Uninvited Guests: Dissecting Treaty Shopping in Commercial Diplomacy

Abstract

Commercial diplomacy plays a critical role in safeguarding a country’s national interest in the face of competing interests of other nations. In an interplay between the home State and the host State of commercial activities, the former need maximum protection for their investors, while the latter prefers to accord less protection to the foreign investors that could not lead them to cumbersome obligations. International investment agreements (IIAs) in general and bilateral investment treaties (BITs) in particular are the primary ways via which both home and host countries need to fairly position their competing interests in commercial diplomacy. It may, however, sometimes happen that foreign investors resort to treaty shopping, by which they require host countries to perform unintended obligations. Treaty shopping allows foreign investors to find some connecting factors with the third country BIT concluded with the host country, by disregarding the BIT their home country concluded with that specific host country to find more protection for their investments.  is a very serious problem for the host countries. Against this backdrop, this article critically analyzes the approaches of dissecting treaty shopping in commercial diplomacy. Investment agreements are used as primary source of data while literatures and reports are relied upon as secondary source of data. The article identifies the magnitude of challenges faced especially by host countries in concluding and implementing investment agreements. It recommends States to be curious and properly utilize the art of negotiation in their commercial diplomacy.

Keywords: bilateral investment treaties, commercial diplomacy, international investment agreements, treaty shopping

DOI: 10.7176/IAGS/103-03

Publication date: January 31st 2026