Regulating Sovereign-Driven Investments in International Trade and Investment Agreements: The Role of Investment Screening Mechanisms

The cross-border economic activity of sovereign investors has been increasing over the last decades. This proved vital in an international economy wrecked by financial, economic, health and other crises. The chapter highlights the two main design principles governing sovereign-driven investments in international trade and investment agreements: first, ownership-neutrality that is conditioned on the commercially-driven nature of a sovereign investment; second, the sovereign power of the host state to regulate market access of foreign (sovereign) investors. The open-ended nature of these principles has allowed for a major—and ongoing—change in the structure of the contemporary international economic law regime. The change has been spearheaded by the introduction of Investment Screening Mechanisms. Investment Screening Mechanisms move the focus from international to domestic law. They may also be bringing about a re-interpretation of the permissibility of foreign sovereign investments in international trade and investment agreements.