International Property Rights Versus the Sovereign Rights of States: A Critical Inquiry into the Continuing Tension in the International Investment Regime

Events in Latin American countries have re-ignited the debate over the constitutive legal process governing the international regulation of foreign direct investment (FDI). These events have once again thrown into focus the continuing tension between sovereign rights and international property rights within the framework of the natural resources development agreements. This article sets out to explore their implications for the natural resources sector which has traditionally provided the setting for the debate on the international regulation of FDI. It posits the view that the long standing friction between the property rights of the FDI party and the sovereign rights of host States could in one sense be seen to a natural consequence of the private-public character dichotomy of State contracts in international economic law. The main thrust of the article is directed at a critical appraisal of the contemporary international legal problems of natural resources development agreements with a view to exploring possible long term solutions. The discussion will include: (1) a critical appraisal of the private-public law dichotomous character of natural resources agreements; (2) a critical inquiry into the source of the friction between private property rights and sovereign rights within the international investment regime and the persistent problems involving the prioritization of norms to govern FDI agreements; and (3) conclude by arguing that the requirement for FDI protection ought not to foreclose the search for lasting solutions to the friction, not least the continued quest for an international lex specialis for international investment law.