Multilateral Agreement on Investment

The Multilateral Agreement on Investment (MAI) was a draft agreement negotiated between members of the Organisation for Economic Co-operation and Development (OECD) between 1995 and 1998. It sought to develop multilateral rules that would ensure that international investment was governed in a more systematic and uniform way between states. When its draft became public in 1997, it drew widespread criticism from civil society groups and developing countries, particularly over the possibility that the agreement would make it difficult to regulate foreign investors. After an intense global campaign was waged against the MAI by the treaty's critics, the host nation France announced in October 1998 that it would not support the agreement, effectively preventing its adoption due to the OECD's consensus procedures.

International direct investment has been taking place in various forms and to different degrees for over a century. Attempts to establish a framework for the protection of foreign investments dates back to the 1920s, most notably negotiating a League of Nations draft convention. Starting from the second half of the twentieth century, the investment protection was developed through the bilateral investment treaties, which are signed between two countries and which state the desired conditions under which investment can take place between them. The first BIT, between West Germany and Pakistan, was signed in 1959 and their numbers have grown steadily since then, although research suggests that BITs do little to increase foreign investment. In 1965, the International Centre for Settlement of Investment Disputes (ICSID) was established in the framework of the United Nations, and in 1967, the OECD prepared the Draft Convention on the Protection of Foreign Property although this was not adopted.

The number of bilateral investment agreements increased rapidly during the 1990s as countries and investors sought more regulation for security, certainty and mobility for their investments after it became clear that the Uruguay Round's Agreement on Trade Related Investment Measures (TRIMS), Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and General Agreement on Trade in Services (GATS) addressed only part of investment-related concerns and did not provide enough security for investors nor strong controls on host governments to regulate multinational corporations. In addition to these instruments, in 1992 the World Bank adopted Guidelines on the Treatment of Foreign Direct Investment. In 1994 the Energy Charter Treaty provided an example of a multilateral investment agreement, though limited to the energy sector.

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