Free tools Windows power users keep installed
One-click scans. No signup required.
iTechGuides is reader-supported. When you buy through links on our site, we may earn an affiliate commission. As an Amazon Associate I earn from qualifying purchases. Learn more
A bilateral investment treaty (BIT) is an agreement between two countries that sets rules for how each country treats qualifying investments from the other. It may give covered investors protections under international law and, if the treaty’s dispute clause allows it, a route to bring certain claims against a host government. A BIT does not automatically cover every foreign investment, guarantee compensation, or prevent governments from regulating.
What a bilateral investment treaty covers
A BIT is one type of international investment agreement. The two countries make reciprocal commitments concerning investments by investors from the other country in their territory. Investment rules can also appear in broader trade agreements, so the agreement’s label alone does not establish what it covers.
The treaty’s definitions determine which people, companies, and assets qualify. A definition may set conditions for an investor’s nationality or for an asset to count as an investment. Some treaties protect investments only after they have been established; others also address admission or establishment. The specific text and the treaty’s status between the relevant countries matter.
Quick wins for a faster PC:
Clear out junk files and repair common Windows errorsFree Scan →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Repair Windows errors before they cause bigger problemsFix Now →What protections a BIT may provide
Treaties vary, but common protections address discrimination, treatment standards, security, interference with investments, and expropriation. These are not a universal checklist: a particular BIT may omit a protection, define it differently, or qualify it with exceptions.
#1 Best Overall
| Protection | What it generally addresses |
|---|---|
| National treatment | Whether a covered foreign investor or investment is treated less favorably than relevant domestic investors or investments in comparable circumstances. |
| Most-favoured-nation treatment | Whether a covered investor or investment is treated less favorably than relevant investors or investments from another country, subject to the treaty’s wording and exceptions. |
| Fair and equitable treatment | A treaty standard for the host state’s treatment of covered investments. Its content depends on the clause and its interpretation; it is not one universally settled checklist. |
| Full protection and security | A commitment concerning the protection and security afforded to covered investments, as defined and interpreted under the applicable treaty. |
| Protection against impairment | Some treaties address unreasonable or discriminatory measures that impair the management, use, enjoyment, or disposal of an investment. |
| Protection against expropriation | Some treaties set conditions for taking an investment, including requirements concerning public purpose, nondiscrimination, due process, and compensation. |
Fair and equitable treatment is common but not uniform. An OECD analysis published in 2023 examined 2,670 investment treaties concluded between 1959 and 2023 by 99 jurisdictions participating in its work programme; almost 95% of that sample referred to the standard. The OECD also found variation in treaty design: older clauses often left the standard unspecified, while newer approaches more often tie it to the customary international law minimum standard, define a closed list of elements, or omit it. UNCTAD described fair and equitable treatment in a 1999 publication as “a yardstick by which relations between foreign direct investors and Governments of capital-importing countries may be assessed.” That description is analytical, not binding treaty language.
For one example of how a protection can be drafted, a published U.S. treaty text allows expropriation only for a public purpose, in a nondiscriminatory manner, with due process and prompt, adequate, and effective compensation. It measures compensation by reference to fair market value immediately before the expropriatory action. That is an example from a particular treaty text, not a formula that applies to every BIT.
Rank #2
Can an investor sue a government under a BIT?
Some BITs offer investor-state dispute settlement (ISDS), which can allow an eligible investor to bring specified claims against a host state before an arbitral tribunal. Whether a particular investor can bring a particular claim depends on the treaty’s terms and any applicable procedural rules. A dispute clause is not an automatic right to arbitrate every disagreement, and it does not predetermine the outcome.
Two separate questions are important:
- What does the treaty require? The substantive protections define the obligations the state has undertaken toward covered investors and investments.
- Can a tribunal hear this claim? Consent, jurisdiction, and procedure determine whether the claimant, investment, dispute, and filing meet the treaty’s conditions.
The applicable text controls matters such as investor standing, covered investments, time limits, waiting periods, forum, and the state’s consent to arbitration. For ICSID arbitration in particular, ratification of the ICSID Convention alone does not constitute consent to arbitrate a particular dispute. The Convention’s preamble states that “no Contracting State shall by the mere fact of its ratification, acceptance or approval of this Convention and without its consent be deemed to be under any obligation to submit any particular dispute to conciliation or arbitration”.
Transparency also depends on the governing instruments. UNCITRAL reports that it amended its Arbitration Rules in 2013 to incorporate Rules on Transparency in Treaty-based Investor-State Arbitration, and that the 2014 Mauritius Convention promotes applying those transparency obligations to existing investment treaties. Those developments do not mean every treaty arbitration is public; the applicable treaty, rules, and other instruments determine what is disclosed.
Does a BIT stop a government from changing its laws?
No. Investment protections are not a blanket ban on regulation or a guarantee against commercial loss. Governments retain the ability to regulate, although a treaty may constrain how they treat covered investors and investments or set conditions for expropriation. The treaty’s wording, applicable exceptions, and the circumstances of the measure determine how those obligations apply.
For example, the U.S. treaty text described above allows expropriation for a public purpose when its stated nondiscrimination, compensation, and due-process conditions are met. That illustrates the difference between regulating and taking an investment under a specific treaty; it does not establish a universal rule for all BITs.
Windows Errors? Fix Them Before They Spread
Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallOutdated Drivers Are Slowing You Down
One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchHow to assess whether a BIT applies
For a real investment or dispute, identify the countries involved and the relevant investment, then check the treaty text that may apply and whether it is in force for those states and facts. Review the operative language rather than relying on a general description of BIT protections.
Best Value
- Check how the treaty defines an investor and a covered investment.
- Determine whether protection begins only after establishment or also covers admission, and review relevant exceptions.
- Read the fair and equitable treatment clause, including any link to customary international law or any defined list of elements.
- Compare the scope and exceptions for national treatment and most-favoured-nation treatment.
- Review direct and indirect expropriation provisions and the stated compensation terms.
- Look for general exceptions, security exceptions, or right-to-regulate language.
- Read the ISDS consent and procedure provisions, including forum, time limits, waiting periods, local-remedy requirements, and transparency rules.
- Confirm entry into force, amendments, termination, and any survival provisions that may affect investments or claims.
These details can change the answer even when two agreements are both called BITs. The OECD’s treaty-design analysis and UNCTAD’s discussion of investment definitions illustrate why the actual agreement—not the category name—must guide the assessment.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
