Convention Establishing the Multilateral Investment Guarantee Agency
- Type: Convention
- Date of signature: 11/10/1985
- Place of signature: Seoul, South Korea
- Depositary: International Bank for Reconstruction and Development (IBRD)
- Date of entry into force: 12/04/1988
What is it about?
This Convention establishes the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group. The objective of this institution is to promote foreign direct investment into emerging economies, as well as to stimulate their development. MIGA offers investors guarantees against probable risks, permitting long-term predictability and reducing their hesitation to invest in certain countries. MIGA offers political risk insurance (guarantees) to investors and lenders and helps developing countries to attract and retain private investment. The insurance also covers the risks of currency transfer, expropriation, breach of contract, war, and civil disruption. MIGA also offers member States assistance to improve their regulations and administrative practices to attract and retain investment.
Why is it relevant?
Participation in MIGA offers two principle advantages: - It permits countries that export capital to expand their activities abroad as new markets open and the risk of investment in certain countries decreases. - These kinds of guarantees allow developing countries to attract foreign capital.
Member States to the World Bank may become a member of MIGA. All member States have to pay a minimum emolument to the Agency, equivalent to some 5,500,000 USD. Parties to a “contract of guarantee”, concluded between an investor and the Multilateral Investment Guarantee Agency, agree upon the submission for arbitration of a dispute in relation to such contract under the Rules of Arbitration for Disputes. It also offers the use of its good offices for the settlement of disputes. For the fiscal year 2003, MIGA guaranteed 37 projects, for a total of 1.4 billion dollars. Projects included the construction of airports, electric grids, telecommunication networks, tourist complexes and others.
- Articles of Agreement of the International Bank for Reconstruction and Development and the International Monetary Fund (Washington, 22 July 1944)
- IBRD Articles of Agreement of the International Monetary Fund (Washington, 22 July 1944)