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Part of the book series: International Law and Economics ((ILEC))

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Abstract

The rationale for this book is based on the increasing relevance of agricultural Foreign Direct Investment (FDI) as a political priority for the global investment agenda since 2008. FDI has been promoted by the international community as a tool to improve food security and the production of biofuels. It is also expected that agricultural FDI will have positive effects on poverty reduction and development. Repercussions of expanded agricultural FDI include conflicts in the area of international law (IL).

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Notes

  1. 1.

    On the weak situation of property rights in Africa see: Heltberg (2002), p. 189; Framework and Guidelines on Land Policy in Africa and also Amanor (2012).

  2. 2.

    Source: The World Bank (2016).

  3. 3.

    Moran (2011) broadly analyses diverse types of FDI, however specific agricultural FDI are not considered. See: Food and Agriculture Organization of the United Nations, Contract Farming (FAO 2001), p. 1. See additionally: United Nations Conference on Trade and Development, World Investment Report 2009. Transnational Corporations, Agricultural Production and Development (World Investment Report 2009, 2009); Vermeulen and Cotula (2010), p. 13.

  4. 4.

    Probably the only legal scholar that has developed a research agenda on LSLIs is Lorenzo Cotula. Here are some of his contributions: Cotula et al. (2009); Cotula (2010a); Vermeulen and Cotula (2010). Cotula has also analysed the instruments used to perform the investments: Cotula (2011).

  5. 5.

    Deininger et al. (2011), p. 95. Governance is seen as one of important requirements to achieve the expected social and development goals of NGOs. See i.e.: Pinstrup-Andersen and Watson (2011), p. 246.

  6. 6.

    Seminally, see the following publication: Williamson (1996). For more concrete literature focussing on LSLIs investment we refer to: Deininger et al. (2011), p. xxvii.

  7. 7.

    See i.e. some of the media reports: The Economist; The Guardian; Bach (2010). See also this article that refers to the opinion of Nigerian Parliament.

  8. 8.

    von Braun and Meinzen-Dick (2009); De Schutter (2011), p. 249; Borras et al. (2011), p. 209.

  9. 9.

    For a study on the effects of NGOs on different economic sectors see the seminal contributions by: Moran (2006, 2011).

  10. 10.

    Al Jazeera.

  11. 11.

    The Oakland Institute (2011a).

  12. 12.

    The Oakland Institute (2011b).

  13. 13.

    The Oakland Institute (2011a).

  14. 14.

    The Oakland Institute (2011c).

  15. 15.

    See, for example, the Ethiopian government’s invitation to investors from India to invest in Ethiopia: Varadarajan (2011).

  16. 16.

    We rely on the UN’s definition of LDCs, low-income countries suffering from the most severe structural impediments to sustainable development. These handicaps are manifested in a low level of human resource development and a high level of structural economic vulnerability. The criteria for defining a country as a LDCs can be found at: United Nations (2016).

  17. 17.

    The first relevant report written on this issue was: GRAIN (2008).

  18. 18.

    De Schutter (2011), p. 249; von Braun (2010), p. 299; OECD (2008).

  19. 19.

    A more detailed description of the deals at Sect. 2.3.

  20. 20.

    Häberli (2012).

  21. 21.

    FAO (2008) at para 2; Deininger et al. (2011), 34 ff.

  22. 22.

    In the framework of this book the term IIAs follows the approach of the UNCTAD that denotes that: ‘Professional Trade and Investment Agreements (PTIAs) refer to a variety of different international arrangements, including free trade agreements, regional trade agreements, economic framework agreements, economic partnership agreements, new-age partnership agreements, economic complementation agreements, agreements for establishing a free trade area and closer economic partnership arrangements. PTIAs, however, do not include BITs. The term ‘International Investment Arrangements’ (IIAs) includes both PTIAs and BIT.’ FAO (2012).

  23. 23.

    This statement is made under the premise that IIAs were signed between developed and developing countries. IIAs offer better legal security to investors investing in developing countries.

  24. 24.

    On the role on institutions in creating incentives in order to achieve proposed goals see the seminal work by: North (1990).

  25. 25.

    Graham et al. (2008).

  26. 26.

    This in the framework of the so-called ‘Washington Consensus’ that as explained by John Williamson describe a set of policy prescriptions that constituted the ‘standard’ reform package promoted for crisis-wracked developing countries by Washington D.C.-based institutions such as the International Monetary Fund, World Bank and the US Treasury Department. Source: Williamson.

  27. 27.

    Graham et al. (2008), p. 34.

  28. 28.

    Uganda Land Act (No. 16 of 1998) An Act to provide for the tenure, ownership and management of land; to amend and consolidate the law relating to tenure, ownership and management of land; and to provide for other related or incidental matters. Uganda Gazette No. 41, 2 July, 1998, Acts Supplement No. 11, pp. 1–83.

  29. 29.

    Constitution of Ethiopia LEX-FAOC129684 [1994] art 40.3.

  30. 30.

    Federal Democratic Republic of Ethiopia Rural Land Administration and Land Use Proclamation (No. 456/2005) art 5.

  31. 31.

    Ibid.

  32. 32.

    Tekle; The Oakland Institute (2011b); Fisseha (2012).

  33. 33.

    See for example the selection of following articles that make reference on these issues: Bundesministerium für Wirtschaftliche Zusammenarbeit und Entwicklung, Entwicklungspolitische Positionierung zum Thema: Großlchige Landkäufe und - pachten in Entwicklungsländern - “Land Grabbing” (2009), p. 8; von Braun and Meinzen-Dick (2009); von Braun (2010), p. 299; GRAIN; Graham et al. (2011); Deng (2011).

  34. 34.

    This statement is an implication of the obligations states have regarding the protection and promotion of human rights. With regard to states’ obligations and the role of transnational corporations see: Stiglitz (2007), p. 451; as well as Human Rights Council (2011a). For the same line of argumentation see Human Rights Council, Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises (A/HRC/8/5/Add2, 2011).

  35. 35.

    For a similar view see: Principles for Responsible Agricultural Investment that Respects Rights, Livelihoods and Resources [2010] available <http://siteresources.worldbank.org/INTARD/214574-1111138388661/22453321/Principles_Extended.pdf> accessed 25 December 2013.

  36. 36.

    On the responsibility of multinational enterprises see at footnote: 34.

  37. 37.

    As we will show in this book, this issue has been broadly covered by the ILC in its study about the fragmentation of International Law. Simma and Kill (2009). For a study approaching the norm conflicts and its effects on governance: ILC (2006).

  38. 38.

    The most relevant contribution regarding fragmentation of international law was made by the ILC. The Commission proposed ways to avoid the further fragmentation and to deal with cases where fragmentation is relevant. See: ILC (2006); Pauwelyn (2003).

  39. 39.

    Some of the most relevant contributions dealing with fragmentation in the law and economic literature are: ILC (2006); van Aaken (2006); Benvenisti and Downs (2007), p. 595; Trachtman (2008); Pauwelyn (2003); van Aaken (2009), p. 483; Pauwelyn.

  40. 40.

    For a contribution reviewing the economic literature on the relationship between corruption, agrarian policies and development see: United Nations Conference on Trade and Development, Intellectual Property Provisions in International Investment Arrangements (UNCTAD/WEB/ITE/IIA/2007/1 2007). For a theorisation of the role of institutions for development see: Bardhan (1997), p. 1320; Raeschke-Kessler and Gottwald (2008), p. 588.

  41. 41.

    The report of the ILC offers an explanation about the source of legal conflicts arising due to the existence of legal fragmentation. See footnote: 37.

  42. 42.

    Concerning the problematic of third-party enforcement and the potential inclusion of counterclaim clauses in international treaties see: ILC (2006).

  43. 43.

    Williston (1902), p. 101.

  44. 44.

    Even though Williston exemplified the problems by using the transmission of property rights, it does not exclude its applicability in other legal areas and the conflicts with other protected rights.

  45. 45.

    On opportunism see infra at: 4.3.

  46. 46.

    Williamson (1985); Williston (1902), p. 101, 773.

  47. 47.

    See, i.e., the contribution of Dammann and Hansmann that makes an analysis on the institutional competence between the two system and highlights the difficulties that courts in weak jurisdictions have given the fact that they have the tendency to be corrupt, slow and inept. The possibility that the parties can turn to a stronger jurisdiction contributes to the stimulation of markets that allow actors to access the principled adjudication mechanism needed to support contractual relations. Dammann and Hansmann (2006). See also: Bayer (1995).

  48. 48.

    The considerations made here concerning a contract for the benefit of a third person are offered in a general way. It is not our intention offer an in-depth discussion about this institution. It is used in a more descriptive way to explain the legal link between a contract and third parties. Our intention is to show how legal institutions at the national level might work when the property rights of a third person are affected through the signature of a contract.

  49. 49.

    The consideration here is made with regard to the missing solid structure in IIL that would make it possible for affected third individuals to intervene in arbitration procedures. However, this absolutely neglected possibility is slowly changing, probably as a consequence of the increasing competition between the arbitration courts, as well as the mechanisms existing beyond the existing procedures. See the broad legal evolutionary approach dealing with the enforcement mechanisms, although in commercial arbitration by: Dammann and Hansmann (2006). See also: Cafaggi (2012).

  50. 50.

    The existence of an IIA between S and the State where I is domiciled is assumed.

  51. 51.

    Many researchers, NGOs and think tanks have been trying to find the way to make investors or traders accountable for human rights violations. For a well-developed study see: Dammann and Hansmann (2006). For a well-developed paper dealing with the Ruggie’s understanding of complicity in general as well as complicity in particular see: Weschka (2006); Narula (2006), p. 691; Sunga (1992).

  52. 52.

    Wettstein (2013), p. 243; Ellickson (1993).

  53. 53.

    United Nations Conference on Trade and Development, World Investment Report 2013 (World Investment Report 2013, 2014) 101.

  54. 54.

    The question whether IIAs attract FDI has been treated in previous empirical studies that have not provided consistent results. We go into more details in Chap. 2 of this study.

  55. 55.

    United Nations Conference on Trade and Development, World Investment Report 2013 (World Investment Report 2013, 2014) 101.

  56. 56.

    Regarding the definition of IIA, see footnote: 22. For a classical view in economics see: MacDougall (1960), p. 13; Blomström and Kokko (1999); Moran (2006). And, now in the legal literature see: Moran (2011). See also Dolzer and Stevens (1995).

  57. 57.

    Peter Muchlinski approaches policy issues and risks concerning NGOs in a nice way. Regarding the change of governments’ preferences because ideological issues. Muchlinski (2008). Guzman also refers to aspects regarding the risks in FDI. Guzman (1998), p. 639.

  58. 58.

    United Nations Conference on Trade and Development, World Investment Report 2013 (World Investment Report 2013, 2014), p. 104.

  59. 59.

    United Nations Conference on Trade and Development, World Investment Report. Investing in a Low-Carbon Economy (20 edn, United Nations 2010), p. 33.

  60. 60.

    United Nations Conference on Trade and Development, Global FDI Rose By 11%; Developed Economies are Trapped in a Historically Low Share (UNCTAD, N 15 January 2014, 2014), p. 7.

  61. 61.

    United Nations Conference on Trade and Development, World Investment Report 2014 (World Investment Report 2014, 2015), p. xvii.

  62. 62.

    Ibid.

  63. 63.

    Ibid.

  64. 64.

    United Nations Conference on Trade and Development, World Investment Report 2012 (World Investment Report 2012, 2013), p. xiii.

  65. 65.

    Ibid.

  66. 66.

    Ibid xiv.

  67. 67.

    Ibid.

  68. 68.

    In most of the IIAs the wording include aspects related to development. For example the BIT between Ethiopia and Germany states that parties desire to ‘intensify economic co-operation between both states’. Treaty Between the Federal Republic of Germany and the Federal Democratic Republic of Ethiopia Concerning the Encouragement and Reciprocal Protection of Investments (Ethiopia Germany) [2004]. In the case of the BIT between the government of the United Kingdom of Great Britain and the Government of the Republic of Sierra Leone parties include the term ‘prosperity in both States’ as the conductive goal of the reciprocal protection under the BIT. Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Sierra Leone (Great Britain-Sierra Leone) [2000] available at <http://investmentpolicyhub.unctad.org/IIA/country/221/treaty/2903> accessed 15 September 2015.

  69. 69.

    United Nations Conference on Trade and Development, World Investment Report 2014 (World Investment Report 2014, 2015), p. 40.

  70. 70.

    Sharma and Aykut (2003), p. 149.

  71. 71.

    United Nations Conference on Trade and Development (2011), p. 7.

  72. 72.

    Ibid.

  73. 73.

    Ibid.

  74. 74.

    For an analysis about the benefits of land registration and the respective problematic situation in sub-Saharan Africa see: Atwood, p. 659. On harmonisation of customary land tenure systems see: Lavigne.

  75. 75.

    This is based on data compiled by the World Bank that can be found at: The World Bank (2016).

  76. 76.

    Wehrmann (2008) and Behnassi and Yaya (2011).

  77. 77.

    An introduction to the relevance of land tenure and sub-Saharan Africa and the conflicts associated with land tenure see: Bernstein (2005).

  78. 78.

    With regard to enforcement, we follow the notion that enforcement includes judicial and non-judicial measures. That enforcement includes either public or private measures that lead the legal subject to comply with ex ante commitments. It also includes different types of adjudication procedures that are designed either privately, by states or IOs, including self-enforcing systems. Issacharoff (2010). Enforcement represents a strategic juncture for the effectiveness and legitimacy of the economic activity of foreign investors, see: Katz (1995). This is contrary to the notion that affirms enforcement promoted by the private sector is outside of the sphere of enforcement and belongs specifically to the social sphere. See i.e.: Bernstein (2005), 68 ff. administrative and also private enforcement measures.

  79. 79.

    The study that opened the discussion on Land Grabbing was: GRAIN (2008). Two additional seminal studies have been published that focus on finance actors and their role in expanding LSLIs. See: GRAIN; GRAIN.

  80. 80.

    GRAIN (2016).

  81. 81.

    GRAIN is an international non-profit organisation that works to support small farmers on food production issues. The Oakland Institute is a policy think tank dedicated to advancing public participation and fair debate on critical social, economic, and environmental issues.

  82. 82.

    For a detailed resume on organisations that have published articles on Land Grabbing we refer to: Palmer (2011).

  83. 83.

    A legal contractual analysis of LSLIs: Cotula (2010b).

  84. 84.

    Cotula (2015).

  85. 85.

    Deininger et al. (2011). See also: Rabah et al. (2011).

  86. 86.

    For comments on the study of the World Bank see: Borras et al. (2011), p. 209.

  87. 87.

    Borras and Franco (2009), p. 50; Meinzen-Dick and Markelova (2009).

  88. 88.

    See for example the reports by the FAO: von Grebmer et al. (2012); FAO and OECD (2010); FAO Rome Declaration on World Food Security. Food World Forum Summit [1996] WSFS 2009/2; FAO (2008); FAO Declaration of the World Summit on Food Security [2009] WSFS 2009/2; FAO, WFP and IFAD (2012). As well as the researches ran by the World Bank: FAO (2012); Rabah et al. 2011. However, the same president of the World Bank recognises some risks of LSLIs by stating: ‘The World Bank Group shares these concerns about the risks associated with large-scale land acquisitions’. Source: ‘Access to Land is Critical for the Poor’ The World Bank Group.

  89. 89.

    Pringle (2011).

  90. 90.

    For a broad discussion about the work of Prof. Ruggie in his role as Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises we recommend the edited following edited book: Ruggie.

  91. 91.

    The reports were submitted in 2006 and 2007 and in 2008. He proposed a framework to ‘Protect, Respect and Remedy’ human rights. Deva and Bilchitz (2013). In the 2008 report he developed legal policies to think in potentials actions to make the first report realizable. Human Rights Council (1998).

  92. 92.

    Human Rights Council (2007), para 35.

  93. 93.

    Human Rights Council (2011b).

  94. 94.

    The most relevant publications dealing with the negative effects of LSLIs are the followings: Sornarajah (2010); De Schutter (2009); Schonecke and Kurzke-Maasmeier (2009).

  95. 95.

    For example, in 2014, the World Bank explicitly recognised the failures of its projects in Ethiopia; which rather than producing the developing oriented effects as expected, produced forced displacement of indigenous people. See the document of the World Bank recognising its failures at: The Inspection Panel (2014).

  96. 96.

    van Aaken (2013), p. 27 <http://investmentpolicyhub.unctad.org/Blog/Index/22der> accessed 12 July 2015; Häberli (2012); Cotula (2015), p. 49.

  97. 97.

    On the relevance of enforcement in international law referring to LSLIs see: Cotula (2012); a general approach: Scott and Stephan (2006).

  98. 98.

    Some scholars have use the term ‘L&E’ and ‘functional analysis’ as synonyms. We also apply both terms to refer the analysis of legal problems applying economic theories. For the same use of this term see: Reinier et al. (2009); van Aaken (2010); van Aaken (2014), p. 827.

  99. 99.

    The model developed by RC theory has been traditionally used to elaborate law and economic approaches. There are other models proposed by constructivists that suppose collectivism, contrary to relying on methodological individualism as we do. In such models the rational considerations of economic actors as conceived by methodological individualism is rejected because it fails by neglecting the formative influence of ideas, norms and values on behaviour. And, because rational choice does not consider the effect that a system has on economic actors. See i.e. Checkel (1998), pp. 325 ff.; Finnemore and Sikkink (2001). For an overview see: Wendt (2000), p. 165.

    Rational Choice assumptions have been commonly applied in the field of L&E. As stated by van Aaken ‘Rational choice assumptions are the cornerstone of positive economics and economic analysis of law, which applies economic methods to analyse law’ See: van Aaken. For a deep study on the application of Rational Choice in Legal Theory see: van Aaken (2003), Pauwelyn (2006) and Guzman (2008).

  100. 100.

    See Chap. 4 of this research that offers a deep analysis of both theories.

  101. 101.

    North (1992), p. 1.

  102. 102.

    Ibid.

  103. 103.

    Becker (1976), p. 14.

  104. 104.

    Ibid.

  105. 105.

    Coase (1937), p. 386. See also: Mueller (2008).

  106. 106.

    Snidal (2002), p. 73.

  107. 107.

    Udehn and Heath.

  108. 108.

    This statement, which is supported in this study, was elaborated by: Dunoff and Trachtman (1999), p. 1, 27.

  109. 109.

    van Aaken (2003), p. 56.

  110. 110.

    Dunoff and Trachtman (1999), p. 1, 11.

  111. 111.

    The theoretical approach developed and applied by Grossman and Helpman is the most relevant for this research. Grossman and Helpman (1994), p. 833; Grossman (1995), p. 667; Grossman and Helpman (2001). We recommend a short review on the contribution of Grossman: Baron (2002), p. 1221; van Aaken and Trachtman (2016).

  112. 112.

    Putnam (1988), pp. 427 and 437. The application of a two-levels game has taken relevance in the field of politic economic as well as in L&E. The approach consists in demonstrating that the behaviour of traders on an international level reflects their national behaviour so that they can achieve proposed goals.

  113. 113.

    For the seminal contributions, see: Downs and Rocke (1995), p. 24. For an introduction in public choice for lawyers see: Farber and Frickey (1991).

  114. 114.

    See footnote: 111.

  115. 115.

    This approach that has be enriched by the contributions of: Putnam (1988), p. 427; Grossman (1995), p. 667; Downs and Rocke (1995), p. 24; and also Milner (1997).

  116. 116.

    Williamson (1985), p. 47; Williamson (1979), p. 233, 234.

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Montilla Fernández, L.T. (2017). Introductory Part. In: Large-Scale Land Investments in Least Developed Countries. International Law and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-65280-1_1

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