Introduction

A serious impediment to foreign private investment in a developing country is the fear of loss through expropriation, nationalization and similar measures. Any developing country that seeks to encourage the flow of foreign private capital to be invested in its territory is anxious to moderate these fears by establishing assurances and guarantees to foreign investors of the security of their investments. Indeed, the International Chamber of Commerce concedes that ‘the fear of expropriation has probably been considered one of the main impediments to the international flow of private capital’.

Apart from the early period of President Nimeiri's regime, Sudan, has, since independence in 1956, repeatedly assured foreign investors that their investments would not be nationalized or expropriated except for public purposes and on payment of just compensation. Equally, foreign investors have been assured that they would be allowed to transfer abroad their profits and capital.

In this chapter it is proposed to examine the form and content of these guarantees, to see to what extent they really provide protection to foreign investment both under municipal and international law.

It should be emphasized that the term ‘guarantee’ is not used here in its strict legal sense, but only to denote the various promises and undertakings given unilaterally by the state to foreign investors in relation to their investments.