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Multilateral Agreement on InvestmentIntroduction:-Multilateral Agreement on Investment (MAI) was a
draft agreement negotiated between members of the organisation forEconomic Co-operation and Development(OECD) in 19951998. Its
ostensible purpose was to develop multilateral rules that would ensure
international investment was governed in a more systematic and
uniform way between states. When its draft became public in 1997, it
drew widespread criticism from civil society groups and developing
countries, particularly over the possibility that the agreement would
make it difficult to regulate foreign investors. After an intense global
campaign was waged against the MAI by the treaty's critics, the hostnation France announced in October 1998 that it would not support
the agreement, effectively preventing its adoption due to the OECDsconsensus proceduresPurposes and provisions
While authorizing the negotiations, the OECD Ministerial Council aimed
to reach a "broad multilateral framework for international investment with
high standards for the liberalization of investment regimes and
investment protection and with effective dispute-settlement procedures".
The aim was to create more consistent, secure and stable investment
conditions and to regulate investment in a more uniform, transparent and
enforceable manner. Although the agreement was to be negotiated
between the member states, the intention was to have an open-
agreement which non-OECD members could accede on a negotiated
basis.
One of the main purposes of the agreement was to eliminate the
"patchwork" of investment rules enshrined in the then-1300+ bilateral
investment treaties. Contrary to many critics, the MAI would help prevent
"races to the bottom" that would undermine high standards of Canadian
regulation. More specifically, the agreement would:
Minimise the diverse state regulations in governing the conditions
under which investments by foreign corporations could take place.
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Enable compensation to corporations for proven unfair or
discriminatory investment conditions causing loss of profit.
Allow states and corporations recourse to international arbitration
to settle any disputes arising under the agreement, instead of
national courts in the host state.
ConclusionThe MAI is aimed at setting up an international regime for protection and
advancement of international investors' rights. But correspondingly the
rights and authority of the host country's government will be eitherremoved or severely restricted.
Moreover, the MAI would impose no obligations on the foreign investor
to respect the sovereignty or social and development objectives of the
host country. But the host country's government would have many new
and heavy obligations towards the foreign investor.
The approach taken by MAI proponents is new in that it is an extreme
approach as it covers and greatly expands the rights of internationalinvestors, whilst not recognising and thus greatly reducing the authority
and rights of host governments and countries.