国际经济法(双语)课程Chapter-5-Foreign-Investment课件.ppt

1、CHAPTER 5FOREIGN INVESTMENT5-1Topics for this chapter:l Foreign Investment Laws and Codesl Supervision of Foreign Investmentl Securities Regulationsl Enforcement of Securities Regulation Internationally5-2A.Foreign Investment Laws and Codes What is foreign investment?Ownership by one person of 10 pe

2、rcent of more of the controlling interest in an enterprise not located in the persons home country.Some states have general investment laws that(joint ventures)or percentage of foreign investment.Other countries put restrictions on investment in,such as agriculture,technology,or media.Some of these

3、laws are incorporated into (BITs)(双边投资协定）.5-3BITs Most often between a developed state and that states favored developing states.Many BITs contain international dispute settlement provisions.BITs constitute the most important protection of international foreign investment.5-4Typical Terms in BITs BI

4、Ts usually define foreign investment and the conditions under which investors from one state can invest in the other state.Often provide fair and equitable treatment clauses and compensation guarantees for expropriation.National Treatment&Most Favored Treatment Many designate the International Cente

5、r for the Settlement of Investment Disputes()as the arbitral body.5-5a.National Foreign Investment PoliciesPurpose of foreign investment regulations:1.Promoting local productivity and technological development,5-6So_Paulo2.Encouraging local participation,and3.Minimizing foreign competition in econom

6、ic areas already well served by local businesses.a.National Foreign Investment PoliciesTo achieve these purposes,investment laws establish basic policies for screening and regulating foreign investment applications.These generally fall into three categories:1.To encourage investment through incentiv

7、es and minimal regulations.2.To use investment incentives but also to require local participation quotas.3.Subject foreign investment to local screening and supervision.5-7b.Regional Investment Policies Nations in a particular region may agree to general standards for investment in their region.One

8、such region is the Association of Southeast Asian Nations().This region is a leading recipient of foreign direct investment(FDI).ASEAN countries act individually and collectively to attract investment.Exhibit 5-3 shows a sample of the investment incentives implemented by ASEAN countries5-8ASEAN Inve

9、stment Incentives5-9c.Screening Foreign Investment Applications Most countries require the foreign investor to with the government and obtain government approval of the venture.In many countries,foreign investors register with a single central agency set up to facilitate foreign investments.Its inte

10、rnal staff may evaluate proposals.In other countries,such as India and Mexico,the central agency only coordinates other specialized agencies and departments.In some countries,such as Brazil,the evaluation is handled directly by various departments and agencies.5-10c.Screening Foreign Investment Appl

11、ications:Screening Investment Proposals There are many varied criteria by which countries screen proposals.Some examples of proposals that will be screened include:Proposals seeking investment incentives.()Those with a certain percentage of foreign ownership.(40%in)Those that exceed a certain amount

12、 of capital.($5M or majority ownership foreign-)Presidential approval needed for acquisition of majority interest in locally owned company worth more than$10M.()5-11c.Screening Foreign Investment Applications:Tiered Screening and Special Screening In some countries,one person or department will do t

13、he screening if the investment is under a certain amount.If less,they are screened locally.5-12lSpecialized agencies screen investments in natural resource-based industries:HydrocarbonsMineralsForestry c.Screening Foreign Investment Applications:Information That Must Be DisclosedForeign investors mu

14、st supply screening agencies with detailed information,such as:a)The industry to be established b)A financial planc)A production scheme showing annual volume and value of the productiond)A services scheme showing what services will be createde)The owners,the management structure,and the relative sha

15、re of local and foreign controlf)5-13c.Screening Foreign Investment Applications:Evaluation Criteria Criteria judge conformity with countrys national development objectives.The criteria vary greatly,but generally includes:a)Impact on the balance of paymentb)Number of jobs createdc)Impact of technica

16、l know-how and the training program for indigenous employeesd)Impact on the local market5-14Evaluation Criteria(cont.)e)Contribution to the development of less economically developed zones or regionsf)Ratio between foreign and national capital contributiong)Export diversification and stimulationh)Us

17、e of national inputs and components in the manufacture of the product（本地化要求）i)Effect on price levels and the quality of the product5-15d.Application Process Formal and Informal The investment application submitted by a foreign investor must demonstrate two things to the local authorities:The propose

18、d investment fits the guidelines of the investment law,and That the investment agrees with the investment philosophy of the host country.Reading 5-1 demonstrates how failure to understand the investment philosophy in the host country can lead to mistakes by an investor.5-16e.Approval of ForeignInves

19、tment Applications Approval or disapproval of an application will be done by an informal letter unless the investor asks for an incentive or the investor is asked to make a concession.In either case,a formal investment agreement is needed.Agreement will be governed by the host states contract laws.u

20、nless the parties agree otherwise.5-17Case 5-1Arab Republic of Egypt v.Southern Pacific Properties,Ltd.et al.Southern Pacific Properties(SPP)entered into contracts with an Egyptian state-owned corporation(EGOTH)and the Egyptian government,represented by the minister of tourism.Egypt backed out of th

21、e contracts that provided for arbitration.Court set aside judgment against government because tourism minister had no authority to bind government.5-18 E.G.O.T.H.eg/en/Index.htmf.Business FormsInternational investors may be limited by the host country in the kinds of business forms they are allowed

22、to use.Most states want foreign investors to use businesses that:1.Have local participation2.Fully disclose their activities to the publicLocal participation usually means a joint venture organized as a,or.(what does govt want?)Percentage of usually determines what incentives are available.When is h

23、ighly valued,it usually requires a public stock corporation to be set up.5-19g.Limitations on Foreign Equity Foreign investment laws frequently limit the percentage of equity that foreigners may hold in local businesses.In India,the limit is 40%.In Mexico,it is 49%.Exceptions are usually allowed to

24、attract investors.5-20Foreign Investment Promotion Board(FIPB)screens all applications for foreign investment in India.h.Sectoral Limitations Foreign investment is commonly restricted by particular economic sectors.Investment laws usually:Reserve certain sectors of the economy for exclusive ownershi

25、p by the state or its nationals.Permit a limited percentage of foreign ownership in certain sectors,or Define certain sectors where full or majority foreign ownership is allowed.5-21Closed Sectors Most states do not allow foreign ownership in certain sectors.Sectors that are often closed are:Public

26、utilities（公用事业）Vital or strategic industries Ex:France reserves broadcasting,telecommunications,railroads,gas,and electricity to state agencies or state-owned companies Industries that are sufficiently developed Ex:Flour milling in Ireland/leather production in Japan Medium or small-scale industries

27、 that can be developed by nationals.5-22Restricted Sectors Restricted Sectors states limit percentage of foreign investment allowed in these sectors.This is done to limit foreign influence in domestic political,economic,and social affairs.Ex:Korea limits ownership in telecommunications to 49%.Ex:Aus

28、tralia limits radio and television ownership to 20%.5-23SeoulPerthForeign Priority Sectors Sectors of a states economy in which foreigners are encouraged to invest.Local resources may be lacking or the investment may help create jobs.Ex:In Bangladesh,the government invites investment in many sectors

29、,including:Electronic equipment,agro-based industry,cement（水泥）,rayon（人造纤维）,computer software,chemicals and petrochemicals,frozen foods,and paper Ex:South Africas priority sectors include:Automotive industry,marine,rail,and aerospace,capital equipment（资本设备，固定设备）,chemicals,clothing and textiles,mining

30、,and tourism 5-24i.Geographic Limitations A few countries limit the geographic areas in which foreign investors may conduct business.restricts foreign ownership of land and businesses adjacent to ocean frontiers.forbids foreign commercial fishing inside its barrier reef.Restricts the purchase of lan

31、d by foreigners.Does not allow foreigners to engage in coastal trade（沿海贸易）.The right of a state to restrict investment in certain geographic areas is respected by other states in accordance with the states.5-25Case 5-2Brady v.Brown Brady and Cardwell(BC)wanted to acquire coastal land in Mexico.Forei

32、gners were forbidden from owning property BC hired Brown,who created contracts under which BC invested in property.Attorney Brown manipulated the transactions by forming corporations with his family members as majority stockholders.5-26Brady v.Brown Brown asked U.S.court to apply comity and find tha

33、t contracts were void under Mexican law.Court found that action for fraud was not prevented by comity since.5-27Mexico Cityj.Free ZonesSpecial Economic Zones Geographical areas wherein goods may be imported and exported and in which a variety of trade-related activities may be carried on.Used by sta

34、tes to encourage multinational enterprises to invest in their economies by making direct investment.Characterized by geographical size and by the type of activities that may be carried on within the zone.5-28Free Zones Characterized by Size Free zones vary greatly in size:From large multistate regio

35、ns(e.g.NAFTA)To small subzones located in a building.The largest are called Comprised of two or more states that have agreed to let each others enterprises carry on trade across their borders free of tariffs and restrictions.NAFTA is a free trade area.5-29Free Zones Characterized by Size State may o

36、pen up its entire territory or all its sectors(e.g.Singapore).May open up certain regions(e.g.Chinas Special Economic Zones).The oldest type of zone is the ,an entire port city that has been opened to international trade(e.g.).The(or foreign trade zone)is a designated smaller area near a port.5-30Th

37、e Foreign Trade Zone Board approves FTZs in the US.The US has more than 180 FTZs and 256 subzones.Free Zone Categories by Activities The type of activities that take place within a free zone include:Storage（存储）Distribution（分销）Manufacturing（制造）Retailing（零售）The full range of activities are allowed in

38、an FTZ,but may be restricted in a subzone,such as a single retail building.5-33Hong Kong Free Zone Categories by Activitiesare free zones in which manufacturing facilities process raw materials or assemble parts imported from abroad and then export the finished product.For customs purposes,the mater

39、ials and parts are treated as if they never entered the host country.No tariffs or duties are imposed.5-34Free Zone Categories by Activities(duty-free zones)areas in international airports and harbors where travelers can buy goods free of taxes.located at a port of entry,shippers can store goods unt

40、il they clear customs（清关）.5-35k.Foreign Investment Guarantees Host countries provide guarantees to foreign investors to attract investment.Some important guarantees include:Compensation in the event of Repatriation of proceeds upon sale of the enterprise Repatriation of profits and dividends Repatri

41、ation for current income Repatriation of principal（本金）and interest（利息）from loans Nondiscriminatory treatment Stabilization of taxes and regulations Convertibility of local currency5-36k.Foreign Investment Guarantees Constitutional provisions 1 usually deal with compensation due foreign investors in

42、the event of:acquisition by a state of property previously held by private persons or companies in a large scale.depriving a person or company of private property.Most countries laws require that the taking be in the public interest and that“fair,”“just,”or“full”compensation be paid to the owner.5-3

43、7k.Foreign Investment Guarantees Foreign investment laws provide guarantees in addition to constitutional provisions:the assurance of a host state government that foreign investors will be able to take out of the state both the investment capital they brought in and the profits they earned.the assur

44、ance of a host state government that foreign investors will be treated the same way as local investors.promise foreign investors that the host government will not change its tax,foreign exchange,or other legal regime for a certain period of time.5-38Case 5-4Arbitration Between Wintershall AG et al.a

45、nd the Government of Qatar Investment laws and agreements require that the host state on requests for modifications.Facts:Qatar entered into an Exploration and Production Sharing Agreement(ESPA)with five foreign companies.Time limits were built into the agreement with relinquishment provisions.5-39C

46、ase 5-4Arbitration Between Wintershall AG et al.and the Government of Qatar Facts:(cont.from slide 5-39)Claimants did not find oil,but had not been allowed to drill in area called Structure A due to a border dispute between Qatar and Bahrain.Qatar would not accept an alternative proposal relating to

47、 natural gas production based upon lack of economic feasibility.5-40Case 5-4Arbitration Between Wintershall AG et al.and the Government of Qatar Issues:Claimants argued that:Qatar breached ESPA and expropriated the claimants rights and interests by Denying them permission to explore for petroleum in

48、 Structure A,and By failing to agree with claimants on contractual arrangements for utilization of natural gas discovered by claimants.5-41Case 5-4Arbitration Between Wintershall AG et al.and the Government of Qatar Arbitral Tribunal findings:There was.Qatar had negotiated in good faith.It had.There

49、 was no expropriation of claimants contractual rights for failing to accept new proposals for areas outside the Contract Area.The notice of relinquishment was ineffective.The claimants had yet to be allowed to explore Structure A and.5-42B.Supervision of Foreign Investment d.Protection of Subsidiari

50、es Subsidiary firms are subject to same obligations as local firms.And special regulations to prevent them from abusing:Their local subsidiaries Their subsidiaries employees Their subsidiaries creditors5-43Protection of Subsidiaries:Disclosure of Information All firms are subject to basic disclosure