Different to investment measures? The nature of performance requirements

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Author: Olga Magomedova

DOI: 10.21128/2226-2059-2019-3-114-129

Keywords: investment measures; investment state policy; NAFTA; performance requirements; TRIMs Agreement


Nowadays a rare international investment agreement goes without the provisions on performance requirements (PRs), although the concept has rushed into the international legal framework without a firm scholastic foundation and even without the customary roots. This collective term for the particular investment measure was initially used in the bilateral treaties for designating the tools which the States so as to ensure a better investment regime. Therefore the rough idea of a PRs as a substantive notion is built on the fragmentary knowledge of its separate types: from the local content and the trade balance requirements to the technology transfer and the educationa nd training requirements. For the lack of a generally recognized definition of the performance requirements, the article turns to the scholar’s opinions and the adjudicator’s reasoning, where the different approaches are revealed. At the same time the schematic representation of PRs in the international agreements has a rational explanation: the States have to fend off the investor’s unfounded expectations. However, even the most detailed scheme of the inner workings of these measures does not settle the yearning for understanding their substance. Guided by the numerous examples from the arbitration practice and the national legislation of the selected countries, the article highlights the inherent features of PRs. As a tool of the state investment policy, these measures can be ensured with the sovereign power, but they represent a rare mechanism, the effectiveness of which depends primarily on the balance of the interests of the State and the investor.  The mechanism of PRs is  built on the fexibility and the diversity of the forms, the orientation towards the specific measurable results, the profound impact on the investment activities, the commensurable capacity and capability. The analysis of these elements challenges the widespread prejudice against PRs in the age of trade liberalization. Despite the strong interrelation with the principles of non-discrimination and national treatment and other investment standards, the prohibition of PRs had its own ulterior causes of occurrence. In conclusion, the article provides the assessment of the prohibition of these measures as a new rule of the international investment law.

About the author: Olga Magomedova – Master of Law, Moscow State Institute of International Relations (University) under the Ministry of Foreign Affairs of Russia, Moscow, Russia.

Citation: Magomedova O. (2019) Investitsionnym meram rozn'? Sut' kontseptsii “performance requirements” [Different to investment measures? The nature of performance requirements]. Mezhdunarodnoe pravosudie, vol.9, no.3, pp.114–129. (In Russian).


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