INVESTMENT GUARANTEES IN ETHIOPIA: FULL PROTECTION AND SECURITY OF INVESTMENTS

Abstract

In a contemporary world investment is one of the main sources of economic development. States use investment guarantees as a method to promote investment. There are many types of Investment guarantee standards and one of them is the “full protection and security” standard. The standard suggested that the host state is under the obligation to take active measures to protect the investment from adverse effects. However, the extent of protection advocated by the standard is a point of disagreement between the host state and the investors. Debates exist regarding the question of whether the standard covers not only physical but also legal security, and also whether the liability it imposes is of a due-diligence or a strict liability. The decisions of various tribunals adopt a restrictive interpretation of the phrase ‘full protection and security. This research tried to see investment guarantees in Ethiopia: the full protection and security of investments. To that effect, the researcher employed a qualitative data collection and analysis methodology. Ethiopian investment laws and several BITs have been consulted; the researcher has also interviewed experts at the EIC, AAIC, Ethiopian Insurance Corporation, and investors. The main findings of this research are the existing investment proclamation does not stipulate the FPS standard. There exists no formally decided arbitral award or judicial decisions dealing with these issues of the FPS standard. Legal experts consulted tend to have different opinions towards the issues of level of protection and/or standard of liability. Based on the findings, the research recommends measures to be adopted by the government. The researcher calls for the responsible organs (the lawmaker, arbitrators, or judicial courts) to provide uniform and formal decisions about the issues concerning the level of protection given to investors and the standard of liability of the country under full protection and security (FPS) standard.