The Opportunity that awaits under International Investment Law
International Investment Law is a branch of law that regulates and protects the business interest of individuals in foreign countries. These countries in which these investments have been made, could be addressed as host states. The regulation of international investments is quite pertinent owing to the fact that both parties are investing. The host states both have mutual stakes based on the investment in question and it would be very easy for the host state to oppress the investor, because they said investment is within the host states control. Thus, this law is set aside to protect the business interests of aliens abroad.
State contracts and their role in the fall of Nigeria
Foreign private companies developed an interesting way of protecting their investments abroad, these companies incorporate applicable law clauses into their contracts with the host state. These clauses remove the contract from the exclusive umbrella of the domestic law of those states regarding specific operations. They had the ability of freezing the domestic law of the host states at the time of the conclusion of the contract, this is mainly used for oil concessions.
In a “developed” state with an effective machinery of government the innovation of state contracts could be an instrument of massive development for such a country, in a situation where an oil company comes to Nigeria and requests to start drilling at a particular location. Such company would begin negotiating clauses that would protect their investment here in Nigeria, the government would then agree to these terms and subsequently ask such a company to make unnecessary payments for such a concession. Once all payments are made (both necessary and unnecessary), such company would be reluctant to perform its corporate social responsibilities to the state in which it is doing business. This is because they have spent far more than it should have to ensure the ease of doing business. State contracts in Nigeria have become underground transactions that line the pockets of unknown thieves. Moreover, it has given foreign companies a free pass to choose not to perform their corporate social responsibility to the nation in which they do business with.
So Nigeria is a typical example of what happens when there is lack of accountability of Foreign investments. If these negotiations were brought to the notice of the public, these foreign companies in order to maintain the ease of doing business, they would aid immensely in development of such a state. Such development would be to the benefit of the host state and the investor.