International investment law and foreign investment

Eishan Jan, Mohammad Naqib and Ahmad, Muhamad Hassan and Ali Mohamed, Ashgar Ali (2025) International investment law and foreign investment. In: Company Law in Malaysia. Sweet & Maxwell, Thomson Reuters, Kuala Lumpur, Malaysia., pp. 465-479. ISBN 978-629-7700-74-8

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Abstract

International investment law, which governs relations between states and foreign investors with a primary focus on supporting and promoting foreign direct investment (“FDI”), plays a significant role in Malaysia. It promotes FDI, facilitates business activities, and provides mechanisms for resolving disputes. The main objective of international investment law is to balance the rights and obligations of foreign investors and host states, including Malaysia. FDI, as a key driver of economic growth, brings additional capital, technology, and knowledge to host states, offering significant benefits. To ensure fair treatment and prevent discriminatory practices against investors, international investment law – primarily established through treaties – provides a regulatory framework that protects both investors and host states. These treaties provide specific mechanisms to address disputes arising from such relationships. As discussed in this chapter, investment treaties obligate host states, including Malaysia, to honour their commitments while safeguarding their sovereignty. Any violation of these obligations grants foreign investors the right to bring claims against the host state through international arbitration. For host states like Malaysia, adhering to their obligations under investment treaties is essential, as these treaties uphold fundamental principles of international investment law. These principles include non- discrimination (encompassing national treatment and most- favoured- nation treatment), protection against expropriation, fair and equitable treatment, and access to effective dispute resolution mechanisms, particularly arbitration. Given the high costs associated with defending investment arbitration claims and the risk of significant monetary awards against the host state, it is in a host state’s best interest to act responsibly and adhere to these principles in good faith. The purpose of this chapter is to provide a concise discussion on the principles of international investment law. It examines its key sources, highlights its main principles and legal foundations, and explores the rights afforded to foreign investors. Additionally, the chapter analyses the structure and effectiveness of dispute settlement mechanisms and considers the broader implications for both host states, such as Malaysia, and foreign investors.

Item Type:	Book Chapter
Uncontrolled Keywords:	International investment law, foreign direct investment, foreign investment, foreign companies.
Subjects:	K Law > K Law (General)
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Ahmad Ibrahim Kulliyyah of Laws > Department of Civil Law
Depositing User:	Dr. Muhamad Hassan Ahmad
Date Deposited:	10 Nov 2025 10:40
Last Modified:	10 Nov 2025 10:40
URI:	http://irep.iium.edu.my/id/eprint/124243

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