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Bilateral Investment Treaty

Investment

An agreement between two countries establishing terms for private investment by nationals of each country in the other.

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A bilateral investment treaty is an agreement between two states setting the treatment each will give to investments made in its territory by investors of the other, and — the feature that gives these treaties their force — usually giving those investors a direct right to bring the host state to international arbitration rather than to its own courts. Beyond that shape there is no standard text. Each treaty defines its own key terms: what counts as an investment, who qualifies as an investor, what fair and equitable treatment requires, and which disputes may be arbitrated at all. Older treaties tend to be short and broadly worded, newer ones far more prescriptive, with carve-outs for regulatory measures. Awards under one treaty do not bind tribunals under another, so a proposition about “BIT law” is usually a proposition about a family of similar clauses rather than a rule.
Why this entry carries no source list. This term has no central definition because it is defined treaty by treaty. What it means for a given investment is set by the particular agreement’s own text, and the tribunals interpreting one treaty are not bound by those interpreting another. Citing one instrument would imply a generality that does not exist. Read the treaty that covers your investment, and read how tribunals have construed its wording.

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From the AJG lexicon archive (July 2026).

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