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DEVELOPMENT OF THE INSTITUTE OF INTERNATIONAL LEGAL
PERSONALITY IN INTERNATIONAL INVESTMENT RELATIONS
Rahmonov Jaloliddin
Lecturer At Tashkent State University of Law, Uzbekistan
https://doi.org/10.5281/zenodo.13925041
Abstract:
The development of the Institute of International Legal Personality in
International Investment Relations has been a significant topic of discussion among legal
scholars and policymakers in recent years. This abstract explores the evolution of international
legal personality in the context of cross-border investments, examining its role in shaping the
rights and obligations of states and investors. It analyzes the key legal principles governing
international legal personality in investment law, including the concept of state responsibility,
the nationality principle, and the principle of sovereign immunity. Additionally, the abstract
discusses the challenges and opportunities presented by the evolving nature of international
investment relations, such as the rise of transnational corporations, the increasing role of
international arbitration, and the impact of globalization on the concept of international legal
personality.
Key words:
International legal personality, International investment law, State
responsibility, Foreign direct investment, Bilateral investment treaties
Introduction:
The concept of international legal personality (ILP) plays a crucial role in international
law, providing the foundation for entities to bear rights and obligations on the global stage.
Traditionally, international legal personality was reserved for sovereign states and
intergovernmental organizations. However, the rise of international investment relations has
expanded the scope, granting private actors, particularly multinational corporations (MNCs),
an increasingly prominent role in global governance. This article will explore the evolution of
ILP within the context of international investment relations, the driving factors behind its
development, and the implications for modern international law [1].
Main part:
Historically, ILP was understood to be the exclusive domain of sovereign states, which
were the primary actors in international law. The notion of ILP was formally developed in the
early 20th century, particularly through the work of the Permanent Court of International
Justice (PCIJ) and later the International Court of Justice (ICJ). These institutions affirmed that
only states, as legal persons, had standing in international law to bring claims and conclude
treaties [2].
International organizations, such as the United Nations and the World Trade
Organization, also gained ILP, allowing them to participate in international legal processes.
These bodies are created by treaties between sovereign states and derive their ILP from the
express consent of their member states. Still, for much of the 20th century, ILP was strictly
defined in terms of state sovereignty and intergovernmental relations [3].
The Expansion of ILP in International Investment Relations
With the globalization of markets and the increase in cross-border investment activities,
non-state actors, particularly MNCs, began to play a significant role in shaping international
investment relations. This necessitated a rethinking of ILP beyond states and
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intergovernmental organizations, as MNCs started engaging in legal disputes and investment
treaties.
International investment agreements began to include provisions that conferred rights
and protections directly on foreign investors, typically corporations. These treaties established
legal frameworks under which investors could pursue claims against host states through
mechanisms like investor-state dispute settlement (ISDS). The North American Free Trade
Agreement (NAFTA) and subsequent trade agreements serve as prominent examples of this
evolution [4].
ISDS provisions, included in many BITs and MITs, allowed private investors to bring
claims directly against states before international tribunals, bypassing traditional diplomatic
channels. This shift granted MNCs a form of ILP, as they could now seek enforcement of their
rights in international law without relying on their home states to act on their behalf.
Established by the World Bank, ICSID became a central forum for resolving investment
disputes between states and foreign investors. It recognized the ability of private investors to
engage in arbitration proceedings, further solidifying their role as international legal persons
with standing in international law [5].
Several factors have contributed to the expansion of ILP in the realm of international
investment:
1.
Economic Globalization
: The increasing interconnectivity of global markets and the rise
of multinational corporations have blurred the lines between domestic and international
spheres. As MNCs gained influence over cross-border trade, their need for legal protection and
predictability in foreign markets led to the development of international frameworks that
recognized their ILP [6].
2.
The Growing Importance of Foreign Direct Investment (FDI)
: FDI became a
cornerstone of economic development for many states, particularly in emerging markets. States
began to enter into BITs and MITs to attract FDI, offering legal protections to foreign investors.
This process shifted the balance of power between states and MNCs, as investors gained rights
enforceable through international legal mechanisms.
3.
Human Rights and Corporate Responsibility
: The increasing awareness of corporate
social responsibility and human rights obligations also played a role in reshaping ILP. While
MNCs gained rights under investment treaties, they have also been held accountable for human
rights violations and environmental degradation in host states. The United Nations Guiding
Principles on Business and Human Rights, for instance, have encouraged a normative shift
toward recognizing the responsibility of MNCs to uphold international human rights standards
[7].
The development of ILP for private actors, particularly MNCs, has profound implications
for the structure and functioning of international law. Some of these include:
1.
Fragmentation of International Law
: The rise of international investment arbitration
has created a parallel legal regime that operates independently of traditional diplomatic and
state-centric mechanisms. While this system offers foreign investors greater access to justice,
it has also raised concerns about the potential for conflicting legal decisions and the lack of
oversight from public international law institutions [8].
2.
Shift in Power Dynamics
: The expansion of ILP for MNCs has altered the balance of
power between states and corporations. MNCs, with their vast economic resources, can exert
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considerable influence over state policies through their participation in international
arbitration proceedings. This has led to criticisms that ISDS provisions privilege corporate
interests over those of sovereign states and their citizens.
3.
Accountability and Corporate Governance
: The recognition of MNCs as international
legal persons has heightened expectations for their compliance with international norms. As
private actors gain rights in the international legal order, they are also subject to greater
scrutiny regarding their adherence to human rights, environmental standards, and anti-
corruption norms. Future developments in ILP may focus on strengthening accountability
mechanisms for private actors in international law [9].
Conclusion
The development of international legal personality in international investment relations
marks a significant evolution in the landscape of international law. While the traditional
concept of ILP was confined to sovereign states and intergovernmental organizations, the rise
of multinational corporations as key players in global investment has necessitated the
expansion of ILP to include private actors. This shift reflects broader changes in global
governance and raises important questions about the balance of power, accountability, and the
future trajectory of international legal norms [10].
As investment relations continue to evolve, so too will the role of ILP in shaping the legal
frameworks that govern cross-border economic activities. Addressing the challenges and
opportunities posed by this development will be a critical task for scholars, policymakers, and
legal practitioners in the years to come.
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