Artificial Intelligence, Foreign Investment And International Economic Law: Emerging Regulatory Challenges
Bushra Khan & Saif Rahman, CB&IL LLM Scholar, Amity Law School, Amity University, Noida
ABSTRACT
The rapid expansion of AI-related foreign direct investment in data centres, semiconductor manufacturing, cloud infrastructure, advanced computing, digital platforms and research-intensive enterprises has created emerging challenges for international economic law. Simultaneously, states are adopting AI regulations, data-governance requirements, export controls, technology-transfer measures and investment-screening mechanisms, creating tensions between investment protection and regulatory autonomy. This paper examines the evolving relationship between AI, FDI and international economic law, focusing on principles such as fair and equitable treatment, national treatment, most-favoured-nation treatment, expropriation and the right to regulate, alongside relevant WTO and digital-trade disciplines. It argues that although existing international economic law can address several AI-related disputes, its rules were largely developed before the emergence of the contemporary AI economy. Regulatory fragmentation, cross-border data flows, intellectual property, algorithmic transparency, national security, technology transfer and unequal digital capabilities create uncertainty for both investors and host states. The paper proposes a coordinated framework based on transparency, proportionality, regulatory interoperability, investment facilitation and preservation of legitimate public-policy space. It concludes that international economic law should balance technological innovation and investment protection with sovereign regulatory autonomy, responsible investment and inclusive digital development.
Keywords: Artificial Intelligence; Foreign Direct Investment; International Economic Law; International Investment Agreements; WTO; Digital Trade; Data Governance; Developing Countries.
