Dr Nobumichi Teramura (IAS, UBD) and Professor Luke Nottage (Sydney Law School) recently contributed a research article to the Journal of International Economic Law (JIEL). In the Scopus index, the JIEL is a Q1 journal in ‘Law’ and ‘Economics, Econometrics and Finance (miscellaneous)’ quartiles. The advance publication of the article is available here.  

This work was funded by Universiti Brunei Darussalam Research Grant UBD/RSCH/1.12/FICBF(b)/2022/021 and the University of Sydney Law School’s Legal Scholarship Support Scheme.

Abstract: This article analyses two types of provisions relevant to corruption in Asian international investment agreements (IIAs): clauses requiring (host) states to enforce anti-corruption laws and clauses that protect foreign investments made in accordance with host state laws. It tests whether IIA drafters act rationally regarding such clauses, or instead show status quo or other biases. This is complex first because rational strategies should depend on whether the state is a net exporter of foreign direct investment (FDI) or a net importer, but we explain how determining this status may be difficult. Secondly, rational strategies should depend on the relative extent of corruption in each state and, somewhat relatedly, the extent of inbound FDI claims. Despite such complexities and some instances of more ‘bounded’ rationality, overall states seem to be drafting both types of clauses rationally—even, and indeed especially, the net-FDI-importing states that tend to be transitioning economies. Adding to that empirical result from a more normative perspective, the article helps identify factors that could or should be considered by future IIA drafters, international bodies, or others tracking the trajectories of IIAs and corruption in Asia and beyond.