International trade and investment breed prosperity. Prosperity, in turn, fosters peaceful relations. Through legal regimes that encourage and strengthen trade and investment, international law contributes greatly to the "creation of conditions of stability and well-being which are necessary for peaceful and friendly relations among nations. " For the United States, bilateral treaties have held center stage in setting legal standards for the establishment and protection of United States investments overseas, including those that take the form of foreign incorporated businesses. One measure of the effectiveness of these legal standards is their success at resolving international investment disputes when they arise. Without enforceable legal protections, the prospective investor has a lower expectation of security in the investment and is therefore less inclined to conduct business abroad. Consequently, a legal regime that fails to protect overseas investment carries a cost in foregone welfare and ultimately lessens opportunities for nations to forge strong and lasting economic ties.
Sean D. Murphy,
The ELSI Case: An Investment Dispute at the International Court of Justice,
Yale J. Int'l L.
Available at: http://digitalcommons.law.yale.edu/yjil/vol16/iss2/3