** [The Introductory Note was prepared for International Legal Materials by Jurgen Voss, Counsel, The World Bank.]

1/ For more details on the history, see Voss, 24 ILM 688 (May 1985).

2/ It was published in 24 ILM 692 (May 1985).

3/ Meetings of the “Committee of the Whole” are less formal than the — regular meetings of the Bank's Board of Executive Directors. They serve the purpose of facilitating the frank exchange of views and, when successful, result in an informal agreement which becomes a decision of the Executive Directors by virtue of its confirmation in a formal meeting of the Board. Discussions in such an informal committee also facilitated the formulation of the Convention establishing the International Finance Corporation (IFC) in 1956, the International Development Association (IDA) in 1960, and the International Centre for Settlement of Investment Disputes (ICSID) in 1966.

4/ Under the Convention, countries are classified for voting purposes as belonging to either Category One or Category Two. See Schedule A to the Convention for the classification of individual countries.

5/ Unless stated otherwise, cited Articles refer to the Convention establishing MIGA which is published hereinafter.

6/ The IMF Balance of Payments Manual para 408 at 136 (4th ed. 1977) defines foreign direct investment as “investment which is made to acquire a lasting interest in an enterprise operating in an economy other than that of the investor, the investor's purpose being to have an effective voice in the management of the enterprise”. See also OECD, Detailed Benchmark Definition of Foreign Direct Investment (Paris: 1983).

7/ Developing countries are those listed under Category Two of Schedule A to the Convention. The limitation provided for in Article 14 does not apply to sponsored investments referred to infra.

8/ It should be noted that the two aspects are interrelated, as investments that are welcomed by host countries and serve their interests are less vulnerable to adverse host government action.

9/ This is the average value of the SDR in terms of U.S. dollars during the period January 1, 1981 to June 30, 1985. The denomination of the capital in SDR at a fixed equivalent to the U.S. dollar represents a compromise between the countries preferring the denomination of the capital in dollars and those preferring SDRs.

10/ The number of membership votes was computed so that if all members of the World Bank joined MIGA, developing countries as a group would have the same voting power as developed countries as a group.

11/ The “World Bank Group” consists of the World Bank, the International Development Association (IDA) and the International Finance Corporation (IFC).

12/ At present, 22 countries (practically all OECD countries as well as India and Korea) have national investment guarantee programs.

13/ At present, only the Inter-Arab Investment Guarantee Corporation in Kuwait, which covers only investments between Arab member countries.

14/ Political risk coverage is offered by underwriters of Lloyd's of London and of some U.S. insurance companies.