FULL PROTECTION AND SECURITY OF FOREIGN DIRECT INVESTMENT UNDER THE ETHIOPIAN INVESTMENT LEGAL REGIME: THE LAW AND THE PRACTICE IN OROMIA

Abstract

Investment in general and FDI in particular plays significant role for economic development of states. Ethiopia as least developing country needs the inflow of FDI. Attraction of FDI requires the existence of protection regime in host states. Ethiopia has enacted investment proclamations, signed different BITs and other legislations to attract FDI. Moreover, the country provides different incentives for investors to encourage the inflow of FDI. However, investors need to have protection and security for their investments in addition to incentives and other factors. In 2015 and 2016, foreign owned investments sustained around one billion birr loss as results of public uprising in Ethiopia. This creates frustration on investors. Therefore, the main objective of the study is to assess the legal and institutional frame works of FPS of FDI in Ethiopia mainly based on the actual problems happed in Oromia regional state. In this regard, the investment proclamation fails to incorporate FPS standard. The BITs signed by Ethiopia also fails clearly to shows the nature and scope the standard in case damage sustained by investors. Most importantly. Ethiopia has no guidelines to regulate the issues concerning how to evaluate damaged property, by whom, how to pay compensation, how to assert claims and other related issues. To assess the issue, the researcher used both doctrinal and empirical research approach. General principles, customary international law minimum standards, experiences from the decision of tribunals and other states. Domestic legislations such as -the constitution, proclamations, BITs and other relevant primary legislations have been analysed. In addition, interview is made with officials from Investment Commission, officials and experts from Development Bank, foreign investors. The discussion in the paper shows that FPS standard in our BITs is broad enough to open way for broader interpretation by tribunals that may result in strict liability. In addition, the current approach used by the government to evaluate the property lost results in dissatisfactions from the sides of investors. The government paid the compensation as grant for all with in its capacity and based on priority for investments that are export oriented. Therefore, the researcher mainly recommends to revisit our BITs to limit the obligation of the government clearly that considers our capacity. In addition, we need to have guideline to regulate evaluation of property damaged, how, by whom and other related concerns to avoid bureaucracy for investors.