THE ROLE OF EXPROPRIATION IN PROMOTING AND ATTRACTING FOREIGN INVESTMENT: CASE STUDY OF RWANDA

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.