With the purpose of creating and preserving a positive investment atmosphere for foreign investors, Colombia has been negotiating and ratifying International Investment Agreements (IIAs), which include Agreements on the Reciprocal Promotion and Protection of Investments (ARPPIs), Free Trade Agreements (FTAs) with investment chapters and Double Taxation Agreements (DTAs).
In this context, International Investment Agreements intend to decrease noncommercial risks for investors by creating clear regulatory frameworks based on predictable rules. ARPPIS, for example, aim to protect foreign investment in the country where the agreement was executed. To accomplish this, they define the protected assets and apply international law principles such as fair and equitable treatment, full security, and guarantees as protection standards. Additionally, they offer different mechanisms for dispute resolution such as State-investor international arbitration. Nevertheless, the protection offered by IIAS does not affect the Governments regulatory authority, while ARPPIs and FTAs assure that regulatory changes will not affect guarantees contained in such agreements.
In achieving its purpose of protecting foreign investment, Colombia has become party to the Overseas Private Investment Corporation (OPIC), the International Centre for Settlement of Investment Disputes (ICSID) and the Multilateral Investment Guarantee Agency (MIGA).
OPIC stimulates U.S. investment in developing countries. To do so, it offers financing and protection against contingencies such as currency transfer restrictions and political instability, as well as it guarantees investment projects.
The ICSID agreement allows foreign investors to submit disputes with the host states to specialized international arbitration or mediation. However, the investors’ home country must also be part of the agreement in order to be able to use these dispute resolution mechanisms. Nonetheless, the possibility to use arbitration and conciliation as alternative dispute resolution methods depends on the existence of a treaty in force that allows that possibility.
MIGA, as a multilateral organization, protects foreign investors in member countries against noncommercial risks such as exchange transfer restrictions, discriminatory expropriations, riots and civil wars. As OPIC, it also promotes investment in member developing countries and offers information on these countries in order to support the investment process from an early stage.