Is Arbitration a Threat or a Boon to the Legitimacy of International Investment Law?

The present Article addresses three distinct issues that are central to the critique of investment treaties and arbitration. First, it discusses the virtues of granting investors an independent right to initiate dispute settlement directly against the host state instead of forcing them to rely either on dispute resolution in domestic courts or on interstate dispute resolution. Second, this Article shows how investment-treaty arbitration takes into account private and public interests in deciding whether state conduct has violated the rights granted to investors under investment treaties. It thus argues that concepts related to investors\u27 rights, such as fair and equitable treatment or the concept of indirect expropriation, do not establish rights that unilaterally favor investors over states. Third, this Article addresses the relatively recent critique of whether arbitration, as compared to a permanent court with tenured judges, vitiates the legitimacy of international investment law. It explains the institutional choice in favor of arbitration, analyzes the independence and impartiality of arbitrators and shows which control mechanisms preclude the arbitral mechanism from becoming a source of pro-investor bias. Finally, the Article concludes by pointing to strategies by which the present system of investment-treaty arbitration can, and increasingly does, accommodate the legitimate concerns of nonparties to the proceedings. Such strategies, it is argued, do not require a radical redesign of the entire system, but can be integrated into the existing system of international investment law and arbitration. In sum, this Article argues that investment treaties and investor-state arbitration constitute a legitimate vehicle for structuring and stabilizing foreign investment activities

Investment treaty law and the fear for sovereignty: transnational challenges and solutions

This article addresses the vagueness, and the interpretative challenges associated with, international investment agreements (IIAs) and develops a new normative framework for interpreting these treaties. It focuses on the historical embedding of investment protection as a means of facilitating economic development as well as upon its synthetic public law nature. The analysis shows that a teleological approach to interpretation imposes boundaries on the meaning of substantive IIA provisions. The article then elaborates how the transnational dimension of IIAs provides a benchmark, which is the level of protection offered to economic actors against interference by the state in countries with the highest rule of law standards. The article then shows how the resulting challenges of comparative public law could be addressed through the methodology of re‐ and pre‐statement of transnational uniform ‘principles’: sophisticated and detailed rules striking the proper balance between private economic interests and the public regulatory interest, so as to provide more legal certainty for both investors and host states