actions of State enterprises. First, States are increasingly delegating their functions to State enterprises as part of a global trend to smaller government.5 As entities "clothed with the power of government but possessed of the flexibility and initiative of a private enterprise", as former U.S. President Franklin Roosevelt once put it,6 State enterprises are attractive destinations for such delegated functions. Within President Roosevelt's quote lies the second reason for the high number of BIT claims impugning the actions of companies owned and controlled by the State. This same combination of features that makes State enterprises so effective also makes them particularly likely to act inconsistently with a State's BIT obligations. State enterprises can exercise the flexibility and initiative of a private enterprise

Journal

Journal of World Investment and TradeBrill

Published: Jan 1, 2006

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