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in absolute terms that the exploitation of natural resources in any country should always be carried out in accordance with national law.²⁹⁹ Article 2 of the Charter of Economic Rights and Duties of States emphasizes that no state can be forced to offer preferential treatment to foreign investment.³⁰⁰ However, the Declaration on the Establishment of a New International Economic Order provides that states, as fully sovereign entities, should take measures in the interest of their national economies to regulate and supervise the activities of transnational corporations operating in their territories.³⁰¹

A number of multilateral treaties directly address the issue of regulating investments. The Havana Charter (1948) stipulates that the state, unless otherwise agreed, has the right to take all appropriate safeguards necessary to: ensure that foreign investment is not used as a basis for interference in its internal affairs or national policies; determine if and to what extent and under which conditions the state would allow future foreign investment; establish effective requirements for the ownership of existing and future investments, and other reasonable requirements for such investments.³⁰² The International Covenant on Economic, Social and Cultural Rights can be interpreted in such a way that it suggests that, under certain conditions, developing countries have the right to treat foreign investors differently from their own citizens. The ICESCR ensures that developing countries can determine, having due regard for human rights and their own national economy, to what extent they will guarantee the economic rights recognized in this Covenant to persons who do not have their nationality.³⁰³ The ASEAN Investment Agreement of 1987 provides for the host state’s right to manage foreign investments.³⁰⁴ Similarly, the Energy Charter Treaty (1994) indicates the right of states to regulate foreign investments, subject to the obligations under this Treaty and other norms of international law.³⁰⁵ The large number of bilateral agreements on investment protection and promotion of investments is also important.³⁰⁶

With regard to non-binding multilateral instruments other than UN resolutions, it is worth pointing out the guidelines annexed to the OECD Declaration (2011)³⁰⁷ on international investment and multinational companies, which ensure that every state has the right to determine the operating conditions of transnational companies under its national jurisdiction, subject to the provisions of international law and international agreements regarding the relevant investment. These issues are also reflected in the Seoul Declaration (1986)³⁰⁸ and the World Bank Guidelines of 1992,³⁰⁹ although the latter document focuses more on the promotion of foreign investment than on the perspective of the host state.

All the documents referred to above assume that the host states have the general right to regulate foreign investments and to subject the investments located in their territory to local law. However, this right is qualified by the overriding provisions of international law included in bilateral and multilateral investment agreements and by the general obligations regarding the treatment of foreigners resulting from international human rights law.³¹⁰

3.5.1.2 The right to regulate acceptance of foreign investments

Resolution No. 1803 (XVII)³¹¹ declares that the import of capital needed for the development of natural resources should be in line with the principles that the states deem necessary for the granting of permits, restrictions, or bans on such activities.

The Havana Charter recognized the right of every state to determine the extent to which, if, and under what conditions it would allow future foreign investment.³¹² However, such a provision was not included in the General Agreement on Tariffs and Trade (GATT),³¹³ either in the 1947 or the 1994 version, as this arrangement does not include investment. Only the 1994 General Agreement on Trade in Services (GATS)³¹⁴ recognizes in its preamble the right of states to regulate the provision of services in their territories to achieve national policy objectives and the special needs of developing countries regarding the exercise of this right. All national regulations affecting trade in services should, however, be “administered in a reasonable, objective and impartial manner”.³¹⁵

The right to regulate acceptance of foreign investments may be limited voluntarily, e.g. in the context of economic integration between states. The Inter-Arab agreement of 1980 on the mutual promotion and protection of investments³¹⁶ states that the determination of the procedure, conditions and restrictions, and the designation of sectors in which such investments can be made, is an attribute of state sovereignty. This limitation of the right of states-parties to mutually restrict free enterprise is also contained in the Treaty on the Functioning of the European Union: the Member States of the European Union mutually recognize their citizens’ freedom of entrepreneurship and waive the right to independently regulate the enterprise of companies from another EU Member State.³¹⁷ The North American Free Trade Agreement (NAFTA) of 1992, however, still provides all three parties with the exclusive right to conduct certain business activity and to refuse the inclusion of foreign investment in this activity.³¹⁸ The Energy Charter Treaty (1994) declares the right of every country to freely determine which geographical areas of its territory are to be made available for the exploration and management of energy resources, as well as the right of the state to participate in such exploration and exploitation, e.g. through state-owned companies.³¹⁹

The Draft OECD Convention on the Protection of Foreign Property (1967)³²⁰ stipulated that, unless otherwise agreed, no would be required to permit foreigners to acquire real estate on its territory. The OECD Declaration on International Investments and Multinational Enterprises explicitly states that it does not address the right of states to regulate foreign investment or the conditions for setting up foreign enterprises.³²¹

3.5.1.3 The right to exercise power over foreign investments

UN resolutions confirm the host state’s right to regulate and exercise control over the activities of foreign investors in its territory, including legal and administrative measures and the exercise of judiciary.³²² The Charter of Economic Rights and Duties of States establishes the right of every state to regulate and exercise power over foreign investments within its national jurisdiction in accordance with its laws and regulations and in accordance with its national objectives and priorities; as well as to supervise the activities

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