Predicting Outcomes in Investment Treaty Arbitration

Crafting appropriate dispute settlement processes is challenging for any conflict-management system, particularly for politically sensitive international economic law disputes. As the United States negotiates investment treaties with Asian and European countries, the terms of dispute settlement have become contentious. There is a vigorous debate about whether investment treaty arbitration (ITA) is an appropriate dispute settlement mechanism. While some sing the praises of ITA, others offer a spirited critique. Some critics claim that ITA is biased against states, while others suggest ITA is predictable but unfair due to factors like arbitrator identity or venue. Using data from 159 final cases derived from 272 publicly available ITA awards, this Article examines outcomes of ITA cases to explore those concerns. Key descriptive findings demonstrate that states reliably won a greater proportion of cases than investors; and for the subset of cases investors won, the mean award was US$45.6 million with mean investor success rate of 35%. State success rates were roughly similar to respondent-favorable or state-favorable results in whistleblowing, qui tam, and medical-malpractice litigation in U.S. courts. The Article then explores whether ITA outcomes varied depending upon investor identity, state identity, the presence of repeat-player counsel, arbitrator-related, or venue variables. Models using case-based variables always predicted outcomes whereas arbitrator-venue models did not. The results provide initial evidence that the most critical variables for predicting outcomes involved some form of investor identity and the experience of parties’ lawyers. For investor identity, the most robust predictor was whether investors were human beings, with cases brought by people exhibiting greater success than corporations; and when at least one named investor or corporate parent was ranked in the Financial Times 500, investors sometimes secured more favorable outcomes. Following Marc Galanter’s scholarship demonstrating that repeat-player lawyers are critical to litigation outcomes, attorney experience also affected ITA outcomes. Investors with experienced counsel were more likely to obtain a damage award against a state, whereas states retaining experienced counsel were only reliably associated with decreased levels of relative investor success. Although there was variation in outcomes, ultimately, the data did not support a conclusion that ITA was completely unpredictable; rather, the results called into question some critiques of ITA and did not prove that ITA is a wholly unacceptable form of dispute settlement. Instead, the results suggest the vital debate about ITA’s future would be well served by focusing on evidence-based insights and reliance on data rather than nonreplicable intuition

International Investment Arbitration: Winning, Losing and Why

This perspective reviews recent empirical research about investment treaty arbitration in order to help create a more accurate framework for policy choices and dispute-resolution strategies

国际投资仲裁：胜诉、败诉及其原因

本文回顾了最近有关投资条约仲裁的实证研究，目的是为了帮助创建一个更准确的政策选择和争端解决的战略框架

Empiricism and International Law: Insights for Investment Treaty Dispute Resolution

While scholars in the United States increasingly focus on the empirical dimension of legal scholarship, there have been challenges in using empiricism to explore international legal issues. Rather than relying on logic or instinct alone, empirical methodologies can provide scholars with tools to gain new facts, see existing ideas through a different lens, and engage in a more nuanced analysis of international law phenomena. There appears to be a natural synergy between empiricism and international investment treaty dispute resolution. With calls for trade time outs by U.S. presidential candidates, there is interest in how investment treaties function, whether they achieve their goals, and at what cost. Given the implications for public policy, international relations, and allocation of domestic financial resources, empirical assessment of international investment law is not misplaced. This Essay considers the efficacy of using empirical methodologies to gain insights about the resolution of investment treaty disputes and international investment law. Part I considers the historical tensions between international law and empiricism and moves towards reintegration. Part II explores what form empiricism might take and argues for a broad understanding of empiricism. Part III analyzes how to develop an empirical approach in light of the costs and benefits and proposes five steps to facilitate the creation of an empirical research agenda for international investment treaty dispute resolution. While recognizing that empiricism is not a panacea, the Essay suggests that the benefits of making empiricism part of the methodological landscape of investment treaty dispute resolution scholarship are worth the costs. Empiricism offers a chance to obtain accurate information about investment disputes, correct misperceptions about existing dispute resolution processes, permits considered analysis of legal issues affecting the public, and facilitates informed decisions about the negotiation and revision of investment treaties

Rationalizing Costs in Investment Treaty Arbitration

International investment and related disputes are on the rise. With national courts generally unavailable and difficulties resolving disputes through diplomacy, investment treaties give investors a right to seek redress and arbitrate directly with states. The costs of these investment treaty arbitrations - including the costs of lawyers for both sides, as well as administrative and tribunal expenses - are arguably substantial. This Article offers empirical research indicating that even partial costs could represent more than 10% of an average award. The data suggested a lack of certainty about total costs, which parties had ultimate liability for costs, and the justification for those cost decisions. Although there were signs of balance and a preference for parties to be responsible for their own costs, there was neither a universal approach to cost allocation nor a reliable relationship between cost shifts and losing. Awards typically lacked citation to legal authority and provided minimal rationale, and the justifications for cost decisions exhibited broad variation. Small pockets of coherence existed. Tribunals typically decided costs only in the final award; and as the amount investors claimed increased, tribunal costs also increased. Such a combination of variability and convergence can disrupt the value of arbitration for investors and states. In light of the data, but recognizing the need for additional research to replicate and expand upon the initial findings, this Article recommends states consider implementing measures that encourage arbitrators to consider specific factors when making cost decisions, obligate investors to particularize their claimed damages at an early stage, and facilitate the use of other Alternative Dispute Resolution (ADR) strategies. Establishing such procedural safeguards can aid the legitimacy of a dispute resolution mechanism with critical implications for the international political economy

The Crossroads of Investment Arbitration

None available

The Diversity Challenge: Exploring the Invisible College of International Arbitration

As diversity can affect the perceived legitimacy of a state’s dispute resolution system and the quality of judicial decisions, diversity levels in the national bench and bar have been an area of transnational concern. By contrast, little is known about diversity of adjudicators and counsel in international arbitration. With a lack of accurate, complete, and publicly available data about international arbitrators and practitioners, speculation about membership in the “invisible college” of international arbitration abounds. Using data from a survey of attendees at the prestigious and elite biennial Congress of the International Council for Commercial Arbitration permitted one glimpse into the membership of the international arbitration community. Although defining the international arbitration community is challenging, rather than leave the “invisible college” unexamined, this Article offers one systematic glimpse into the global elites of international arbitration using data from 413 subjects who served as counsel and 262 who acted as arbitrators (including 67 investment treaty arbitrators). The median international arbitrator was a fifty-three year old man who was a national of a developed state reporting ten arbitral appointments; and the median counsel was a forty-six year old man who was a national of a developed state and had served as counsel in fifteen arbitrations. In addition: (1) 17.6% of the arbitrators were women, and there was a significant age difference such that male arbitrators were approximately ten years older than women; (2) for those acting as international arbitrators, we could not identify a significant difference in the number of appointments women and men obtained; (3) depending upon how development status was defined, developing world arbitrators accounted for fifteen to twenty percent of arbitrators; and (4) for all measures used to analyze development status, arbitrators from the developing world received a statistically lower number of appointments than their developed world counterparts. Recognizing the data revealed diversity in international arbitration is a complex phenomenon, the data nevertheless supported, rather than disproved, claims that international arbitration is a relatively homogenous group. Acknowledging that international arbitration may improve over time and diversity issues challenge other forms of dispute resolution, diversity levels in international arbitration were somewhat lower than in several national court systems but were generally reflective of diversity levels in other international courts and tribunals. The international arbitration community seems aware of the distortions. For all subjects, 57.5% either somewhat or strongly agreed that international arbitration experiences challenges related to gender, nationality, or age. Younger subjects and women were statistically more likely to identify such challenges as compared to older or male subjects; but subjects from states outside the Organisation for Economic Co-operation and Development (OECD) were less likely to identify challenges when compared to their OECD counterparts. Replication is necessary as the results may reflect a limited historical baseline of international arbitration global elites. Given the self-identified concerns and the symbolic legitimacy of broader representation, the international arbitration community may wish to explore factors inhibiting full utilization of untapped talent and facilitate aims of procedural, and potentially distributive, justice. Structural and incremental strategies could then promote a sustainable international arbitration system for the future

Empirical Modalities: Lessons for the Future of International Investment

None available