THE OBLIGATION OF HOST STATES TO ACCORD THE STANDARD OF “FULL PROTECTION AND SECURITY” TO FOREIGN INVESTMENTS UNDER INTERNATIONAL INVESTMENT LAW A thesis submitted for the Degree of Doctor of Philosophy By Onyema Awa ONYEANI Department of Law Brunel University London January 2018 Declaration This is to attest that this work I have tendered for examination for the PhD Law Degree to Brunel University London is entirely my work except in the places where I have obviously marked that it is the work of some other people. I also affirm that any citation or rephrase from published or unpublished work of others have been acknowledged. The copyright of this piece of work remains with the author. Citation from it is allowed on the condition that full acknowledgement is made. I declare that this work’s permission does not, in anywhere, as far as I know, transgress any third parties’ rights. Acknowledgement First and foremost, this thesis is dedicated to God Almighty. Special thanks to Him for granting me special favour to embark on this journey and made it possible for me to accomplish it. Whatever God starts He is able to accomplish. Moreover, it is not him that wills, nor runs, but of God that shows mercy. (Romans 9:16). I thank you God for your faithfulness towards me. Jehovah, receive all the Glory in the Name of Jesus, Amen. Special thanks to my first Principal Supervisor Dr. Tony Cole for laying out the foundation believing me. You always encouraged me and told me that I can do it. Even when I was downcast you lifted me up with your words of wisdom. I will always be grateful to you for giving me the opportunity. My special thanks also go to my present Principle Supervisor Professor Ilias Bentekas, who worked tirelessly reading my voluminous work even with his tight schedules. You stepped up the supervisory task of this thesis to make it a success. I thank you profusely. Thanks to Brunel University Law School administration Team for your administrative assistance. I thank Dr. Charles Oluwarotimi Olubokun immensely for your words of advice. I always run to you for advice when I get stuck and you were always there for me when I needed you. You never disappointed me and for that reason I doff my heart to you. To my father Nelson Onyeani, and my mother, Christiana Achama Onyeani, thanks for your supports even when in your graves. You both might be dead but I believe that your spirits are alive watching over me. You could not have been prouder of me than this for earning this great achievement. I know both of you would be in disbelieve of this accomplishment. Even in death, I love both a lot and may your souls rest in perfect peace, Amen. Special thanks to my grandmother, Orzorji Okorie Acha, (The Iron Lady). I cannot thank you enough for taking care of me at the age of just one year old when my mother (your first daughter) passed on at a very tender age. You took me in and gave me everything just like a loving and a caring biological mother would have given to her own son. I love you and may your soul rest in perfect peace. To my wife, Alessandra Onyeani, I thank you immensely for setting the ball rolling for me right from my bachelor’s. No one encouraged and believed in me like you did. You always told me that I can do it. I will never forget how after writing my course works on papers in the day time and you helped me type it in the middle of the night after putting the children to bed. You are really one in a million. I give both brave bravo and kudos to you. Special thanks to my beautiful children, Kimberley Onyinyechi Onyeani, Beyonce Amaka Onyeani, Beverly Chioma Onyeani, congratulations for surviving in far distance country of Germany without the presence of your father. I did this for myself and you the children, and believe that this legacy will linger in your lives. Thank you, thank you, and thank you to everyone who contributed in one way or the other for the successful completion of this great and remarkable achievement. Cheers. Abstract The analysis of this thesis is to examine whether foreign investors can fully rely on the standard of FPS in BITs for the protection of their investments in the territories of host States which has been mandated to States by international law. This question cannot be answered without giving insights into the content and structure of the origin of FPS standard and adopts a dynamic based-perspective of the interpretation of FPS under VCLT 1969, encompassing the relationship between FPS and CIL. It investigates the tribunals’ interpretation of the clause using case laws and literatures to identify and explore the underlying explanatory process behind tribunals’ case findings and outcomes. The study examines the critical realism that the obligation of FPS standard does not place absolute liability to a host State, rather the exercise of a reasonable degree of vigilance. It evaluates the controversy surrounding the relationships between FPS and FET, and illuminates on how the two standards may co-evolve which has led to various arbitral tribunals’ divergence opinions interpretation of the two principles. The evaluation of the application of FPS to digital assets is dynamic in this research as it addresses the nature of threats investors face globally today over cyber attacks of digital investments. The thesis also emphasis on balancing up investors’ rights and obligation, which explains the measures that States can apply to prevent foreign investors from engaging in illegitimate activities. Having look at all these issues, circumstances, and the controversies surrounding FPS standard, the result found is that there is a existence of a gap in this area of the law, that would mean that foreign investors cannot completely rely on the principle of FPS for the protection of their investments in the territories of the host unless this lacunae is properly filled by both the States and arbitral tribunals, especially the tribunals’ interpretative meaning of the standard of FPS. iv List of Abbreviations APTs Advanced persistent threats AEEAN Association of Southeast Asian Nations AJIL American Journal of International Law APTs Advanced Persistent Threats BIT Bilateral Investment Treaty BYIL British Year Book of International Law CAFTA Central American Free Trade Agreement CAFTA-DR Central American Free Trade Agreement (Dominican Republic) CERTs Computer Emergency Response Teams CIL Customary International Law COMESA Common Market for Eastern and Southern Africa Courses of The Hague Academy of International Law) CERTs Computer Emergency Response Teams CPI Consumer Price Index CSD Commission on Sustainable Development DR Congo Democratic Republic of the Congo EA Environmental Assessment EC Treaty European Community Treaty ECHR European Convention on Human Rights ECJ European Court of Justice ECOWAS Economic Community of West African States ECT Energy Charter Treaty ECtHR European Court of Human Rights v EHRR European Human Rights Reports EU European Union FCN Friendship, commerce, and navigation FCT Free Trade Commission FDI Foreign Direct Investment FET Fair and Equitable Treatment FIPA Foreign Investment Protection and Promotion Agreement FPS Full Protection and Security FTA Free Trade Agreement FTC Free Trade Commission GA General Assembly GPS Global Positioning System GATT General Agreement on Tariffs and Trade 1994 ICAO Chicago Convention: International Civil Aviation Organisation ICC Internal Chamber of Commerce ICJ International Court of Justice ICJ Rep International Court of Justice Reports ICSID International Centre for the Settlement of Investment Disputes CSID Convention Convention on the Settlement of Investment Disputes ICSID Review-FILJ ICSID Review Foreign Investment Law Journal IIAs International Investment Agreements IISD International Agreement on the Investment for sustainable Development ILC International Law Commission vi ILM Internal Legal Materials ILR International Law Review IMF International Monetary Fund IP Intellectual Property IPFSD Investment Policy Framework for Sustainable Development ISPs Internet Service Providers ITO International Trade Organisation J Int. Arb. Journal of International Arbitration LCIA London Court of International Arbitration MAI Multilateral Agreement on Investment MFN Most-Favoured-Nation MIGA Multilateral Investment Guarantee Agency MITs Multilateral Investment Treaties NAFTA North American Free Trade Agreement NCP National Contract Points NGO Non-Governmental Organisation NIEO New International Economic Order NSA National Aeronautics and Space Administration OECD Organisation for Economic Cooperation and Development PCIJ Permanent Court of International Justice PCIJ Rep Permanent Court of International Justice Reports PPI Producer Price Index PTIAs Preferential Trade and Investment Agreements vii Receuil Receuil des Cours de I’Academie de droit international (Collected RIAA Reports of International Arbitral Awards SADC Southern African Development Community TFEU Treaty on the Function of the European Union TPP Trans-Pacific Partnership TRIMS Trade Related Investment Measures UK United Kingdom UN United Nations UNCAC United Nations Convention against Corruption UNCITRAL United Nations Commission on International Trade Law UNCTAD United Nations Conference on Trade and Development UNTS United Nations Treaty Series US United States of America VAT Valued Added Tax VCLT Vienna Convention on the Law of Treaties WTO World Trade Organisation viii Table of Treaties, Conventions, Resolutions, and Rules Abs-Shawcross Draft Convention on Investment Abroad 1959, together with an introduction by the authors and their formal commentary on the draft, were published in a special issue of the Journal of Public Law in 1960. Agreement between Japan and Lao People’s Republic for the Liberalisation, Promotion and Protection of Investment (16 January 2008) Art.10 Agreement between Japan and the Republic of Colombia for the Liberalisation, Promotion and Protection of Investment (12 September 2011). Art. 8 Agreement between Japan and the Republic of Peru for the Promotion, Protection and Liberalization of Investment (21 November, 2008).