Professor Abi-Saab stated, at the closing of the 2016 TWAIL Cairo Conference, that his time working on an ICSID tribunal had been akin to “working behind enemy lines”. As one of international law’s most prominent and well-rounded figures to come from an emerging country, his words echo a largely corroborated sentiment, which has permeated the relationship with foreign investment between the North and South: distrust. The investment field provides a robust framework for analyzing the dissonance between North and South — as Carlos Montenegro suggests in his work, the origin of international investment agreements (IIAs) is inherently antagonistic, as it is tied to the North’s colonial purpose of conquering and controlling the South.
Criticism of IIAs, while not new, has seen significant growth since the neoliberal crisis of the late 2000s, with much of this critique grounded in concerns over the persistent and unequal distribution of power within the investment regime. The notion that IIAs require a structural modification has been discussed on mainstream forums for years now, such as the UNCITRAL Working Group III and the more recent UNIDROIT Project. These projects tackle issues such as the reproduction of asymmetrical power relations between developed and developing States, the rising dissatisfaction with Investor-State Dispute Settlement (ISDS), the perceived pro-investor bias of the treaties and the lack of representation outside of the eurocentric sphere, to name a few. However, none of these projects aim to drastically change the treaties in regards to the main tension points. In this sense, this post seeks to analyse some of the ways in which developing countries have been regulating their own FDI.
This analysis begins by examining Brazil’s Cooperation and Investment Facilitation Agreements (CIFAs), which serve as an alternative to traditional Bilateral Investment Treaties (BITs), before proceeding to consider more conventional BITs concluded between developing nations. The central question that arises is: can projects of this kind genuinely be expected to alter, in a meaningful way, the colonial foundations of the IIA regime?
Abi-Saab’s opinion — that investment law’s institutions, in general, are embedded in a villainous spirit of sorts — actually echoes historical criticism from the Global South against IIAs, as they are the primary basis for the development of these relationships. That is to say, the foundation of IIAs is intertwined with the colonial origins of the North–South divide. The eurocentric monopoly makes itself noticeable in virtually every dimension of international investment law, as the North dictates the normative and institutional frameworks of the investment regime. Thus, the situation presents itself as a “Us v. Them” scenario. In this battle against “the Northern enemy”, then, what other alternative is left to the South, other than to join forces and strike back?
The Fellowship of the South: Brazil’s Cooperation and Facilitation Agreements
South-South cooperation is a theme widely broached in different sectors of international law. In this light, Brazil’s CFIAs emerge as an alternative to the classic BITs, entirely formulated by Brazil, and with their Global South counterparts in mind. The CFIA is a new model of IIA that drastically deviates from the standardized pattern enshrined in the BITs, which have been essentially unchanged since their conception in the 1960s. Unlike the traditional North–South IIAs, the CFIA is framed as an instrument of solidarity, mutual development, and shared economic priorities among developing countries. The CFIA flips the axis in its head: while the BIT is purposely focused on the promotion and protection of investment, the CFIA is centered around the cooperation and the facilitation of investments.
The novelty with the CFIAs lies mainly with the fact that it intentionally excludes ISDS of its clauses, in consonance with Brazil’s traditional position against this mechanism. Instead, it brings out the core idea of prevention of conflicts, through a series of closer interactions between the undersigned parties — for instance, the figure of the ombudsman is introduced as a designated focal point in each party’s territory, tasked with serving as the initial channel of communication for any issue related to the investment. Moreover, Joint Committees are established with the complementary mandate of overseeing the investment relationship from the negotiation phase through implementation, ensuring continuous dialogue and coordination. Should a dispute arise that cannot be resolved through either of these mechanisms, the matter may then be escalated, allowing one State to initiate arbitral proceedings against the other. Other staple clauses are also missing from CFIAs, such as FET (Fair and Equitable Treatment). There is a clear horizontalization of the parties that differs drastically from the standard BIT model.
Nevertheless, this model also sheds light on different issues in regards to South-South IIAs: for one, the South is not a monolith. The idyllic notion of cooperation clashes against facts such as the significant power imbalance between developing countries — as an example, Brazil’s GDP is nearly 100 times larger than Mozambique’s GDP, the first ever State to sign a CFIA. It is crucial to point out that Brazil is an outlier in the investment world: while it has never ratified a BIT, staunchly opposing ISDS and the possible interference of a foreign enterprise in their sovereign rights, it has retained its position as Latin America’s largest FDI (Foreign Direct Investment) recipient. Thus, this model is not universal by design; it is tailored to Brazil’s profile and interests.
The Good, the Bad and the Bilateral Investment
One cannot ignore that South-South cooperation in investment also displays glaring issues. For one, a central paradox lies in the fact that, despite the discourse of horizontal cooperation, South-South IIAs can — and often do — replicate the main points of critique against traditional treaties. The International Trade Center (2020) mapped out that, while South-South investment flows are growing, especially in the technological market, a considerable amount of challenges remain, such as a limited operational capacity to receive foreign investments and political and economic volatility.
Does a treaty signed between parties with vastly different socioeconomic realities not also necessarily reflect a power imbalance? Does South-South cooperation in IIAs constitute an alternative pathway in the world of investment law, or do they simply reproduce the hegemonic template among themselves?
China’s exponential growth as an exporter and importer of FDI is evidence that the “developing country” label is quite relative, and the power imbalances among Southern actors can be almost as significant as the long-standing asymmetries that have characterized their relations with the North. Moreover, South-South cooperation, by itself, does not necessarily imply any change within the investment framework. On the contrary, other South-South cooperation agreements have largely followed the classic BIT model — e.g. the Argentina-Guatemala BIT or the Sri Lanka-Thailand BIT, both of which present extensive investor protections, FET clauses, and the adoption of the ISDS mechanism. The South African Development Community Model BIT (2012) also contains these controversial clauses, despite its objective being the encouragement and increase of investments, with special attention given to the Host State.
Closing remarks
Within this context, it is noteworthy to mention that CFIAs are still relatively new, as the first treaty was signed in 2015, and there is no concrete evidence that any of Brazil’s three CFIAs in force have attracted more FDI to the country. Thus, as Professor Carolina Moehlecke (2025) noted, Brazil’s CFIAs take into consideration the Brazilian enterprises that have already established operations abroad, aiming to protect these investments more than it aims to attract FDI through these agreements.
Additionally, not every emerging economy may view an CFIA-style model as aligned with its interests. On one hand, the normative aspirations of South-South cooperation (such as preserving policy space, enhancing development autonomy, and fostering mutual benefits) could be beneficial to both parties, and could potentially strengthen the South as a bloc. On the other hand, Global South states often face competitive pressures to appear investment-friendly to the North, which, in turn, encourages the adoption of familiar treaty designs over newer ones. In many cases, the expected gains from attracting investment from a developed, capital-exporting State, may seem more compelling to a developing country than engaging in a partnership with another Southern state that has comparatively limited capital to offer.
Still, there are emerging signs of transformation, namely the CFIAs — despite being a novelty still, this model has the potential to develop into a more effective mechanism of South-South cooperation in investment law, given the innovation it presents. Thus, it stands to reason that South-South cooperation can reshape investment treaty law in more equitable ways, even if this potential remains uneven across regions at first. In regards to the CFIAs, there is great expectation that upcoming agreements, such as the one with India, shall launch Brazil as an investor in a new, growing market. This is an opportunity to project Brazil’s investment presence beyond its traditional regional sphere, marking the shift to a role of capital-exporter. Whether such agreement can effectively secure this outward investment role, however, remains an open question.
In conclusion, South-South cooperation in IIAs is a field in transition: while many treaties continue to follow the standard patterns of investment protection, new models demonstrate a willingness to challenge those provisions. Nonetheless, the success of South-South cooperation, and whether it will ultimately contribute to a more equitable global investment order, depends on the ability of developing countries to coordinate efforts to resist reproducing the legal structures that historically limited their own autonomy. The shadows of the old order remain, leaving the challenge of not only negotiating new agreements, but also ensuring that these instruments do not leave Southern States stranded behind enemy lines.
REFERENCES:
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