Dr Hamidreza Mokhtarian

Unjust Foreign Investment Agreement on Exhaustible Natural Resources Dr Hamidreza Mokhtarian

Economically speaking, a state's concern with respect to the point ofexhaustibility of natural resources necessitates the government of a hostcountry to endure a great responsibility, not only to the current citizens, but it also is liable to the future generations. Therefore, the government ofa host sate, on behalf of its nation, bears a great and absolute responsibilityto protect exhaustible natural resources for the best interest of the nation. Such a responsibility seems more significant where exhaustible naturalresources are the subject of a foreign investment agreement. Foreign investment is a transfer of funds or materials from one country, asthe capital-exporting state, to another country, as the host state, in returnfor a direct or indirect participation in the earning of that enterprise. Thewhole process of foreign investment could be executed and implementedthroughout a foreign investment agreement, in which fundamentalprinciples of international law must be observed in order for suchinvestment agreement to be valid. Among fundamental principles ofinternational law, there are peremptory norms in international law fromwhich no state, through foreign investment agreement, is permitted toderogate. Therefore, if an investment treaty, at the time of its conclusion, contradicts a peremptory of general international law it would be void as itis stipulated in The Vienna Convention on the Law of Treaties. The main objective of this paper is to examine whether the principle ofpermanent sovereignty over natural resources is peremptory norm ofgeneral international law while it has been already recognized asobligations erga omnes by a vast majority of states besides theInternational Court of Justice in several cases. Since exhaustible natural resources especially of hydrocarbon industriesare one of the most vulnerable targets of foreign investment agreementthrough which the principle of sovereignty may be contradicted, this papermainly focus on such agreement concerning petroleum industr