The purpose of BITs is usually to provide amore stable and secure environment for foreign investors, and thereby to ensure ''investor confidence''. The security and guarantees provided by a BIT are seen as essential to encourage the inflow of supposedly much-needed foreign investment to developing countries. Most developing country governments are constantly told that foreign investors need such assurances before they can be persuaded to enter into potentially unknown or risky markets.

However, there is little evidence that signing a BIT actually does contribute to more FDI in developing countries. Even the World Bank admits that ''empirical studies have not found a strong link between the conclusion of a BIT and subsequent investment inflows''. (World Development Report 2005) In fact, countries without too many BITs (such as China) have been far more successful in attracting FDI from home countries that have signed BITs with other developing countries.

Table 1: Number of Bilateral Investment Treaties in 2002
Region	Number of BITs		Countries	Average BITs per country
Developed countries	1170		26	45
Developing countries	1745		150	12
Africa	533		53	10
Latin America and the Caribbean	413		40	10
Asia and the Pacific	1003		57	18
Central and Eastern Europe	716		19	38

Instead, BITs have far-reaching and typically negative implications for host country governments and citizens, because of the sweeping protections afforded to investors at the cost of domestic socio-economic rights and environmental standards. A common concern about investment agreements is that they subject countries to the risk of litigation by corporations from or based in another country which is a signatory to the same agreement. This might be based on a company's objections to the host government's environmental, health, social or economic policies, if these are seen to interfere with the company's ''right'' to profit.

These adverse effects are already becoming evident in the increasing litigation which is facing developing country governments who seek to safeguard citizens' rights. For example, the multinational infrastructure company Bechtel (which also deals in water supply services) successfully currently sued the Bolivian government under a 1992 Holland-Bolivia BIT for loss of profits after the government's reversal of a disastrous water privatisation in Cochabamba municipality following a popular uprising in the area.

A number of other developing or formerly socialist countries are facing such disputes brought by multinational companies, ranging from Pakistan to the Czech Republic. The most striking recent examples of the adverse effects of BITs for the host country come from post-crisis Argentina.

The World Investment Report 2005 describes how the privatisation of public utilities in the early 1990s, combined with the 54 BITs that the Argentine government signed over the 1990s, had unforeseen adverse consequences after the sharp devaluation of the peso during the 2002 financial crisis. The trebling of the value of the dollar in local currency forced the government to transform all dollar-denominated contracts into peso-denominated contracts, including those signed with the utility forms that were now owned and controlled by multinational companies. In addition, the periodic adjustment of tariffs based on foreign inflation indices were also eliminated.

This has led to a spate of disputes instigated by foreign investors - as many as 37 such cases have been filed with World Bank's private arbitration body for investment disputes, the International Centre for Settlement of Investment Disputes (ICSID) since 2002. The first award of the ICSID tribunal, on 12 May 2005, ordered Argentina to pay $133.5 million plus interest in compensation to the US-based multinational CMS on grounds of violation of the BIT between Argentina and the US. ICSID rejected the Argentine government's plea that these were emergency measures based on the necessity created by the dire financial, economic and social crisis in the country.

It should be noted that the resolution of such conflicts is not subject to the standard juridical systems of the member countries - rather it is governed by tribunals or similar bodies specified in the treaty. This amounts to the privatisation of commercial justice, with no democratic accountability of the decision makers in this regard. In many bilateral agreements, the provisions state that where a dispute cannot be settled amicably and procedures for settlement have not been agreed within a specified period, the dispute can be referred to another body.

The two most important such bodies are the World Bank's private arbitration body for investment disputes, the International Centre for Settlement of Investment Disputes (ICSID) or the UN Commission on International Trade Law (UNCITRAL). Under NAFTA, complainants (usually the dissatisfied investors) are allowed to choose between these two bodies.

Domestic courts and national legal systems are completely marginalised by investors' recourse to these international arbitration panels. ICSID and UNCITRAL only allow for the investor and government parties to the dispute to have legal standing. The public has no right to listen to proceedings or to view evidence and submissions. Both bodies require only minimal disclosure of the names of the parties and a brief indication of the subject matter, which prevents public scrutiny or popular opposition. These bodies are thus given the responsibility to adjudicate virtually all investment disputes without democratic structures or transparency, despite the fact that they are not serving private goals but an international judicial function governed by treaty and international law.

These two arbitration bodies have developed rules for both conciliation and arbitration that are based completely on legal systems of the north, especially the US, and ignore much of the world's wealth of experience in settling disputes, such as Asian rules of arbitration. The record of these bodies thus far has been very investor-friendly, in awarding substantial damages and compensation to multinational corporations for ''transgressions'' of developing country governments.

Under these conditions, there is clearly little incentive or need for international investors to settle disputes amicably, given the highly favourable outcomes for corporations which have initiated proceedings under such agreements. So BITs have become potent weapons of multinational companies against not only governments but also the societies of countries that have signed these treaties.

Clearly, in this context, it is critical for civil society across the developing world to demand that the signing of BITs be subject to public scrutiny, and that the proceedings disputes arising from BITs be open and publicly accessible for the common good.