7/31/2019 Introduction to Multilateral Agreement on Investment

1/2

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.

7/31/2019 Introduction to Multilateral Agreement on Investment

2/2

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.