Using International Law to Protect Property Rights and International Investment

by Stephan Kinsella on November 24, 2025

Among libertarians I am known most for my intellectual property (IP) and general libertarian theorizing, as in my books Legal Foundations of a Free Society (Papinian Press, 2023), Against Intellectual Property (Mises Institute, 2008) and other publications. In my libertarian writing and theorizing I have tried to blend my practical and theoretical legal knowledge (of IP law, oil & gas law, international law, Roman/Louisiana/civil law, and common law) with libertarian and Austrian economics scholarship and insights.

I viewed this “libertarian legal” writing as my hobby or avocation, although I devoted a lot of time to this research and writing, and in retirement it is what occupies much of my time and attention. In my vocation, ¹ I also practiced law for over thirty years, initially in the fields of oil and gas and international law, then specializing in IP and patent law, and general commercial law as general counsel of a high-tech company.

In addition to my purely libertarian writing (my avocation) and my legal career (my vocation), I also did a good deal of publishing and scholarship on purely legal topics such as civil law, oil & gas law, and international law—e.g., International Investment, Political Risk, and Dispute Resolution, 2d ed. (Oxford University Press, 2020), Louisiana Civil Law Dictionary (Quid Pro Books, 2011) and many others. ² Some of this I did for career purposes—to advance at law firms or to help land clients. This is so-called “business development” or “client development,” which is one way to succeed or make partner at law firms, to get clients, and so on. And some of it was done as a lucrative publishing side-business—e.g., editing multi-volume commercial law, international law, and IP law treatises for various publishers, often with co-editors or co-authors. ³ For this reason, unlike my libertarian writing, all of which I post online for free and under Creative Commons CC-BY or CC0 licenses, much of this work is paywalled, with the copyright held by mainstream publishers such as Oceana Publications or Oxford University Press.

In the end, most of this purely legal scholarship was done because of my interest in law and legal theory itself, e.g. on international law, oil & gas law, IP law, and so on. And as noted above, I attempted to use some of this knowledge to bolster my libertarian theory work. Inevitably, some of my purely legal scholarship was affected by my libertarian views, interests, and values. For example, in earlier writing for publications such as the Russian Oil & Gas Guide and others I provided advice to clients on how to use international law to protect their investments in developing countries from expropriation. ⁴ This was all shortly after the collapse of the Soviet Union, when the ABA and its “CEELI” (Central European and Eurasian Law Initiative) and related initiatives sought to held guide emerging economies such as in newly-freed Eastern Europe in reforming their law to protect property rights, the rule of law, and so on. ⁵ I was asked by ABA/CEELI to analyze various draft laws, such as those of Romania, Lithuania, Russia, and so on. ⁶

Some of this culminated in a long law review article, “Reducing Political Risk in Developing Countries: Bilateral Investment Treaties, Stabilization Clauses, and MIGA & OPIC Investment Insurance,” published in the New York Law School Journal of International and Comparative Law in 1994. ⁷ As I noted there,

Western investors seek to benefit themselves and the populace of developing countries by investing needed capital to finance production and economic growth. But unless political risks are minimized, investors will not be willing to invest their precious time and capital. Fortunately, as the world begins to gain a greater appreciation for the importance of property rights, methods are becoming available to lower political risks to allow investment to proceed.

Concessions, directly negotiated between the investor and the host state, containing stabilization and international arbitration clauses, are one method of reducing political risks; purchasing government-sponsored or even private insurance is still another. The protections won by BITs also serve to reduce the political risks inherent in foreign investment. BITs create a regime anchored in international law which is favorable, not hostile, to investment—a regime which attempts to prevent expropriation, direct or indirect, and to provide for full compensation when expropriation does occur.

Hopefully, for the sake of both investors and the developing countries, the trend towards greater protection of the property rights of investors will continue in this direction.

My goal here was to help clients and explain how to protect private property rights, especially with investments in developing countries which have a history and tendency to expropriate such investments. This is one reason I was hopeful about the now-defunct Multilateral Agreement on Investment, or MAI— ⁸ this was before I was aware of the use of such treaties and negotiations to export US IP protections to other countries, which I call IP imperialism.

The 1994 article got the attention M.C. Susan De Maio, an acquisitions editor at Oceana Publications, a legal publisher in Dobbs Ferry, NY. She asked me and my co-author, Paul Comeaux, to turn this into a book, which we published in 1997, Protecting Foreign Investment Under International Law: Legal Aspects of Political Risk. I later published an expanded and updated version of this, with other co-authors, with Oxford University Press in 2005, second edition 2020, to-wit International Investment, Political Risk, and Dispute Resolution (IIPR). Like my previous writing, including the 1994 article, one goal of this work was to help western investors protect their investments in developing countries for their benefit and for the benefit of the host countries. Thus, as I wrote in the Preface to Protecting Foreign Investment Under International Law:

Political risk—the risk that a host government will interfere with the property rights of a foreign investor—is a topic that has been discussed with increasing frequency in recent years, partly because of the increasing attractiveness of investing in developing economies. While legal and political considerations in the host state are critical in assessing political risk, international law also plays an important role. Matters such as international responsibility of a foreign government to an investor, treaties protecting foreign investment, political risk insurance, immunity of states from suit in other states, and international arbitration between states and investors are all either governed or affected by international law.

It had been clear to us for some time, when we conceived of writing this book, that there was no up-to-date reference work integrating these and other issues that affect political risk. Many of the relevant topics, such as political risk insurance, bilateral investment treaties, and arbitration, have been addressed in various law journals in the past, but not as an integrated whole in the context of political risk. Other topics, such as provisions in investor-state contracts that may reduce political risk, have not been given much attention at all in recent years. And while there is certainly a wealth of material covering the international law of expropriation and nationalization, much of it is written from an academic viewpoint rather than from the perspective of assisting the investor in avoiding confiscation of property located in a host state. We thus undertook this project in an attempt to address these and other topics, integrated by a common theme: protection of the investor against the risk of interference with or confiscation of property rights by a host government.

This book is addressed to a wide audience, and is written to appeal to both lawyers and non-lawyers alike. It is suitable as a primer for attorneys and investors seeking to familiarize themselves with international law affecting political risk. It is also addressed to both in-house and outside counsel for corporations that either have or are contemplating foreign investment in developing countries. Experienced attorneys involved in expropriation-related litigation should also find this book useful as a reference guide to important principles of international law related to political risk. It should also be useful to law students studying international law and academics seeking a reference work pertaining to the legal aspects of political risk. Practitioners should find the sample documents in the appendices of use as well, for both comparison purposes and for ease of reference.

Readers may note a certain unconventional non-neutrality in the book expressed towards both investors and governments that expropriate investments. We readily admit that we are pro-investor, since we believe in the sanctity of individual rights and private property rights. We acknowledge the absolutely essential role of entrepreneurship and capital investment in the production of wealth and in human flourishing, prosperity, and, indeed, civilized survival. (Some of our reasons for this view are presented in Appendix I.) For these reasons we cannot help but rejoice when private property rights are respected and gain greater acceptance worldwide, and cringe when host states engage in expropriation. These sentiments are one motivation for our undertaking this book and, we believe, have spurred us to attempt to point out as many ways for investors to protect themselves as possible. However, while admitting our pro-investor bias, we have attempted to remain strictly objective in our evaluation and discussion of international law and business and political realities. Where investors face dangers and their rights are insecure, a sober and realistic assessment of these dangers is essential so that the investor may make wise investment decisions.

In the Introduction, we lay out the history and risks of expropriation of international investments, and note:

In light of this, what can an investor in a developing country do to measure the political risk in a given country before deciding whether to invest? What can an investor do to protect itself against political risk once it has invested? What type of protection against political risk currently exists under international law? Finally, what can an investor do after political risk has materialized and caused it damage? This book is an attempt to set out the answers to these questions that are provided by international law.

… International law does not provide the entire solution to an investor seeking to reduce the political risks of investing in a developing state. The laws and political climate of the host state, as well as the organizational structure of the investment vehicle, also play important roles. A solid understanding of the international law related to political risk, however, is vital to any investor seeking to reduce such risks.

In my 2005 follow treatise IIPR I expressed similar pro-property rights sentiments, and in fact dedicated the book to libertarian philosopher Hans-Hermann Hoppe. As I wrote in the Preface:

The present volume addresses the same issues as did the 1997 work, with updated and expanded coverage. Our goal here is to enable the investor to appreciate the risks associated with government interference in property rights, to minimize those risks and deal effectively with their consequences. But we also hope to promote understanding within host governments about investors’ expectations and concerns, to allow them to avoid conflict and maximize the benefits of foreign direct investment for their countries and constituencies.

… We are convinced that the reduction of political risk, through the active participation of both host countries and foreign investors, is a critical factor in the improvement of the human condition worldwide. Entrepreneurship and capital investment are essential to the expansion of prosperity. This conviction, in addition to a more detached enthusiasm for the subject of our practice and research, is one motivation for undertaking this book and, we believe, has spurred us to forcefully explain both how investors can protect themselves, and the ways that host States can make such protection superfluous. It should be noted that, regardless of the authors’ policy preferences, we have attempted to remain strictly objective in evaluating the realities of international law, business, and politics.

Given all this, I have been somewhat surprised to have been sometimes criticized by other libertarians for occasionally promoting international law. Most libertarians are ignorant of my legal work on international law (or of international law at all; yet they feel competent to comment on it), but I have spoken and written on it on occasion from a libertarian perspective. For example, I led a panel on related topics, based on my at the inaugural meeting of the Property and Freedom Society in 2006: Chair, Panelist, Panel discussion, Property and Freedom Society Inaugural Meeting, Bodrum, Turkey (May 18–22, 2006): “Property Rights and the Protection of International Investment. The case of Turkey, Lithuania, Romania, Bulgaria, Czechia, Georgia, and Poland.” I spoke on this topic again at the PFS in 2018 and recently published International Law, Libertarian Principles, and the Russia-Ukraine War, Free Life (19 April 2022). ⁹

It is true that international law is not perfectly libertarian; neither are the English common law or Roman law, though they are largely libertarian in content. ¹⁰ International law does tend to have a leftist or socialist tinge, ¹¹ but the UN has no power to tax or legislate and in any case the UN is not the same as customary international law.

In the past, some conservatives, such as John Birch Society types, driving cars adorned with bumper stickers like “Get the US out! of the UN.” I understand the fear of one-world government and loss of sovereignty, but in today’s world it seems unlikely that the US will cede its authority to the UN; it has not joined the UN’s International Criminal Court or the welfarist United Nations Convention on the Law of the Sea, for example. If anything, the US is more likely to use the UN to control other nations, for example in foisting IP treaties or other treaties with IP provisions on other nations, which I dub IP imperialism. ¹² But again, the UN is voluntary, cannot tax or legislate, and is not the same thing as international law.

Another criticism of international law seems to be that it is not “real” law since there is no government. This is yet another ignorant comment, which I dispatch in KOL250 | International Law Through a Libertarian Lens (PFS 2018):

In response to the simpleminded but common comment and legal positivistic sentiment that international law is not real or that international law does not exist, because there is no sovereign state and enforceable legislation, see, inter alia, Anthony D’Amato, “What ‘Counts’ as Law?,” in Law-Making in the Global Communkty, Nicholas G. Onuf, ed. (1982), Northwestern Public Law Research Paper No. 11-02, and many other treatises and papers. Also Is international law real? Professor José Alvarez weighs in (“almost all 0:18 states comply with almost all international law almost all the time. 0:22 Most people focused on the almost, but the fact is that they do comply it’s 0:28 just not front page news when they do”); International Law Explained | Kal Raustiala | Big Think; Philip Allott – The True Nature of International Law.

See my International Law, Libertarian Principles, and the Russia-Ukraine War; see also Murray Rothbard, “Just War,” in John Denson, ed., The Costs of War:

Much of “classical international law” theory, developed by the Catholic Scholastics, notably the 16th-century Spanish Scholastics such as Vitoria and Suarez, and then the Dutch Protestant Scholastic Grotius and by 18th- and 19th-century jurists, was an explanation of the criteria for a just war. For war, as a grave act of killing, needs to be justified.

… Classical international law … should be brought back as quickly as possible.

In any case, international law is in many ways more libertarian than municipal law (the domestic law of states). State legal systems are nowadays overrun with legislation and central planning and welfare rights. International law is primarily concerned with upholding agreements or treaties (pacta sunt servanda) and with limiting or restricting the power of states to wage war, e.g. the laws of war (Geneva Conventions; Just war theory). Because international law is less detailed and more abstract than municipal law and less based on statute, there is more chance to argue with natural law type reasoning, such as the law of war. And for those of us who are opposed to war, isn’t it good that there is a forum for nation-states to meet and try diplomacy instead of war? When libertarian law is to be formed, it makes sense that it would borrow from, build on, and correct private law principles developed in Roman law and the Anglo-American common law, and also in other systems such as the Law Merchant, International Law, and so on. ¹³

One final note. The critics are not only usually ignorant about international law but also of other legal systems they criticize, such as their mistaken notion that the Roman-law based European civil law adopts the rule that “All that is not permitted is forbidden”. This is true of totalitarian systems but not of code-based or even legislation-based systems.

A note on Próspera. As I noted previously, ¹⁴ I visited Próspera, a charter city on the island of Roatán, Honduras, earlier this year on the Tom Woods Cruise. ¹⁵ Naturally, it is under assault by the statists and leftists (or do I repeat myself). ¹⁶ See, for example, this pathetic Vice hit piece, Libertarian Island Utopia is Now A Legal Boondoggle, dripping with bile and malice. ¹⁷ The leftists in Honduras appear to be doing their best to shut it down; no doubt the contrast with the relatively free-market Próspera enclave makes the rest of the socialism-ruined country look bad. But apparently this would breach a 50 year agreement which could result in $11B in damages, about 1/3 of the country’s GDP. ¹⁸

I do not know the specifics, but as best I can tell, the liability would stem from (see Grok overview):

Honduras’s ZEDE enabling law, “Law for the Promotion and Creation of Development and Employment Zones,” enacted in 2013 (declared unconstitutional its Supreme Court in April 2024)
The creation of the Próspera ZEDE under the ZEDE enabling law in 2017
Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), a multilateral treaty that includes investor-state dispute settlement (ISDS) provisions (see text here)
Honduras’s membership in ICSID (even though Honduras withdrew in Aug. 2024) ¹⁹

The ICSID claim ²⁰ is proceeding. There appears to be jurisdiction due to a combination of factors: Honduras’s membership in ICSID; the Central America – United States – Dominican Republic Free Trade Agreement [the “CAFTA-DR”]; and the Agreement for Legal Stability and Investor Protection between Honduras Próspera Inc., and Honduras [the “LSA”]. ²¹ The combination of the CAFTA-DR and ICSID agreements, recognized treaties under international law, and the LSA between Honduras and Honduras Próspera Inc. under the ZEDE enabling law, which invoked these treaties, were enough to “internationalize” the LSA so that Honduras cannot change its terms by domestic legislation after the law.

This is exactly the point of using treaties and international law as it applies to international concessions and related agreements to “stabilize” or freeze the state’s municipal (domestic) law in place at a given time so that the legislature cannot just change it later without consequence. The doctrine of parliamentary or legislative sovereignty permits states to change their law, but if an agreement has been properly “internationalized” then the state can still have liability under international law. I discuss all this in detail in International Investment, Political Risk, and Dispute Resolution, ¶¶2.29, 2.53, 5.109, et pass.; and in non-paywalled pieces such as “Reducing Political Risk in Developing Countries: Bilateral Investment Treaties, Stabilization Clauses, and MIGA & OPIC Investment Insurance” and “Reducing the Political Risk of Investing in Russia and Other C.I.S. Republics: International Arbitration and Stabilization Clauses.”

This also shows that critics who say international law is not “real” do not know what they are talking about.