§ 1.3 Questions of protection of foreign investments in a historical retrospective show

As the granting obligation was specified above, in modern contractual practice of the states to foreign investments on a mutual basis of the "fair" and reference "equal in rights", and also maintenance of "safety" with it is fixed in the majority of international investment agreements [90].

Thus also it is important to notice, that originally the state obligation to provide a favorable mode of capital investments and their protection was generated as usual norm of international law. One of early mentions of the given international legal custom meets in comments of vice-president of the United States John Adams of 1796 to the first agreement on friendship, commerce and navigation between the USA and France 1778

He noticed, that «among principles of the right of the nations there is no more affirmed principle, than that allocates with protection by all means accessible suverenu, the property of the foreigners sojourning under jurisdiction of the country, being in friendship with their country


Origins ».

However the next decades up to the beginning of XX century neither in contractual practice of the states, nor in the international legal doctrine it was not given special attention to questions of the legal mechanisms, called to provide protection and a favorable mode of foreign capital investments in the accepting state. So, throughout XIX century international investment dogovory were in most cases limited to sendings to norms of the legislation of the states accepting investment and did not provide separate standards of protection of the property of foreign persons. The logic underlying such practice, consisted that each state, as a rule, aspires to provide private property protection in the territory all set of internal legal means, and application of a mode of such protection concerning the property of foreigners should provide sufficient level of its safety [91 [92] [93].

So, for example, making comments on property relations in Russian empire M.A.Isaev notices, that «inviolability of a private property as the absolute principle of the real (private) right always admitted for citizens of the All-Russia emperor» [94]. As to expropriation, it «was known to the domestic law and meant the same, as in any other civilised country: alienation of the property rights for the equivalent repayment» [95]. Concerning the general order of regulation of position of foreigners of M.A.Isaev specifies that it «can be characterised as typical status personalis - in particular, the Russian law recognised as them precisely same legal capacity what they had in the homeland» [96 [97] [98].

The paradigm described above (in which frameworks the same level of protection of a private property was given to foreigners, as to own citizens of the agreeing states) has found the absolutised embodiment in works of outstanding Argentina lawyer K.Kalvo. The concept for the first time formulated by it in the monography «International law: the theory and practice of Europe and America» («Derecho Internacional Teorico y Practico de Europa at America») 1868, in the international legal literature became known as «doctrine Kalvo». Its essence was reduced to the statement about absolute equality of residents and non-residents before the law (the national standard), and, as consequence, state possibilities to limit level of protection of the foreign property if simultaneously with it level of protection of the property of residents is limited.

At the heart of doctrine Kalvo the idea of the state sovereignty laid. The state Was supposed, that, possessing all completeness of the power in the territory, by acceptance of corresponding laws can provide as high level of protection of foreign capital investments, and to deprive of their any protection. It was thus supposed, that the foreign investor should address for upholding of the rights in courts of the accepting state, and is deprived the right to diplomatic protection. The given concept is based on idea that the legal regime of foreign capital investments has natsionalnopravovuju, instead of the international legal nature [99].

In the first decades of XX century doctrine Kalvo has received a wide circulation not only in circles of theorists, but also at level of the state practice which have led to its essential reconsideration. In Russia after 1917 the large-scale expropriation of the foreign property which were not accompanied by granting of any indemnification has been carried out. It was proved, in particular, by realisation of a principle of the national standard [100] as ekspropriatsionnye actions were realised in an equal measure and concerning own citizens, and concerning foreigners.

Arbitration proceeding of 1930 between the English company «Lena Goldfields Ltd became one of symbolical events of that time.» And the government of the USSR. As the reason for trial the expropriation of the enterprises carried out by the government on a gold mining, coping the foreign company on the basis kontsessionnogo agreements has served. In spite of the fact that the USSR at a certain stage has refused participation in process, against it the decision, awarded to the suffered investor monetary indemnification has been passed. The given decision, however, and has not been carried out. Indemnification has been paid from means of the state treasury of the Great Britain only later 38 years thanks to darraigning at diplomatic level the governments of two states [101].

The similar events which have led to radical revision of a mode of possession by the property, occurred and in Mexico during the same historical period. As a result of revolution in this country the enterprises of agrarian and oil sectors which were mainly in the property of citizens of the USA that has led to numerous disputes for which permission the governments of the USA and Mexico had been created the special commission on claims on the basis of the contract of 1923 Work of the commission within several years have been nationalised did not differ efficiency that has induced US state secretary Kordella of Hull to initiate in 1938 correspondence with the government of Mexico for settlement of disputes.

Within the limits of K.Hallom's given correspondence the rule has been formulated, according to which international law expropriation of property of foreign persons under condition of payment by it of "immediate, adequate and effective indemnification» (English is supposed: «prompt, adequate and effective compensation»). The given rule became known further under the name «the formula of Hull» (English: «Hull Formula»). In turn, the position of Mexico has been substantially based on principles of doctrine Kalvo, and in spite of the fact that the parties could agree about payment of indemnifications, a consensus under matters of law between them has not been reached [102 [103].

It is important to notice, that the formula of Hull has received a wide circulation in contractual practice of the states. Many international treaties mentioning questions of expropriation, provide now a corresponding condition about indemnification. So, for example, the point (d) Contract articles 13 to the Power charter provides a condition about «fast, sufficient and effective indemnification» while the majority of bilateral investment contracts with participation of the Russian Federation provide a condition about «fast, adequate and effective


Indemnifications ».

Long-term discussion about legitimacy of doctrine Kalvo has especially become aggravated during an epoch after decolonization in the middle of XX century in a context of disputes between developing countries and the capital countries-exporters. This discussion, and also results of revolutions in Russia and Mexico have caused a concept urgency according to which the foreign person uses protection against unacceptable measures concerning it and its property owing to action of norms of the international law which application does not depend on the legislation of the state accepting investment. Set of the such


Norms it is accepted to name «the international minimum standard».

At the heart of the given concept traditional principles of the international common law, concerning regulations of a legal regime of foreign capital investments lay. They were formed under the influence of the concept of responsibility of the state for injury to foreign persons or their property [104 [105]. According to the international legal doctrine which has received development in the end of XIX century, the state accepting investment should observe the international minimum standard of civilisation in relation to foreign persons and their property. Application of the given standard cannot be put in dependence on, whether the similar standard is given to own citizens and legal bodies of the accepting state. The international minimum standard of civilisation established also a minimum level of protection of human rights and the property rights within the limits of national criminal and civil legal proceedings [106].

Making comments on a question on indemnification which should be paid the proprietor of property at its withdrawal, the European court under human rights in the decision on business «James and others» against the Great Britain has proved the concept of the international minimum standard as follows 1986: «the Especial bases for differentiation of residents and non-residents at the decision of questions of indemnification are available at withdrawal of the property within the limits of social reforms. First, non-residents are more vulnerable before

The national legislation: unlike residents they do not accept anybody voting or appointment of officials, and nobody consults to them on the given question. Secondly, in spite of the fact that property withdrawal always should be carried out in public interests, to residents and non-residents the different approach is applicable, and there are quite proved bases to approve, that residents should bear bolshee


Burden for the sake of public interests, than non-residents ».

Briefing the above-stated, it is possible to come to conclusion, that necessity of differentiation of the status of residents and non-residents is proved when it is a question of maintenance of safety of a private property. It is simultaneously necessary to mean, that definition of the international minimum standard which should be applied to non-residents, it is represented extremely inconvenient, taking into consideration that up to present time it and has not found the written fastening in one international legal document.

The classical description of such reference with the foreign person who would break the international minimum standard, has been formulated by the general commission on claims between the USA and Mexico functioning during one historical period with mentioned above special commission, at a legal investigation «Neer and Neer» against Mexico in 1926 Such reference is «shocking, unfair, intended infringement of the obligation or insufficiency of actions of the state, so more low

The international standards, that any reasonable and impartial person


Recognises such insufficiency ».

So wide characteristic of the international minimum standard allows to define the general frameworks and a direction of its action. Nevertheless, it leaves opened set of questions by consideration of details, that not only complicates practical application of the standard, but also basically allows to bring up a question on, whether there is in general such conventional rule as the international minimum standard. Possibly, it also was one of the formation reasons in second half XX century of contractual practice, [107 [108] special standards of protection of the rights of foreign persons providing application and their properties which would allow to specify a legal regime providing their safety and the fair reference with them. In particular, standards concern such special standards of "a fair mode» and the "safety" containing in the majority of operating international investment agreements and traditionally considered by experts (as it will be shown more low) or alternatively to the international minimum standard, or as the contractual form of its reflexion also.

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A source: Borgojakov Alexander Sergeevich. STANDARDS «FAIR MODE» And "SAFETY" of FOREIGN INVESTMENTS In INTERNATIONAL LAW. The dissertation on competition of a scientific degree of the master of laws. Moscow -. 2018

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