The Transition from Diplomatic Protection to Investor-State Arbitration and the Rise of Private Actors on the International Scene (original) (raw)
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European Yearbook of International Economic Law, 2020
This Chapter first summarizes the criticism voiced against investment treaty arbitration with specific regard to its relationship with domestic courts (infra at Sect. 2.1). It does not seek to discuss all of the multiple concerns raised against investment arbitration, which have already been addressed in the authors' First CIDS Report 1 and are further examined in the UNCITRAL Secretariat's papers, 2 among other materials. 3 Discussing the criticism of investment arbitration vis-à-vis domestic courts requires providing an overview of the main reasons why States created the investment treaty system in the first place (infra at Sect. 2.2) and examining today's justifications for keeping or putting in place an international system of investment dispute resolution, whether in the form of arbitration or standing adjudicatory bodies (infra at Sect. 2.3). The following subsections will in particular ask: What goals were IIAs intended to achieve? In light of those goals, what is the function of international courts and tribunals in the investment law domain, either in their current arbitral configuration or in future constellations such as a MIC? As States are considering questions concerning the institutional design and redesign of the system, it appears important to seek to provide answers to these questions in order to test the continuing validity of the assumptions which underpin the conclusion of investment treaties with international dispute resolution mechanisms.
Social Science Research Network, 2019
I. Introduction Recent negotiations of trade and investment treaties between and among Canada, the European Union (EU), the United States (U.S.), and states in the Asia Pacific region have tested investor-state dispute settlement (ISDS). 1 Those opposed to ISDS argue that it provides investors with the right to challenge, and therefore potentially impede, domestic regulations implemented for legitimate public policy concerns, such as protection of the environment or public health. Others question whether ISDS contributes to, or is governed by, the rule of law. This latter concern is premised on allegations that cases are heard in confidential fora by arbitrators who are not bound by any rules of stare decisis, which together with the above-mentioned ideological stance leads opponents to question the very legitimacy of the system. 2 Certainly not all agree with each such claims. In response, proponents argue that ISDS provides a fundamental mechanism through which the rule of international law is vouchsafed, by holding States responsible for violating good governance obligations they have
Reforming International Investment Arbitration: an Introduction
The Law & Practice of International Courts and Tribunals
For over a decade, investor-state dispute settlement (ISDS) has suffered a socalled legitimacy crisis.1 Critics have argued that ISDS is pro-investor, biased against developing countries, beset by incoherent jurisprudence and plagued by a lack of transparency and excessive costs and compensation.2 While the 1 Amongst the first scholarly critiques was Susan D. Franck's, "The Legitimacy Crisis in Investment Treaty Arbitration:
Transnational Dispute Management, 2014
Most investment treaties contain two dispute resolution clauses: one permitting investor-state arbitration for investment disputes and the other permitting state-to-state arbitration for disputes concerning the treaty's interpretation and/or application. Despite this duality, the potential role of state-to-state arbitration, and its proper relationship with investor-state arbitration, have largely been ignored. However, recent cases, including Peru v. Chile, Italy v. Cuba, and Ecuador v. United States, demonstrate the need to examine the potential and limits of this form of dispute resolution and to consider its implications for the hybridity of the investment treaty system as a whole. One reaction to the re-emergence of state-to-state arbitration has been to view it as a dangerous development that threatens to infringe upon investors' rights and to re-politicize investor-state disputes. This has led some to suggest radically curtailing the scope and availability of state-to-state arbitration in favor of investor-state arbitration. This Article argues that these attempts are inconsistent with the text, object and purpose, and history of investment treaties. The coexistence of these two forms of arbitration without a clear priority mechanism reflects the system's essential hybridity and cannot be wished away. This duality helps to demonstrate that the goals of investor protection and the depoliticization of investor-state disputes are important, but not absolute. Instead, the re-emergence of state-to-state arbitration represents an important step toward a new third era of the investment treaty system in which the rights and claims of both investors and treaty parties are recognized and valued, rather than one being reflexively privileged over the other. The investment treaty system has evolved from its first era, which focused exclusively on states' rights and state-to-state arbitration, to its second era, which focused primarily on investors' rights and investor-state arbitration. Instead of being an illegitimate or regressive development, the re-emergence of state-to-state arbitration represents a permissible and potentially progressive mechanism by which treaty parties can re-engage with the system in order to correct existing imbalances and help shape its development from within. More generally, the coexistence of investor-state and state-to-state arbitration requires a hybrid theory about the nature of investment treaty rights and the allocation of interpretive authority. This Article argues that: investment treaty rights should be understood as being granted to investors and home states on an interdependent basis, such that either-but usually not both-may bring arbitral claims; and interpretative authority should be understood as being shared between the treaty parties, investor-state tribunals, and state-to-state tribunals. This hybrid theory has the potential to help resolve other controversial issues within the field.