International Investment Treaties and Host Government Opportunism in Public-Private Partnership: a Critical Appraisal

Abstract

Contemporary schemes on Public-Private Partnership (PPP) often involve the participation of both foreign and domestic private investors in public infrastructure. The vulnerability of these schemes to host government actions and omissions has given rise to a number of empirical studies on global determinants of PPP trends. In the light of this vulnerability, the impacts of reward and punishment mechanisms that characterize Bilateral and Multilateral Investment Protection Treaties on reducing the temptation for host-government opportunism have been a subject of interest. Interestingly, the actual impact of these international legal mechanisms on investment location has also been controversial. The aims of this paper are as thus to examine the applicability of agreements on Bilateral and Multilateral Investment Protection in Public-Private Infrastructure, and to analyze the factors that militate against the benefits thereof, using political economy and game-theoretic perspectives. In view of the increase in the number of cases that have used various forms of agreement on international investment, we conclude that it will be premature to deny the fact that international investment laws have made a significant difference. In addition, we have examined a number of factors that can determine the extent of their efficacy, with particular reference to oversea PPP investment promotion and protection.