Abstract:
Foreign investment and International Investment Agreements have ability to help in the
economic growth of host countries. But the domestic law plays great role in attracting foreigner
investors. The application of some investment agreements to the protection, promotion and
attraction of foreigner investment has been impacted by the absence of a clear statutory
definition of indirect expropriation even at domestic level, no law or article providing indirect
expropriation. The law regulating investment in Rwanda and the law regulating expropriation
in public interest both of them are silent on the issue of indirect expropriation and the power of
State to regulate.
This study therefore, assesses the role of expropriation in attracting foreign investments and
effectiveness of Bilateral Investment Treaties, which can play the role to increase introduction
of foreign investments in host countries. It urges State to consider indirect expropriation in the
domestic law and to reconsider the wording of indirect expropriation clauses in Bilateral
Investment Treaties, in the light of the suggested practical adjustments, which provide States
greater flexibility for their legal public policy activities without reducing introductions of
foreign investments. Thus, Policymakers need to understand what role domestic laws and these
treaties truly play and how much they can help countries to attract more foreign investments as
they are a significant tool in most countries, particularly developing countries including
Rwanda.
