Development Aid Institutions in International Investment Law: towards a Holistic Approach to Development Financing Flows

Abstract

Abstract Many investment arbitrations have arisen out of investments financed through aid resources. Yet, the legal framework governing aid disbursements remains mostly unexplored in investment awards and in the literature on international investment law. This article is an initial attempt at identifying the interactions between these two legal orders. It finds that 1) multilateral and bilateral aid institutions are not perfect third parties to the investor-State relationship; rather, they influence the content of investment contracts, supervise contract implementation and have a role to play in dispute prevention and resolution; 2) uncertainties surround the jurisdiction of investment tribunals over aid-financed ‘investments’; 3) development institutions may participate as disputing and non-disputing parties in the arbitrations arising out of aid-financed projects. More broadly, the article suggests that the increasing trend of leveraging aid to incentivize private investments warrants an integrated and hence more realistic approach to the different development finance flows.