Protection of Foreign Investments in the Maldives

Nuha Mohamed Didi

 

ABSTRACT: FDI is pivotal to the Maldivian economy. The country’s first national foreign investment law was enacted in 1979. During its tenure, the Maldives faced ups and downs including stable attraction of foreign investment and significant losses before arbitral tribunals. Though the Maldives has not rectified a single Bilateral Investment Treaty (BIT) to date, the country has enacted a new and improved version of its national foreign investment law in 2024 (FIL24). FIL24 is complete with foreign investor protection standards that mimic those usually found in BITs, including FET. This study weighs the resilience of this successor Law against investor protection standards found in BITs. The comparison between the standards of FIL24 and those in BITs demonstrates factors that undermine the provisions in FIL24, predominantly because it is a domestic law. However, the global trends where developing countries are no longer the sole recipients on FDI inflows, developed countries are more willing to accept investment policy standards paving way for a more generous policy space in the host country, drastically shifting from the traditional standards. Furthermore, as a developing nation in the Global South, this study compares the decision by the Maldives to introduce a new domestic legislation. The study found that this shift in dynamics does not necessarily match with the trends followed by other Global South nations. While FIL24 and its impact on investor protection would take some time to materialize, FIL24 carries the potentiality to assert itself as a standalone framework providing protection to investments in this archipelago.