Imaduddin Ahmed

The Fletcher School, Tufts University Graduate School of International Affairs

Executive Summary

In 2009, the government of Madagascar was overthrown for negotiating a seemingly unfavourable deal with Korean conglomerate Daewoo. Of concern to the nation with malnutrition rates as high as 50% were land grabs and food security. The subsequent Malagasy president revoked the deal. Yet despite the bitter experience, Daewoo and the government of Madagascar may still want to consider negotiating for a deal that can better ensure the food security of both nations through Daewoo’s superior farming technologies. A prerequisite to a deal, however, is a legal framework that protects from the Madagascan government the interests of the Malagasy people and the interests of Daewoo. This paper discusses how such a framework can be built with regards to the former, and negotiated with respect to the latter.

‘In the world’s earliest written legal code, dating from 1790BC, Hammurabi, the king of Babylon, laid down rules governing the maintenance of irrigation systems and the amount of water people could take from them. Two generations later, his grandson abandoned this rules-based approach and used the river Tigris as a weapon against rebels in Babylon.

The world is charting a similar course, away from rules governing scarce resources towards conflict over them. For most of the past 50 years, the striking thing about such conflicts is how rare they have been.’

-          The Economist[1]

I. The anxieties over land and food security

The law defines where the rights of one party end and the rights of another begin, and in so doing, it governs the relations of the parties relative to one another.[2] Designed with the purpose of development in mind, the law can benefit the poor[3]. Designed well, the law achieves Pareto efficiency.

With a growing global population, diminishing resources and food production levels reaching their peaks in regions of the world[4], competition to secure food, water and energy have been long-term drivers of land acquisition.[5] Notable short-term drivers were the 2007-08 high oil prices and the ban on food exports by 25 countries in 2008, which resulted in the food crisis and drove up prices for land that could be used for agricultural and fuel production.[6]    

Remarkably, land acquisition for agricultural land often in happens developing countries with high rates of malnutrition.[7] Between 2004 and 2009, agribusinesses, investment banks, hedge funds, traders and increasingly since 2007, states and sovereign wealth funds from the Gulf States, Asia, Europe and the USA, acquired almost 2.5 million hectares – almost half of the United Kingdom’s arable land – in Ethiopia, Ghana, Madagascar, Mali and Sudan.[8] 

With these acquisitions come concerns about “land grabs” from citizens, and a loss of state sovereignty in terms of ability to control the amount of food exported, the water used by foreign investors or the ability to limit the negative environmental impact.

But while the trend of land acquisition may be new for a post-colonial free-market world, the laws governing it are not. How do they balance the interests of foreign investors and their home countries with those of the host country, its citizens and its environment? How can the law create a win-win situation for states and investors seeking to secure food, water and energy, as well as for host states and their citizens?

This paper will examine the primary interests at stake with regards to foreign investment in land, the greater social need for such investment within the agricultural space in particular and how international as well as domestic law govern the competing interests. Finally, this paper will recommend changes in the law in order to optimise returns to society.

II. Foreign land acquisition: the interests at stake

Those whose interests are at stake when it comes to foreign investment in land are the citizens of the host country of foreign investment, the host state, the foreign investor and the home state of the foreign investor.

The foreign investor will want the law to protect its property and to minimise non-commercial, as well as commercial, costs. It will want the host state to protect its assets, tangible and intangible, will want ‘just’ treatment, will want to manage its assets unimpeded (including their dissolution, export and the repatriation of dividends in whatever currency it wishes). It will not want its assets to be seized by the state either outright, or more insidiously by having the state transfer its profitability to itself through regulation or by hiking taxation rates, utilities rates, export or exchange rate tariffs. Should expropriation occur, or should the investor’s assets suffer damage due to the state’s acts or omissions, the investor will want timely and fair compensation.

 Since the home country of the investor stands to benefit from profits that are repatriated, the home country’s interests will align with those of the investor.[9] Additionally, in the case of land acquisitions, an increasing number of Gulf and Asian states are using funds to secure a steady stream of food and fuel[10], and to protect their limited sources of water.[11]

Host countries too need to ensure that they are able to provide for their population’s nutritional and energy needs. They will not want investors to abuse their resources, wanting their guests to pay for what they use. They will not want their guests to damage the environment, not only for the sake of the environment itself, but for the health and safety of citizens, as well as for the reason that harm to the environment can limit the value and economic productivity of the state. The host state will want to limit the investor’s legal entitlements as far as it can – the investors’ rights limit the state’s discretion to do as it sees fit (in the public interest, or otherwise). At the same time, the host state will want the investor’s capital and a share of the profit stream that the investor generates. In the particular case of agricultural investment into countries suffering high rates of malnutrition, the host government will hope for a share of the exponentially increased agricultural produce equal to or above the produce its farmers were previously able to harvest due to technological arbitrage. The government will therefore recognise that it will need to offer the investor a minimum threshold of rights, as well as build a reputation for abiding by domestic and international laws, and by its contractual obligations. It will also recognise the need to create a stable, ordered environment. Ergo, were the host country to push hard to limit the protections of the investor, it should reasonably expect a lower share of the produce during normal times, just as it would expect a lower share of the produce were it to charge a higher premium for rent or for leasing.

Inherent in the negotiations between the investor and the host state is a trade-off. Where laws and regulations are skewed in favour of the host state, but still not so bad that the investor will abstain, the investor will make the host country pay more for investment capital.[12] 

Citizens of the host state will have interests less aligned with their state than will the foreign investor with its home state. What may in the mind of bureaucrats and politicians of the host state be a beneficial exchange for the state’s population at large (if not themselves personally[13]) may not be beneficial, or as beneficial, for individual citizens who give up their land, either voluntarily or forcibly. Particularly in countries with unsecured land rights, citizens will fear not being adequately compensated for the land by their own home state,[14] and will be outraged if their government sells their land at a substantial mark-up. They will fear poverty if all they knew was farming and they are unable to gain employment with the new land owners. Even if they do gain new employment with a less volatile stream of income, if there is less food in circulation in the domestic market and the price of food increases, they will rightly fear whether they will be able to afford to feed themselves to the level that they were able to before (which was not much).[15] They will also fear estrangement from their ancestral lands and their patrimony[16] and fear desecration of their worship sites.[17]

IIIa. The law governing relations between the home state and its people: a look at Madagascar

In March 2009, civilian protestors, backed by the military, saw the overthrow of the Madagascan president. The president’s usurpers claimed that a deal he had made leasing over half of the island nation’s arable land[18] for 99 years with South Korean conglomerate Daewoo lacked transparency[19] and consultation of the affected Malagasy population.[20] Existing farmers would not have been compensated and all the food would have been exported. [21] In exchange, Daewoo would provide employment[22] and pay the government $6 billion.[23]

In a country where nearly 50 percent of people suffer chronic malnutrition[24], the explanation given by Hong Jong-Wan, a Daewoo manager, for wanting to export all harvests to other countries or to Korea, “in case of food crisis”, would not have helped: “Food can be a weapon in this world.”[25]

After the Malagasy president’s ouster, his replacement, Mr Andry Rajoelina, cancelled the agreement with Daewoo, forwarding, in the court of the media, the argument that, “We are not against the idea of working with investors, but if we want to sell or rent out land, we have to change the constitution, you have to consult the people.” [26]

There seems to be some confusion as to what exactly Mr Rajoelina said and meant. The BBC interpreted his words to mean that Madagascar’s constitution did not allow for the rent or sale of land.[27] This statement would have been factually incorrect.[28]

The more judicious interpretation as stated above could conceivably have validity. If customary tenure could be interpreted as holding legal rights over land –in the case of Magaya v. Magaya, the Supreme Court of Zimbabwe upheld the importance of customary law[29]  –  then the constitution did provide legal recourse to small-hold farmers with land under customary tenure. Article 34 of the pre-Rajoelina Constitution provided that the state shall guarantee the right to private property and not deprive people of it except for public use and with fair compensation. Article 35 stated that a village council of elders may take appropriate measures to prevent a loss of land or of ceremonial heritage, unless their intervention jeopardised the common interest or public order. [30]

This case having involved a prevention of loss of land and arguably too a loss of ceremonial heritage[31], Article 35’s provision, ‘may take appropriate measures’ and caveat of ‘common interest and public order’ are sufficiently vague enough to entertain the possibility that in fact an ouster of the incumbent government which sold the people’s land without their consultation could have been legally permissible. Whether or not it was would be up for a court of law to decide, but the point is that the Constitution allows for action first and a judicial decision second, as opposed to the other way around.

We will look at how Mr Rajoelina’s cancellation of the Daewoo deal would have held up in international law in section IV.

IIIb. A better domestic legal system for Madagascar

Clearly what happened in Madagascar was a farce, both in the way the government was going to llegedly seize land without compensating its traditional owners, and for the extra-judicial response. The legal recourse to an alleged abrogation from the Constitution by the state cannot be a coup. The Constitution must allow for courts of law to decide whether there has been a wrongful taking of land or destruction of ceremonial heritage, and then decide upon the appropriate measures to be taken should they be required.

The first step to achieving this is by creating a conflict resolution system within a legal framework. Venues for conflict resolution and their authority should be defined, the public should be aware of these and find them accessible and navigable, the conflict resolution system must publish its court proceedings in order to ensure transparency and faith in such a system, the system should process appeals and should ensure timely compliance with rulings.[32]

To make palpable state seizures of land that transfer the land of farmers to other private entities,

1)      The home state must establish legal processes by which it will allow itself to seize private land:

a.       It must convince a court that it has exhausted exploring alternative ways of meeting a public[33] need without transferring the private land. (In the case of Madagascar, we will explore below how securing land tenure may have achieved the public need of increasing Madagascar’s land productivity and decreasing it incidence of malnutrition.)

b.      It must pay the landowner full market-based compensation at the time of the taking, or earlier, and the relevant court must determine that the amount stipulated is sufficient.[34]

c.       The process should provide sufficient notification to the affected parties and allow them to participate in the hearings and other procedural steps. [35]

2)      The home state must bind itself to ensuring that those whose land is sold have means by which to sustain themselves, and in a manner no less better than by which they were living. This could mean for illiterate arable farmers jobs with no skills other than farming

a.       Training and state jobs

b.      Guaranteed employment with the new landowners as farmers

Taking into consideration the emotional ties of the Malagasy people to their ancestors’ land[36] it is by no means a given that a transfer of native land to Daewoo is the optimal manner by which the government of Madagascar could improve the productivity of its land and reduce the incidence of malnutrition.

Reports The Christian Science Monitor, a lot of land was left unused, the soil quality was depleted by slashing and burning forests to make way for fields and by conservative farmers growing the same crop in it year after year, and farmers failed to invest in their land or in improving their techniques because they feared that they could be moved off of their land at any time (as they were).[37] It is worth exploring then, whether a clarification of citizens’ property rights under the law and whether educational farm programmes would achieve the public need as well as Daewoo with its highly capital and technology intensive farming techniques.

There are six expected benefits to securing land tenure [38] [39] [40] [41] [42] [43] [44]:

i)              higher incentives for investing in the land

ii)             decreased likelihood of the use of ‘slash and burn’ techniques to convert forest into readily usable (but for a short period of time only) agricultural land and hence slower depletion of soil

iii)           sounder environmental practices by virtue of i and ii

iv)           increased likelihood of land transfers to more productive producers (since to them, the value of the land would be higher, they would pay a price higher than the current owner’s reservation price) and development of the non-agricultural economy (this would therefore also make transferring land to Daewoo simpler)

v)             improved access to formal credit by the ability to use the land as collateral (some of this credit could be used to purchase machinery which would also make the land more productive)   

vi)           decreased likelihood of land seizures and better overall governance

Indeed, Klaus Deininger and Jin Songqing of the World Bank Development Research Group show empirically that in Ethiopia, a country which also suffers from high levels of tenure insecurity, an increasing population and environmental degradation, the investment-enhancing impact of greater tenure security and transferability is ‘surprisingly large’.[45]

In 2004, the World Bank showed that farmers in Thailand borrowed up to five times more from lenders than farmers with similar land but without title.[46] It also found that  “a modest improvement in the protection of property rights could reduce the rate of deforestation by as much as one-third.”

Even if Daewoo were to prove the better option, securing citizens’ land rights and enhancing their farming techniques would improve the Madagascan government’s Best Alternative To A Negotiation Agreement, and hence improve its negotiating power vis-a-vis Daewoo, such as making sure that not all the food is exported, and that the landowners whose land is transferred are employed by the company.

How then to clarify the citizens’ property rights? Again, we revert to Leonard Rolfes, who argues that the way forward is by formalising claims through documentation which is accessible to outsiders.[47] The prevalent systems by which this works in the West is by title registration (Europe, Australia, Canada) or by deed registration (United States).

Rolfes anticipates pitfalls, namely disputes over claims to the same land. These, he suggests, can be resolved through special processes in a way that the affected parties will accept as legitimate and will use, and can be rooted in customary norms.[48] The system must, of course, convert into formal property the land rights that exist in practice, though they may not be provable by chains of title or other conventional means. [49] It must be low in cost, navigable and physically accessible to poor people. [50] Too, there must be a process by which the poor can bring decisions to the courts for judicial review should the well-connected attempt to usurp their rights.

Once titles (or deeds) have been established, their transferability must be defined. The legal framework, Rolfes explains, must recognise the principle of ‘freedom of contract’[51]; define provisions on obligations, their termination and remedies for failing to fulfil them (such as an obligation to transfer land ownership for the benefit of another person, and such as the obligation’s fulfilment, or a settlement if fulfilment is not possible); provide rules on how to conclude a contract; and provide rules for when a transaction will be considered invalid (such as fraud or coercion), in order to protect the poor from domineering interests. Also, inheritance law must be drafted in a way that reconciles the formal law with customary norms. [52]

IV. The law governing relations between home states and foreign investors: how Daewoo, Korea and Madagascar ought to negotiate

Mr Rajoelina cancelled Madagascar’s agreement with Daewoo. Would Daewoo have had a case to make for compensation? Given that it seems that Daewoo had not yet paid the Madagascan government the $6 billion in consideration for the 99 year lease;[53] given that the there was – gallingly – no Madagascar-Republic of Korea Bilateral Investment Treaty (BIT)[54] that would have given an international investment tribunal grounds for arbitrating, and if it is the case that Madagascar does not have laws in which a tribunal could find international law principles[55], then Daewoo would have had to have provided in its contract with Madagascar a provision that called for international arbitration, and further, Daewoo would have had to have ensured that ‘investment’ was defined broadly enough[56] in the contract so that it included pre-investment expenditures,[57] Daewoo could then have sued for pre-investment costs and, even more optimistically, for the loss of expected future profits, under international customary law.

International customary law is wrought with controversy, and there is a split between the South and the North on the matter of what standard should be used to judge for compensation. Much of Latin America, for instance, adopts the view that property within its territory is subject only to domestic laws.[58] In the absence of ‘Calvo clauses’ in Madagascar’s legislation or in the contract calling for international arbitration to decide according to Madagascar’s domestic laws, [59] the North’s Hull doctrine would likely be adopted by a tribunal. It calls for ‘prompt, adequate and effective compensation’, and has found traction in De Sabla, where a tribunal found that the expropriator would be liable for the ‘full value’ of property and in the case of  Chorzo´w Factory,  which set down, albeit indirectly, criteria for the ‘value of the undertaking at the moment of dispossession, plus interest to the day of payment’.

After the tribunal decided upon a standard of compensation, it would have to choose an appropriate valuation technique for working out the level of compensation. Tribunals can use discounted cash flows, the book value of the company, the replacement or liquidation cost. In Daewoo’s case, without a history of earnings, a tribunal would be unlikely to use DCF,[60] and without a company having been set up in Madagascar, the book value method would not be applicable either. At most, then, Daewoo could hope for a recuperation of its pre-investment costs. This amount may not justify the costs of taking Madagascar to court, which is possibly why Daewoo has not.

Going forward, suppose that Madagascar were to develop the perquisite to foreign investment – an appropriate domestic legal framework as described above; that it found that Daewoo’s investment could add value were a better contract negotiated vis-a-vis its own food security and the employment of its farmers who once had tenure of the land; and that it found that Daewoo would be amenable to such a contract. (Given the hysteria about Daewoo’s previous attempt, this would also likely involve Daewoo paying Madagascar a monthly rent for the land, which it would not have paid,[61] rather than a lump sum in the beginning that can be squandered by a corrupt government. Less land would likely be acquired, and for a shorter duration.) The first thing Daewoo would want to do, to have more control over its fate under international law than customary international law would afford it, would be to have its government sign a BIT with Madagascar’s.

Then, the law governing Daewoo’s investment in Madagascar would be governed by Madagascar’s domestic law, the Republic of Korea-Madagascar BIT (no other multilateral treaties exist between these countries) and the contract between Daewoo and Madagascar.[62] consider the writings of ‘highly qualified publicists’ (academics) in deciding what to decide in accordance with international law.[63]

When a state decides to enter a treaty with another, it cannot use violation of existing domestic law[64], regional land use and urban planning regulations[65] or even legislation subsequent to the signing of the treaty[66] as excuses to recuse itself from its treaty obligations without compensation to the investor.

With a BIT, the standard of compensation for expropriation would be as is stated within it. The BIT negotiated between Bangladesh and the Republic of Korea in Article 5(1) serves as a model that Daewoo would wanted emulated for a BIT with Madagascar, imitating, as it does, wording of judgments made within international customary law based on the Hull doctrine:‘[C]ompensation shall amount to the market value of the investment expropriated immediately before the expropriation or impending expropriation becomes public knowledge.’[67]

When it comes to compensation for losses owing to armed conflicts, revolutions and national emergencies,[68] South Korea’s past BITs have limited the amount of compensation its companies or nationals can seek. In its BITs with Pakistan and Bangladesh, it explicitly opted for national treatment. [69] This could conceivably be, or become, nothing. In Article 3(2) of these BITs, it has called for the ‘most constant protection and security’ of nationals or companies in the territory of the other contracting party without specifying whether failure to provide this shall result in compensation.

Other countries have, through their wording in their BITs, called for a more objective ‘minimum standard’ of compensation. These BITs require that their national’s or company’s investments not ‘be accorded treatment less than that required by international law’ and demand full protection and security. The standard for compensation when relying on this wording within a BIT has been decided in international customary law

·         as covering ‘any financially assessable damage, including loss of profits in so far as it is established’ by Article 36(2) of the United Nations International Law Commission’s Draft Articles on the Responsibility of States for Internationally Wrongful Acts (2001).[70] The International Court of Justice has cited an earlier draft text of the Articles.[71]

·         or as wiping out as far as possible ‘all the consequences of the illegal act and re-establish the situation which would in all probability have existed if that had not been committed’ in the Chorzow Factory Case.[72]

The Republic of Korea is short-changing its companies with the wording it has used in past BITs. Going forward, it will want to negotiate a BIT with Madagascar that will afford Daewoo a higher standard of compensation should its operations be impaired by a lack of host state protection and security for an undefined number of reasons.

In the cases of CME Czech Republic v Czech Republic,  Azurix v. Argentina and of Siemens v. Argentina, ‘full protection and security’ was interpreted as extending beyond mere physical security, but also to the country’s regulations of the investor’s industry, and of legal security. Suez, Sociedad General de Barcelona S.A., and Vivendi Universal S.A. v. Argentina made clear that ‘full protection and security’ did not extend to responsibility for a stable commercial environment, but also made unclear whether the clause would be upheld to mean a stable legal environment by future tribunals.[73]

The call for ‘full protection and security’ coupled with treatment accorded to investments no less than that required by international law is not, however, the only way to safeguard against harmful regulation or legislative change[74] without compensation. 

Daewoo could explicitly sign into contract with Madagascar the resources it would want access to, the pollution it would need to be allowed to make, and the permits it would require. Korea, for its part, ought to negotiate in the BIT for the necessary permits to be issued once a foreign investment has been approved.

The effect of the BIT provision would be to write in international law Madagascar’s obligation to issue the permits, which would supercede its national laws, unless the violation of the national law were ‘manifest’ and concerned a rule of domestic law ‘of fundamental importance’.[75]

In MTD Equity v Chile, the international investment tribunal, relying on a most favoured nation provision[76] in the Malaysia-Chile BIT (also present in the Korea BITs with Pakistan and Bangladesh), held that Chile breached its obligation to provide fair and equitable treatment (provided for by the Korean BITs) to the Malaysian firm. MTD had received approval by the Chilean government to build a satellite city, but national and local authorities had subsequently deemed the approved project to be a violation of land use and urban planning regulations and refused to issue permits. Based on BITs negotiated with Denmark and Croatia, and based on Malaysia’s most favoured nation status, the Chilean government ought to have ensured that the permits were issued once it approved the investment.

Arguments of ‘creeping expropriation’[77] could also help Daewoo and Korea protect their interests against Madagascar. In Metalclad Corp v. United Mexican States, a U.S. waste-disposal company won its case against the government of Mexico for not having overturned a state government ecological decree and for not forcing a municipal agency to grant permits, that prevented Metalclad from operating its project, which it had been invited to initiate by Mexican officials, and which had met all Mexican legal requirements at the time.

In addition to arguments of ‘creeping expropriation’ Ethyl Corp. v Canada demonstrates that Daewoo might be able to protect its interests by citing discrimination rather than national treatment, and for hindering performance requirements (with the requisite clauses provided for in its negotiated BIT). Ethyl Corp. was able to get compensation for legal fees and damages from the Canadian government, as well as a reversal of laws that banned the import (rather than use)[78] of MMT on the grounds that banning imports discriminate against foreign investors, and that this would likely constitute a violation of Articles 1102 on national treatment, 1106 on performance requirements and on 1110 on expropriation of NAFTA, given that the Canadian government was unable to sufficiently prove the harm that MMT caused to the environment and to health. The Canadian government went as far to sign a letter stating that MMT is not known to be hazardous.

Metalclad and Ethyl Corp do not mean, however, that the Madagascan government would not be able to impair Daewoo’s operations on the grounds of environmental damage per se. In the first case, the mistake of the government was to contract with a company that invested to its detriment, without providing for its ability to do business. In the second case, the host government’s shortcoming was its inability prove harm and its choice in legislative language was indeed discriminatory. Were Madagascar to negotiate in a BIT with Korea a clause to protect its environment, such as what is present in the US-Uruguay BIT[79], there most likely would be scope for it to implement regulations that would limit Daewoo’s environmental degradation under international investment law were it able to prove that a) Daewoo was indeed causing environmental degradation and that b) preventing Daewoo from doing so would not prevent Daewoo from doing what it was in Madagascar to do, and – perhaps – as profitably as it could do otherwise and that c) the regulations were applicable to all farmers, regardless of nationality.

For its part, Korea would want to accede to a BIT article providing for the protection of the environment and Daewoo would want to hold itself to high environmental standards given the level of political awareness and mistrust among the Malagasy people. It would show that Korea and Daewoo come in good faith, with the intention of adding, rather than negating, value to Madagascar.

The Madagascan government would likely find itself on the wrong side of an international tribunal on the grounds of national treatment, fair and equitable treatment, performance requirements and expropriation were it to change radically the tariffs on water or electricity. The same would be true of preventing Daewoo from exporting food, for which there is also a BIT provision in the Bangladesh-Korea BIT, Article 6, which provides that each state shall guarantee ‘the free transfer of the capital of, and the returns from, their investments, subject to its right to exercise equitably and in good faith powers conferred by its laws’. It would be for the Madagascan government to negotiate with Daewoo what percentage of produce could be exported, or to apprise Daewoo of the tax-rate that it intended to impose upon exports at the time of the contract, to avoid later allegations of creeping expropriation.

With food security at the crux of Daewoo’s investment thesis, is there a way for Madagascar to protect its own, should one year there be a poor crop yield? Would Madagascar be able to stop the necessary amount of food exports to prevent famine among its own people?

The hope is that Daewoo’s agricultural technology would increase the size of the proverbial pie, so that hypothetically Madagascar could receive a slice no smaller than what it had before Daewoo’s investment. A contract could stipulate that Madagascar receive no less than a specified absolute amount, and if the yield is less than that amount, Madagascar keeps all. It is difficult to see why, with the political situation in Madagascar as it is, the government would agree to a standard of anything less. Daewoo then would be incentivised to really add value to the land, so that it could repatriate the excess to supplement, and it would enter such an agreement if this were its best option – farmable land is, afterall, a finite resource.

With such an provision in place, or with an agreement to put such a provision in place subsequent to the signing of a BIT, Daewoo would want Korea to negate explicitly in its BIT with Madagascar Madagascar’s ability to invoke the customary international legal doctrine of necessity,[80] which would allow Madagascar to fail to meet its treaty obligations without needing to compensate Daewoo, the investor, as was held in LG&E v Argentina, were it able to prove that its abdication of the responsibility was a matter of necessity.

The scope for invoking the doctrine of necessity in international customary law seems at first blush tight.[81] However, it would be comforting for Daewoo and Korea to know that some tribunal in the future would not take advantage of its ability to go beyond the confines of previously decided cases to broaden the scope for the doctrine, as LG&E v Argentina did in deciding that Argentina’s financial crisis constituted a threat to the state’s ‘essential interest’, when just 18 months earlier, on virtually the same facts, CMS v Argentina had reached the opposite decision.[82] Daewoo would want in a BIT provision the exclusion of the doctrine of necessity for the same reason it would want inclusion of the standard of compensation for expropriation: predictability and protection from the mercurial international customary law.

- - -

It would be premature to dismiss out-of-hand the prospect of Daewoo and Madagascar becoming future partners in business. They both have something that the other desires: one has capital and technology, the other land. Together, they have better factors of food production. If together their factors can combine to improve the food security of both Korea and Madagascar, the only thing left remaining is a legal framework that defines and protects the rights of the Malagasy people and Daewoo. Once this is established in a way that makes sense for all parties, the costs of doing business will be lower, and the benefits and possibility of doing business together will be higher.

Our system of sovereign sukuk ratings could benefit the global economy and promote better cross-cultural relations

Imaduddin Ahmed

guardian.co.uk, Wednesday 2 February 2011 15.02 GMT

Also, linked to by the Wall Street Journal: http://onespot.wsj.com/politics/2011/02/02/489aa/is-your-economy-sharia-compliant