Nowadays the problems of state sovereignty have become very important. Massive transnational capital flows influence economic sovereignty of developing transition countries. By using their super mobility TNCs are able to accumulate massive financial resources very quickly in separate branches of the national economy in order to snatch surplus profit and swiftly remove one’s investment from the recipient country. One party of an investment transaction is usually a sovereign state whose interests, rights and obligations significantly differ from those of private stakeholders. The host state must also take into consideration political, social, cultural and other factors that are not peculiar to the private investor. Nowadays many countries have started to regulate foreign investments in order to achieve domestic policy objectives. Every sovereign state must pursue its own investment policy that is intended to give strong incentives to foreign investors. The state sovereignty is the base for foreign investment regulation, and this has been recognized by norms of international and domestic law. The effective implementation of international law and its functions in foreign investments requires the harmonization of interaction in regulation on a two-tiered basis (international and national).