The IIA, or International Investment Agreement, is an essential tool that many governments worldwide use to protect their domestic investors when investing abroad. This agreement promotes investor confidence by encouraging them to explore business opportunities in new markets, while also creating a sense of security for foreign investors considering investment within their own countries.
Getting to Know the IIA – International Investment Agreement
- The IIA is a type of treaty between countries that addresses issues related to cross-border investments, aimed at protecting, promoting, and liberalizing investments.
- These agreements or treaties are established between governments to define their responsibilities in protecting each other’s investors and investments.
- Countries primarily create IIAs to protect and encourage foreign investment.
- Each agreement may vary in specifics, but generally offers key protections such as non-discrimination and fairness.
- Protected investments must be direct investments that contribute to economic development, excluding speculative investments.
- Globally, there are approximately 3,000 international investment agreements.
- Thailand currently has 47 enforceable international investment agreements covering various countries and economic regions worldwide.
Examples of Protections under the IIA
- Protection against political risks and risks from government measures in the host country.
- Coverage for risks that are typically not included in standard private political risk insurance.
- Safeguards for investment security, guaranteeing free transfers of funds and returns from investments.
- Protection against expropriation, with compensation for any expropriated assets.
- Compensation for damages from violent incidents, including riots and terrorism.
- Additional avenues for redress in case of disputes; if investors lack confidence in the local court system, they may use investor-state dispute settlement mechanisms provided under the agreement.
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Source: Business Relations Center, Department of International Economic Affairs, globthailand.com
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