Conventionally, investors could not sue states directly under international law and arbitration tribunals did not have general jurisdiction over international investment disputes. This has changed, especially since the early 1990s, with the emergence of an international system of investor protection that combines investor-state arbitration and broad standards of investor protection. The system elevates the legal status of investors (but not other individuals) in international law by allowing them to make international claims for damages against host states. Although the system depends on state authority for its establishment and ongoing effectiveness, the system adopts private authority as a method of transnational governance by permitting private investors to make claims and by giving private arbitrators the power to resolve those claims. This provides significant advantages to multinational enterprises at the expense of governmental flexibility in both capital-importing and capital-exporting states, as revealed by the recent explosion of investor claims. This article examines the legal architecture of the system in order to demonstrate how it expands private authority in the context of transnational governance
To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.