International organizations are forums of co-operation of sovereign states based on multilateral international agreement

“International organizations are forums of co-operation of sovereign states based on multilateral international agreement”-Discuss


Legal systems are particular ways of establishing and maintaining social order. It is possible to describe law as the body of official rules and regulations, generally found in constitutions, legislation, judicial opinions, and the like, that is used to govern a society and to control the behavior of its members. It is such a system which cannot be denied or ignored and also a system of rules and regulations.

International direct investment has been taking place in various forms and to different degrees for over a century. Attempts to establish a framework for the protection of foreign investments dates back to the 1920s, most notably negotiating a League of Nations draft convention. Starting from the second half of the twentieth century, the investment protection was developed through the bilateral investment treaties, which are signed between two countries and which state the desired conditions under which investment can take place between them. The first BIT, between West Germany and Pakistan, was signed in 1959 and their numbers have grown steadily since then, although research suggests that BITs do little to increase foreign investment. In 1965, the International Centre for Settlement of Investment Disputes (ICSID) was established in the framework of the United Nations, and in 1967, the OECD prepared the Draft Convention on the Protection of Foreign Property although this was not adopted.

2. What is Multilateralism Today?

Multilateralism is far from being a novel concept. Originally, multilateralism was instituted as a form of cooperation among sovereign states, which are the building blocks of any multilateral arrangement or enterprise. However, today’s increasing diversification of multilateral actors and of multilateral playing fields means that this conception of international relations no longer accurately depicts reality.

The United Nations (UN), as the paramount organization at the international level, represents the primary platform for multilateral cooperation. This, however, does not preclude other organizations from playing a role. Regional organizations have the potential to ease the burden on the UN and play a role of international reach, for example in peace and security operations. The position of the EU is analyzed within this framework.

3. Multilateral Agreement on Investment

The Multilateral Agreement on Investment (MAI) was a draft agreement negotiated between members of the Organization for Economic Co-operation and Development (OECD) in 1995–1998. Its ostensible purpose was to develop multilateral rules that would ensure international investment was governed in a more systematic and uniform way between states. When its draft became public in 1997, it drew widespread criticism from civil society groups and developing countries, particularly over the possibility that the agreement would make it difficult to regulate foreign investors. After an intense global campaign was waged against the MAI by the treaty’s critics, the host nation France announced in October 1998 that it would not support the agreement, effectively preventing its adoption due to the OECD’s consensus procedures.

4. Purposes and provisions of Multilateral Agreement on Investment

According to MAI supporter Sergio Marchi, one of the main purposes of the agreement was to eliminate the “patchwork” of investment rules enshrined in the then-1300+ bilateral investment treaties. Contrary to many critics, he argued that the MAI would help prevent “races to the bottom” that would undermine high standards of Canadian regulation.More specifically, the agreement would:

  • Minimize the diverse state regulations in governing the conditions under which investments by foreign corporations could take place. (In this connection, the agreement embodied acceptance of a compliance regime under which liberalization must proceed forward with no ability to be wound back — the so-called <href=”#Trade_legislation” title=”Ratchet effect”>ratchet effect. This would be enforced by so-called rollback and standstill provisions, to ensure that investors would have access to markets. These provisions required nations to eliminate regulations that violated MAI provisions — either immediately or over a set period of time — and to refrain from passing any such laws in the future.
  • Enable compensation to corporations for proven unfair or discriminatory investment conditions causing loss of profit.
  • Allow states and corporations recourse to international arbitration (for instance, through the International Centre for Settlement of Investment Disputes) to settle any disputes arising under the agreement, instead of national courts in the host state.

The MAI was supported by both the Business and Industry Advisory Committee to the OECD (BIAC) and the Trade Union Advisory Committee to the OECD (TUAC). While BIAC was interested in stable and consistent treatment of investment, TUAC was interested on setting standards on employment and industrial relations.

5. List of specialized agencies of the United Nations

Specialized agencies are autonomous organizations working with the United Nations and each other through the coordinating machinery of the United Nations Economic and Social Council at the intergovernmental level, and through the Chief Executives Board for coordination (CEB) at the inter-secretariat level. Specialized agencies may or may not have been originally created by the United Nations, but they are incorporated into the United Nations System by the United Nations Economic and Social Council acting under Articles 57 and 63 of the United Nations Charter. At present the UN has in total 17specialized agencies that carry out various functions on behalf of the UN. The specialized agencies are as follows:

a.) Food and Agriculture Organization (FAO)

The Food and Agriculture Organization of the United Nations leads international efforts to defeat hunger. Serving both developed and developing countries, FAO acts as a neutral forum where all nations meet as equals to negotiate agreements and debate policy. FAO’s mandate is to raise levels of nutrition, improve agricultural productivity, better the lives of rural populations and contribute to the growth of the world economy. FAO is the largest of UN agencies and its headquarters are in Rome, Italy.

b.)International Civil Aviation Organization (ICAO)

The International Civil Aviation Organization (ICAO) was founded in 1947. It codifies the principles and techniques of international air navigation and fosters the planning and development of international air transport to ensure safe and orderly growth. Its headquarters are located in the Quartier international de Montréal of Montreal, Canada.

c.)International Monetary Fund (IMF)

International Monetary Fund (IMF) provides monetary cooperation and financial stability and acts as a forum for advice, negotiation and assistance on financial issues. It is headquartered in Washington, D.C., United States.

d.)World Health Organization (WHO)

The World Health Organization (WHO) acts as a coordinating authority on international public health. Established on 7 April 1948, and headquartered in Geneva, Switzerland, the agency inherited the mandate and resources of its predecessor, the Health Organization, which had been an agency of the League of Nations.

e.)World Intellectual Property Organization (WIPO)

The World Intellectual Property Organization (WIPO) is a specialized agency of the United Nations created in 1967 and headquartered in Geneva, Switzerland. Its purpose is to encourage creative activity and to promote the protection of intellectual property throughout the world. The organization administers several treaties concerning the protection of intellectual property rights.

f.)United Nations Educational, Scientific and Cultural Organization (UNESCO)

The United Nations Educational, Scientific and Cultural Organization (UNESCO) is a specialized agency of the United Nations established in 1946 with its headquarters in Paris, France. Its stated purpose is to contribute to peace and security by promoting international collaboration through education, science, and culture in order to further universal respect for justice, the rule of law, and the human rights and fundamental freedoms proclaimed in the UN Charter.

6. Arguments

MAI opponents pointed to a perceived threat to national sovereignty and democracy and argued that it would involve participating nations in a “race to the bottom” in environmental and labor standards.

Prominent MAI critic Mark Vallianatos (Friends of the Earth) argued that:

  • The MAI would restrict governments’ ability to limit the participation of foreign multinationals in sectors they deemed critical, whether for developmental, environmental or other reasons. “For example,” he wrote, “the Philippines currently bans foreign investment in rural banking, and Honduras limits foreign investors in forestry to a minority stake. Such protective measures would not be allowed under the MAI as it is currently written.”
  • The agreement would establish the principle of “national treatment” (in which government must treat foreign companies as favorably as domestic companies) as the norm for international investment. Indeed, in some cases, foreign corporations might have stronger protections than domestic investors. “The MAI bars many types of performance requirements, or conditions, even if those conditions are imposed on local companies. Examples of forbidden conditions include requiring investors to form a partnership with a local company and requiring a minimum number of local employees — the types of policies governments use to help ensure that local people benefit from foreign investment.”
  • “The MAI matters because its rules can be enforced. If a foreign investor thinks a country where it has invested is violating the MAI, the investor has a choice: to complain to its own government, which can take the host country to binding international arbitration, or to directly challenge the host country. In either case, the arbitration process is closed — citizens cannot participate — and one-sided, as neither government or affected communities can challenge the behavior of investors. This imbalance points out the MAI’s fundamental flaw: despite the need for corporate accountability in the international economy, current versions of the MAI contain no binding obligations on corporate investors.


There are many other intergovernmental organizations that have concluded cooperation agreements with the United Nations. In terms of cooperation structures, some agreements come very close to the relationship agreements concluded under articles 57 and 63 of the UN Charter with the specialized agencies, but due to lack of formalities required by the Charter the organizations with such agreements are not specialized agencies of the United Nations.

Therefore, on the basis of above discussion we can come to a point and say that “International organizations are forums of co-operation of sovereign states based on multilateral international agreement”.


o  Marchi, Sergio (1997-11-10). “The MAI Debate: YES: Canada Needs Clear Investment Rules”. Montreal Gazette: B3.

o Mechanisms for standstill, rollback and listing of country specific reservations Note by MAI Negotiating Group chairman, OECD, 15 February 1996

o  OECD, Negotiating Group on the Multilateral Agreement on Investment, Draft Consolidated Text of 11 February 1998, document DAFFE/MAI (98)7, pp. 58-64.

o Geddes, John (1995-05-19). “Opening the Gates to Capital”. Financial Post: 14.

o  Geiger, Rainer (1998). “Towards a Multilateral Agreement on Investment”. Cornell International Law Journal 31 (467). ISSN 0010-8812. Retrieved 2010-01-16.

o  Smythe, Elizabeth (1998). “Your Place or Mine? States, International Organizations and the Negotiation of Investment Rules” (PDF). Transnational Corporations (United Nations Conference on Trade and Development) 7 (3): 112. ISSN 1014-9562. Retrieved 2010-01-16.


o  Mark Vallianatos (Friends of the Earth), July, 1997. From the IRC (International Relations Center) [1]

o  MAI NOT newsgroup Archived 1999 website

o  See link in External Links section to access archived 1997-99 postings

o  Operation SalAMI

o  “Pressure Point – Inside the Montreal Blockade”

o  Lisa McGowan MAI: NAFTA on Steroids Economic Justice News v.1 No.1, January 1998

o  1999 campaign brief

o  Copy for Stop MAI’s advertisement

o  UK Parliament Select Committee on European Scrutiny

o  Lalumiere Report in English at

o  Parliament of Australia, Joint Standing Committee on Treaties, Report 18 (MAI)[2] page 3, para 1.12

o  C de Brie, Watch Out for MAI Mark Two, Le Monde diplomatique, May 1999 [3]