Investment

ANALYSIS OF THE BILATHERAL INVESTMNT TREATY BETWEEN
ETHIOPIA AND BELGIUM-LUXEMBERG ECONOMIC UNION IN
LIGHT OF INTERNATIONAL INVESTMENT LAW PRINCIPLES
By: SisayAdane Mesele

Table of content
Title page
Introduction..................................................................................................................................... 1
1. Definition of Concepts............................................................................................................. 2
1.1. Investment ........................................................................................................................ 2
1.2. Investor............................................................................................................................. 2
2. Standard of Treatment ............................................................................................................. 3
2.1. Fair and Equitable Standard of Treatment ........................................................................... 3
2.2. National Treatment Standard ............................................................................................... 5
2.3. Most Favored Nations Treatment (MFN) ............................................................................ 5
3. Property Taking ....................................................................................................................... 7
3.1. Forms of Property Taking ............................................................................................... 7
3.2. Justification For Expropriation......................................................................................... 8
3.3. Conditions of Expropriation............................................................................................. 8
3.4. Compensation................................................................................................................... 9
4. Limits to Regulatory Power................................................................................................... 10
4.1. Regulation of Entry........................................................................................................ 10
4.2. Labor Matters ................................................................................................................. 10
4.3. Environmental Matters................................................................................................... 10
4.4. Tax Matters .................................................................................................................... 11
5. Investment Dispute Settlmnt.................................................................................................. 11
5.1. Issues of Investment Dispute.......................................................................................... 11
5.2. Mechanisms of Investment Dispute Settlement............................................................. 11
6. Termination and Extension of Bits ........................................................................................ 13
Conclusion and Recommendation ................................................................................................ 14
Biblography................................................................................................................................... 15

1
INTRODUCTION
In developing countries the encouragement and expansion of investment in their territory has
become a concern now a days. Consequently, it is uncommon to see these countries signing
bilateral investment treaties (here in after BITs) mainly with developed countries. These BITs are
areas of discussion in many investment literatures. Many of these literatures are general; they do
not target a specific treaty. The purpose of this work is to specifically deal with the BIT between
Ethiopia Belgium-Luxemburg Economic Union. It has been tried to discuss the literature on
BITs briefly and it has been tried to contextualize it to the Ethiopia and Belgium-Luxemburg
BIT.
The paper has six topics. The first deals with definition of key terms in the application a BIT: the
terms ‘investment’ and ‘investor’. The second is about different standards of treatment. Under it
the three types of treatment namely: fair and equitable standard of treatment, national standard of
treatment, and the most favored nation treatment are discussed at length. The scope of these
treatments is addressed in light of the Ethio-Belgium and Luxemburg BIT. Thirdly, the issue of
taking of investment property is discussed. Under it, the different forms of property taking are
highlighted. It has been also tried to discuss the justification and conditions of investment
property taking in general and expropriation in particular. The literatures on the two standards of
compensation are summarized. Fourthly, the policy spaces left for the contracting parties to the
BIT are identified including the justification for these policy spaces. The fifth is about,
investment dispute settlement. Under this, the different issues constituting investment are
identified. The different mechanisms available for investment dispute are discussed at length.
Finally, the issue of termination of BITs is discussed briefly.

2
1. DEFINITION OF CONCEPTS
A law document should determine as to what persons and actions it is to regulate. So, BITs are
expected to answer this question. This is by providing definition for the terms ‘investment’ and
‘investor’. In other words, the definition of ‘investor’ and ‘investment’ is decisive to the scope of
application of rights and obligations provided under investment agreements and to the
establishment of the jurisdiction of investment treaty-based arbitral tribunals1.
1.1.Investment
The term “investment” is defined as the expenditure of asset in expectation of return.2Three
important elements can be drawn from this definition: expenditure, asset and return. However,
BITs emphasize on the second element (asset). Accordingly, BITs define investment to refer the
assets that constitute the investment.3This is called asset based approach to the defining the term
“investment”.4 An example for this approach is found in the BIT between Ethiopia and Belgian-
Luxemburg Economic Union (Ethio-Bel.LuxBIT for precision): “the term ‘investment’ shall
mean any kind of assets or any direct or indirect contribution in cash, in kind or in services,
invested or reinvested in any sector of economic activity”(emphasis mine). Under this provision
definition of investment is even broader than asset based definition and includes any kind of
direct or indirect contribution. So, Portfolio investment is also recognized under this definition.
The Ethio-Bel.lex BIT under Art.2 also illustratively lists some assets constituting investment.
The non exhaustive list of assets and the inclusion of any kind of contribution under the BIT
seem to be designed to protect as wide a range of investment forms as possible.
1.2.Investor
Investors are either natural or legal persons carrying out investment. In majority of the cases,
investors are legal persons.5 The Ethio-Bel.Lux BIT under Art.1/1/a defined investors as: “the
‘nationals’ (for natural persons) according to the legislation of the Kingdom of Belgium, of the
Grand-Duchy of Luxembourg or of the Federal Democratic Republic of Ethiopia, is considered
as a citizen of the Kingdom of Belgium, of the Grand-Duchy of Luxembourg or of the Federal
1Catherine Yannaca-Small,“definition of investor and investor in international investmentagreements” 2008,
http://www.oecd.org/def/inv/, accessed on December 26,2014
2FantuFaris,lecturenote on investment law, 2014
3 Martha Belete, Teaching Material on Economic and Legal Aspects of Foreign Investment Localization for Ethiopia,
(2013), P.2
4 ibid
5 Rudolf Dolzer and ChristophSchereuer, principles of international investment law( 2nded, Oxford University Press,
.2012), p.44

3
Democratic Republic of Ethiopia respectively” (emphasis mine). The provision takes nationality
as central element to the definition of the term individual investor. This has much to do with the
scope of the BIT. In other words, the substantive standards of protection provided under the BIT
are applicable to the investors who are the nationals of the contracting states as per Art.13 of the
BIT.
About, corporate investors, the BIT emphasizes on whether the company in question has
registered office in one of the territory of the contracting state after being constituted in
accordance with the law that contracting state (Art.1/1/b).If accompany fulfils the registered
office and the constituency requirements in one of the contracting state it will be subject to the
BIT in case it invests in the territory of the other contracting state as per Art.13 of the BIT.
2. STANDARD OF TREATMENT
States are required under customary international law to extend “minimum standard of
treatment” to investment by aliens in their territory.6However, the fierce competition to attract
foreign investment to ones territory has led to the inclusion of other three standards of treatment
in BITs:Fair and Equitable treatment (FET), National Standard of Treatment and Most Favored
Nation treatment (MFN). The Ethio-Bel.Lux BIT involves these three standards of treatment.7
2.1. Fair and equitable standard of treatment
The term “fair and equitable” is general, vague and elastic. Arbitrative tribunals have come up
with key elements of fair and equitable treatment. Among the principles most relayed up on by
such tribunals when applying the standard is whether the host state has: (1) failed to protect the
investor’s legitimate expectations; (2) failed to act transparently; (3) acted arbitrarily; (4) subject
the investor to discriminatory treatment; (5) denied the investor’s access to justice; and (6) acted
in bad faith.8Again, it is difficult to define these principles precisely. It is useful to identify
instances that form part of each principle.
a. Legitimate expectations: refers to the expectations arising from the foreign investor’s
reliance on specific host state conduct, usually oral or written representations or commitments
made by the host state in relation to the investment.9
6 Andrew Newcomb and LLUIS Pardell, Law and practice of investment treaties(Kluerlaw international,2008),
p.235
7 BIT between Ethiopia and Belgian-Luxemburg Economic Union, Arts.4 and 5
8JeswaldW.Salacuse,the law of investment treaties (oxford university press,2010),p.230
9 Supra note 6, p.279

4
b. Arbitrariness (Discrimination): arbitrary or discriminatory government conduct against an
investor violates the fair and equitable treatment. It is difficult to determine as to what conduct of
a host state government constitute arbitrary or discriminatory measure. Discrimination contrary
to international human right law, such as sex or race based discrimination; arbitrary regulatory
distinction between things that are like or treating unlike things in the same way are common
instances constituting arbitrariness or discrimination.10
c. Transparency: this is the obligation of a host state to make its legal frame work
apparent.11Instances of this obligation are: publication of applicable laws; notification
requirements with respect to such laws; providing reasonable opportunity to comment on new
laws; and fair application of such laws.12
d. Coercion, Threat, and Harassment: arresting or jailing executives or personnel; threats or
initiation of criminal proceeding; deliberate imposition of unfortunate tax assessment; criminal
or other fines; seizing of physical assets, bank accounts and equity; interfering with, obstructing
or preventing daily business operations; and deportation from home state or refusal to extend
documents that allow foreigners to live and work in the host state are against the standard of fair
and equitable treatment.13
The host state conduct in response to improper conduct of the investor mayn’t be a violation of
fair and equitable treatment.14The host state’s act of revoking license obtained through bribery
can be a nice example.
The Ethio-Bel.LuxBIT has incorporated the fair and equitable treatment under Art.3 (1) as
follow: “all investments made by investors of one contracting party shall enjoy affair and
equitable treatment in the territory of the other contracting party”
In the above provision, there is no qualification indicating as to which stage of the investment
(since pre or pos establishment stage) does the fair and equitable standard of treatment would
start to be applied. In the absence of qualification the BIT has to be interpreted so as to be
applied since pre establishment stage of investment.
10 id,p.289

5
2.2. National Treatment Standard
National treatment standard refers to the extension of treatment to foreign investor by a host state
not less favorably than it accords to national investors.15The Ethio-Bel.LuxBIT under Art.4 (2)
requires contracting parties treating investors of others no less favorably than that they treat their
own investors. According to this provision the foreign investor is granted a possibility of better
treatment than national investors. In other words, the foreign investor will be treated at least in
the same way as national investors in case the BIT is less favorable than the domestic investment
law.
Whether the foreign investor claiming national treatment standard shall be in similar position
with that of the domestic investor up o whom such foreign investor based his claim is an issue.
Some BITs signed by Ethiopia use qualifying words such as “like circumstance” and “similar
situation.”16 However, the Ethio-Bel.LuxBIT doesn’t use these kinds of restrictive words. So,
comparing the foreign and domestic investor in case of applying national treatment standard
under this BIT isn’t an issue.
The other central issue is whether the national treatment standard embodied in the Ethio-
Bel.LuxBIT starts to apply at the pre establishment stage of the investment. According to Art.4
(1) of the BIT national treatment is applicable in all matters relating to investment. This
underlined phrase shall be interpreted to mean that pre establishment requirements to be matters
of investment. So, the standard applicable is unrestrictedly.
2.3. Most Favored Nations Treatment (MFN)
This is a standard that requires a host state not to treat investors and investments of its treaty
partner less favorably than investors and investment from third state.17MFN treatment aims at
creating a level playing field among investors from different home states as pre requisite for
equal competition. 18 The treatment is relative for its application requires comparison between
the original BIT and the BIT with third state19. The BIT between Ethiopia and Bel-Lux
incorporated the MFN treatment under Art.4.
18 Stephen W. Shill, the multi-lateralization of international investment law, (Cambridge university press,2009),
p.76
19ibid

6
Whether the MFN treatment under the BIT is applicable since admission and to investment
dispute settlement matters is worthy of discussion. The BIT under Art.4 (3) and 4(4) excludes the
applicability of MFN treatment on privileges granted to investors of third states due to regional
economic organizations and on tax matters. About the investment dispute settlement and
admission the provision is silent. It neither excluded nor included the applicability of MFN
treatment to these matters. Art.4 (1) of the BIT provides that: “in all matters relating to the
treatment of investment,the investors of each contracting party shall enjoy ……or MFN
treatment in the territory of the other contracting party.” In my view, the underlined phrase
broad and it shall be interpreted so as to include the matters of investment dispute settlement and
admission. Therefore, MFN treatment under the Ethio-Bel-Lux BIT is applicable since
admission of a foreign investor and also on matters of investment dispute settlement.
Whether comparison among foreign investments or foreign investors becomes an issue in case a
there is a claim based on MFN clause under the Ethio-Bel.LuxBIT arises is a matter that needs to
be discussed. The bit under Art.7(2) provides that: “…each contracting party shall accord, on its
territory, to investor of other contracting party, treatment no less favorable than that granted to
…investors of any other state if the latter is more favorable.”The above provision is silent on the
issue of similarity or difference between foreign investment or investors. It emphasizes on the
extent of treatment accorded to the investors of a contracting party in relation to the treatment
that is accorded to an investor from a third state. This deferential treatment among foreign
treatment may have two sources: (1) the host states legislation, regulation, administrative act, and
(2) the treaty between the host state and other host state.20 This idea can be illustrated as follow:
Let us assume that a Belgian investor who made investment in Ethiopia alleges that the
Ethiopian investment legislation and the BIT between Ethiopia and Sudan has guaranteed better
protection to Sudanese investors than the Ethio-Bel.LuxBIT. Let us further assume that he
claimed to be treated equally with the Sudanese investor. In this case the differential treatment
proved by the two sources on the one hand and the Ethio-Bel.LuxBIT one the other hand will be
an issue, not the similarity between the Sudanese and the Belgian investor. Accordingly,
Comparison of the two sources that are alleged to have treated Sudanese investors more
favorably with that of the Ethio-Bel.LuxBIT becomes important.

7
3. PROPERTY TAKING
An age old, overriding concern of all foreign investors is that host state government will seize
their assets.21 To overcome this fear (uncertainty) and to promote foreign investment BITs come
up with provisions dealing with protection of investment property from taking.22Investment
property refers to a determinate thing (tangible or intangible)23 used to carry out investment.
Property taking may be defined as the act of seizing (controlling) or dispossessing a determinate
thing of someone with or without intention to return.24 These definitions can be contextualized to
BITs. Accordingly, property taking means any measure of a host state such as expropriation,
nationalization,25confiscation, forced sale26 etc. that has the effect of dispossessing27the foreign
investor’s investment property. From this definition, one can extract the issue of what possible
act of a host state constitutes property taking. The issue will be discussed under the section
below.
3.1.Forms of Property Taking
The Ethio-Bel.Lux BIT under Art.7(1) provides that : “each contracting party undertakes not
adopt any measure of expropriation or nationalization or any other measure having the effect of
directly or indirectly dispossessing the investor of the other contracting party.” The provision
illustratively listed expropriation and nationalization, without defining them, as acts of
contracting states constituting expropriation.
 Expropriation Vs Nationalization
“Expropriation” refers to taking a particular investment property where as “Nationalization” is
the whole taking of the industry.28 Expropriation is more of legal; nationalization is more of
political.29 In terms of purpose, the property of foreign investor is nationalized to diminish the
domination of foreign investment over the economy of the host state30 where as expropriation is
justified by public purpose.
21 id,p.285
22ibid
23Henry Campbell Black, Black’s law dictionary, (9th ed.2009) ,see the term “property”
24 Id, see the term property and the term taking.
25 Supra note 7, Art.7(1)
26 M. Sornarajah,TheInternational Law on Foreign Investment, (2nd ed. Cambridge university press,2004),p.348
27 Supra note 25
28 Supra note 8, P.285
29Phone Interview with Solomon Hailu on 20 December 2014,land administration officer in north wollo
30 Supra note 26

8
 Confiscation Vs Forced Sale
Confiscation is the capricious taking of property by a host state for personal gain of the ruling
elites (unusual) or for public purpose. Forced sale is a situation where by a state causes a foreign
investor to sale its investment property and leaves that state.31
However, the above distinction on the different forms of taking is not an issue in Ethio-Bel.Lux
BIT.The above provision (Art.7 (1)) aims at protection against any kind of investment property
of an alien. It emphasizes on, taking and recognized any forms of taking. Consequently, whether
or not taking (dispossessing the investor) has occurred should be an issue, not the specific form
of taking.
However, expropriation is the usual form of taking now a day. Therefore, our discussion in the
subsequent section will revolve around it.
3.2.Justification for Expropriation
According to the notion of territorial sovereignty, a host state has the right to expropriate alien’s
property.32The Ethio-Bel.Lux BIT also respects this position with requirements. Reasons of
public purpose, security or national interest are grounds for property taking in general and
expropriation in particular according to the BIT.33It doesn’t elaborate these grounds. Nor they are
defined in many jurisdictions. One clear thing is that expropriation should be justified by genuine
34(demonstrable35) internal economic, political, or military need of a host state.36 In other words,
expropriating a foreign investor shouldn’t be for the personal interest of rulers or third state, 37but
it must be attributable to the honest interest of the public.
In practice, however, the issue of justification has rarely arisen in international expropriation
cases.38
3.3.Conditions of Expropriation
The justifiability of expropriation discussed above is subject to conditions. According to the
Ethio-Bel.Lux BIT, expropriation shall be taken under due process of law; it shall be neither
31id,p.356
33 Supra note 7, Art.7(2)
34 Supra note 6, P.370
35 Id, p.372
36 Supra note 34
37 Supra note35
38 Supra note6, p.371

9
discriminatory nor contrary to any specific commitments and it shall be accompanied by
compensation.39Due process of law is all about giving advance notification to the affected
investor, fair hearing by impartial adjudicator to assess the action in dispute.40Requirement of
non discrimination and specific commitment are discussed above under the sub section 2.1 on
fair and equitable treatment. Among the conditions, the requirement of compensation is
controversial. It is discussed below.
3.4.Compensation
Determining compensation for injury requires standards. There are two competing standards of
compensation for expropriation: the Hull standard and appropriate compensation formula.41The
Hull standard requires an expropriating state to pay the affected investor ‘prompt’, ‘effective’
and ‘adequate’ compensation.42 ‘Prompt’ means payment should be made without undue delay.43
‘Effective’ means payment should be made in realizable and readily transferable currency.44
‘Adequate’ means payment should be based on the fair market value of the investment
expropriated.45 Market value is all about taking in to account the transaction between a willing
buyer and seller.46 In other words, payment shall be made looking at the amount with which a
willing buyer will normally purchase from a willing seller.
The appropriate standard on the hand, appropriate standard suggests that payment of
compensation must consider the circumstances of the expropriating country and mayn’t
necessarily be made immediately.
The Ethio-Bel.Lux BIT prefers the ‘Hull standard’. The BIT requires payment of adequate and
effective compensation (Art.7 /2). The amount of the compensation to be paid shall amount to
the market value of the investment on the day before the measure was taken or became public
(Art.7/3). The same provision requires compensation to be paid in any convertible currency; to
be freely transferable and to be paid without undue delay. Delay would results in payment of
interest as per Art. 7/3.
39 Supra note 6, Art.7(2) (a) and (b)
40 Supra note 7,p.322
41Supra note 3, p.25
43 ibid
44 ibid
45 ibid

10
4. LIMITS TO REGULATORY POWER
Waiver of a host state’s right to regulate foreign investment in its territory is unlikely. This right
is justified by sovergnity.47 BITs nowadays provide for the right of entry and establishment of
investment to the nationals of contracting states.48 So, BITs are expected to leave policy space
for contracting states throughout the majority of their provisions.
4.1.Regulation of entry
Customary international law recognizes that the entry of foreign investment was entirely a matter
for sovereign prerogative of a state.49The Ethio-Bel.Lux BIT also respects this position. As per
Art.2 of the BIT, each contracting party shall accept investment by investors of other country in
accordance with its legislation. Accordingly, the Ethiopian investment proclamation
No.769/2012 has provided requirements for admission: sectoral requirement (Art.6-9), minimum
capital requirement (Art.11), permission requirement (Art.12)
The Ethio-Bel.Lux BIT also constrains right to regulate entry to some extent. A nice illustration
may be MFN treatment is applicable up on admission as discussed in section 2.3.
4.2.Labor Matters
The Ethio-Bel.LuxBIT underArt.1 (6) recognized the domestic labor legislation of the
contracting states with respect to internationally recognized labor rights such as right to
association, collective bargaining, and minimum wage etc. The BIT takes in to account the
interests of Ethiopian employees. Unfortunately, minimum wage is not set under the Ethiopian
labor law. So, the Ethiopian legislature shall amend labour proclamation no 377/2003 to come up
with minimum wage.
4.3.Environmental matters
Recently, environmental matter becomes a global issue. The Ethio-Bel.Lux BIT is drafted
accordingly. It recognizes the concern of the international environmental. It imposed on
contracting states, duty of ensuring high level of environmental protection through their
legislation (Art.5/1). The BIT under Art.5/1 also recognizes the right of each contracting party to
48 ibid
49 Id, p.311

11
establish its own levels of domestic environmental protection and environmental development
policies and priorities and to adopt and modify accordingly its environmental legislation.
4.4.Tax matters
Generally tax matters fall under outside the scope of investment treaties and instead in separate
bilateral tax treaties.50Nothing in international law prevents the guarantying of tax holidays to
and incentives to foreign investors but this within the discretion of state authorities.51 The
granting of incentives to desirable investor on economic factors is not discrimination.52The
Ethio-Bel.Lux BIT also adopts this position. Under Art 4/4, it excepts the application of MFN
and NT to tax matters.
5. INVESTMENT DISPUTE SETTLMNT
Investment dispute can arise between contracting parties (state-state dispute) or between a
foreign investor and a host state (investor-state dispute).
5.1.Issues of investment dispute
This relates to identifying matters that may give rise to investment dispute. As per Art.12 of the
Ethio-Bel.Lux BIT, disputes relating to the interpretation and application of the BIT are matters
of state-state dispute.
The BIT doesn’t specifically identify issues of investor-state dispute. Investor-state dispute may
arise from seizure of foreign investor’s factory, the promulgation of new law affecting the
interest of investor, simple refusal a host state to grant visa etc.53Generally, investor-state dispute
may arise from a contested violation of the standard of treatment provided under the BIT.
5.2.Mechanisms of Investment Dispute Settlement
a. State-state dispute settlement mechanisms: the Ethio-Bel.Lux BIT under Art.12 provides 3
mechanisms of settling state-state dispute: settlement through diplomatic channel, settlement
by joint commission and settlement by arbitration. The BIT prefers diplomatic channel as the
first way of settling dispute between contracting states (Art.12/1). Settlement by joint
commission is the second preferred way if the first mechanism is unsuccessful (Art.12/2). In the
absence of settlement after these two mechanisms used, the dispute shall be submitted to
arbitration, at the request of either of the parties (Art.12/3).
50 Supra note 8,p. 349
52 Id, p.116
53 Supra note8, p.354

12
Arbitration: is the last resort as per the Ethio-Bel.Lux BIT. The contracting parties to a dispute
must try to settle the dispute through diplomatic channel firstly failing which, by joint
commission (Art.12/1 and 2).The term ‘shall’ under these two Articles shows that the contracting
states in dispute can’t simply jump to arbitration. The other relevant point is settlement by
arbitration doesn’t need the mutual agreement of the disputing states. The matter shall be
submitted to arbitration court at the request of either of the disputing states (Art.12/3).
The arbitration court is constituted by two arbitrators appointed by each disputing states and one
chairman appointed by these two arbitrators (Art12/3). The arbitration court shall determine its
own rules of procedure (Art.12/4). The BIT doesn’t provide as to which substantive rule is
applicable. Since the scope of state-state dispute is on the interpretation and application of the
BIT, basically the BIT will be applicable. Other BITs specify rules/principles of international
law to be applied in addition to the rules of the BIT.54
The decision of the arbitration court is taken by Majority vote and such decisions are final and
binding on contracting parties (Art 12/4 of the BIT).
b. Investor-State Dispute settlement mechanisms: Art 11 of the Ethio-Bel.Lux BIT provides
three mechanisms for settling investor-state dispute: negotiation (amicable settlement),
settlement, settlement by local court or by international arbitration. The BIT prefers amicable
settlement as the first way of investor-state dispute settlement (Art11/1). In the absence of
amicable settlement, the foreign investor is given the right to submit the dispute to either to local
court of the host state or to international arbitration at his choice. (Art.11/2). Exhaustion of
domestic administrative or judiciary remedy is not requirement as per Art.11/2 of the BIT. This
may be due to the fear that the judiciary of the host state may not be impartial, independent,
competent or flexible.55
Moreover, the BIT gives the investor an option to submit the dispute for settlement to
U.N.C.I.T.R.A.L, or I.C.S.I.D, or the arbitral court of the international chamber of commerce in

13
Paris, or the arbitration institute of the chamber of commerce in Stockholm (Art.11/3). The
arbitral award of these organizations is final and binding (Art.11/5).
6. TERMINATION AND EXTENSION OF BITs
Investment agreements are generally long-term transactions56. There is no reported case of a
country actually terminating an investment treaty to which it has agreed.57 This is important to
give assurance of predictability and stable legal framework. Investment treaties usually establish
an initial period for which the treaty will be in force without providing for a right to terminate the
treaty during that period and specify how long the treaty will continue following the expiration
of the initial period or termination. The Ethio-Bel.Lux BIT shall remain in force for a period of
10 years (Art.14/1). As a rule, the parties may terminate a treaty only after the end of the initial
period or after submitting advance written notice. The Ethio-Bel.Lux BIT recognizes tacit
extension of the BIT each time for further period of ten years, unless either contracting party
does not serve notice of termination at least six months before the expiry of the BIT’s period of
validity (Art.14/1).
The fate of investments made, acquired or approved prior to the date of termination is an issue.
Most treaty-termination provisions have continuing effect clause, which extend the applicability
of the BIT as regards these investment at stake.58 The Ethio-Bel.Lux BIT under Art.14/2 extends
the applicability of the BIT on investments made prior to termination after termination.
57 Id, p. 252
58ibids

14
CONCLUSION AND RECOMMENDATION
The scope of the Ethio-Bel.Lux BIT is designed to include almost all forms of investment. It is
applicable on all kinds of assets and direct or indirect contributions in cash, in kind or in service,
invested or reinvested by investors of contracting party in another contracting party. The BIT has
almost unrestrictive MFN and NT clause. Ethiopia is currently in need of investors mainly in
areas of manufacturing to strength the domestic production capacity. The MFN and NT clauses
of the BIT should have except portfolio and other indirect contribution. This would have given
Ethiopia the opportunity of specially treating investors investing in the countries area of concern.
Therefore, the country shall notify its treaty partners to modify the treatment clause of the BIT.
Property taking means any measure of a host state such as expropriation, nationalization,
confiscation, forced sale etc. that has the effect of dispossessing the foreign investor’s investment
property. The distinction on the different forms of taking is not an issue in Ethio-Bel.Lux BIT.
The BIT aims at protection against any kind of investment property of an alien. It emphasizes on,
the issue whether the investor is disposed by recognizing any forms of property taking. The BIT
also gives the foreign investor right to submit disputes with the host state for settlement to
international arbitration, without the requirement of exhausting domestic remedy. The arbitral
award is binding. These are important to increase the confidence of the foreign investors and
reduce their fear towards investing in Ethiopia.
The BIT also respects the position of international environmental and labor laws. It reaffirms the
important international principles of environmental and labor law. It also recognizes a host states
right to regulate admission of investment.

15
BIBLOGRAPHY
A. BOOKS
1. Andrew Newcombe and Liuis Paradell,law and practice of investment treaties; standard
of treatment, (Kluwer law international,2009)
2. G.schawrzenbereg, foreign investment and international law,1969
3. Gray,International trade ,Investment and payment, 1979
4. JeswalldW.Salacuse,the law of investment treaties, (Oxfored university press,2010)
5. M.Sornarajah,the international law on foreign investment,(3rded, Cambridge University
Press, 2004).
6. Martha Belete, teaching materials on economic and legal aspects of foreign direct
investment localization for Ethiopia,investment policy of Ethiopia, (UNCATED Virtual
Institute,2013)
7. Ralpha.H. Folson,international trade and investment,2000.
8. Rudolf Dolzer and ChristophScheruer, principles of international investment law, (2nded,
Oxford university press, 2012)
9. Stephen W. Shill, the multi-lateralization of international investment law, (Cambridge
university press, 2009)
B. LAWS
1. The Bilateral investment treaty between Ethiopia and Belgium-Luxemburg economic
union, 2006
2. Investment incentives and investment areas reserved for domestic investors council of
minister regulation Federal negarit Gazeta no 270/2012.
3. proclamation no 769/2012 to provide for investment regulation, Federal negarit Gazeta ,
2012

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