Iranian Bilateral Investment Treaties: Substantive Principles and Standards

There are more than 3000 bilateral investment treaties (BITs) in force. BITs are designed to facilitate foreign direct investment (FDI) and developing countries negotiate them as a strategy to attract FDI. BITs contain common denominators of free admission, fair treatment, non-expropriation and dispute resolution procedure which are the core components of an investment friendly regime. This article makes a proposition that even if a location does not have an ideal FDI legal system in conformity with the Perry-Kessaris Paradigm, it may still be attractive for foreign investment if there are BITs containing the substantive investment protection standards. The author refers to Iran as a case study which has signed more than 50 BITs with capital exporting and neighbouring countries to promote capital flows. Iran is a resource-rich country and its economy depends on foreign exchange revenues from petroleum exports. Therefore to attract FDI flows in the energy sector it should develop a legal framework that is investor friendly. BITs contain the blueprint for reforming FDI legal system to develop an investment friendly regime. This article for the first time provides a comprehensive review of Iranian BITs.