Summary of G. Van Harten, \u27The Use of Quantitative Methods to Examine Possible Bias in Investment Arbitration\u27 and \u27Reply\u27 [to Franck, Garbin, and Perkins] in the Yearbook on International Investment Law & Policy (2011)

This is a summary of two articles I produced in an extended exchange with Susan D. Franck and others in the Yearbook on International Investment Law & Policy. The exchange dealt with the role of empirical methods in testing for possible bias in investment treaty arbitration and with various criticisms of Franck\u27s earlier study on this topic in the Harvard International Law Journal (2009)

Beware the discretionary choices of arbitrators

Investment treaty arbitration has unfolded rapidly in recent years. Some observations arising from analyses of arbitrator awards are highlighted below.[1] They support broad conclusions that: · arbitrators reviewed a wide range of legislative, executive and judicial decisions but typically did not exercise judicial restraint in various ways associated with domestic and international courts; · arbitrators typically adopted expansive approaches to their authority and to investor entitlements to compensation, especially where the claimant had the nationality of a major Western capital-exporting state; and · decision-making power was highly concentrated among arbitrators, suggesting a need for closer scrutiny of how the most active individual arbitrators have expanded the meaning of investment treaties and corresponding principles of state liability

Foreign Investor Protection and Climate Action: A New Price Tag for Urgent Policies

From a climate perspective, not all investment is equal. Desirable investment in clean energy needs encouragement and protection, while undesirable investment in fossil fuels needs clear policy signals to avoid further investment in destructive activities and stranding more assets. In this paper, evidence is presented on how foreign investor protection provisions in trade and investment agreements tilt the playing field in favor of entrenched incumbents and against urgent action on climate; on the potential for a massive expansion of investor-state litigation and risks to climate policy in proposed trade deals; and on key flaws in recent European Commission proposals to reform investor-state dispute settlement (ISDS)

Notes on the German Economy and Energy Ministry\u27s Proposal for Reformed Investor-State Dispute Settlement (ISDS)

These notes provide a general reaction to a proposal by the German economy and energy ministry for ISDS in a treaty between Europe and the U.S. Overall, the proposal takes only a minority of the steps needed to make ISDS independent, fair, open, subsidiary, and balanced. I suggest that the appropriate approach remains to reject ISDS in new treaties (especially among Western developed countries). The proposal would be a good starting point for replacing ISDS in existing treaties with developing or transition countries – but that is clearly not its purpose

A Parade of Reforms: The European Commission\u27s Latest Proposal for ISDS

The European Commission\u27s most recent proposal for ISDS reflects a move away from essentially fake reforms to something potentially more meaningful. However, it is insufficient to satisfy the criteria of independence, fairness, openness, subsidiarity, and balance and does not appear reliable until backed by clear language and a negotiating red line for the proposed Canada-Europe CETA and any other agreement providing for ISDS

A Case for an International Investment Court

The article elaborates on the lack of objective guarantees of independence and impartiality in the existing system of investment treaty arbitration. This founds a case for an international investment court to replace the existing system. The argument proceeds in three steps: (1) investment treaty arbitration is uniquely a form of public law adjudication, constituted at the international level; (2) as constituted it does not satisfy standards of independence and impartiality in public law adjudication; and (3) various reasons that might be offered to justify this failing are unsatisfactory in light of the importance of these standards. For this reason, states should be encouraged to establish an international investment court in accordance with well-known principles of judicial decision-making. Above all, alternatives to the existing system should be measured against the criteria that typically apply in public law, especially the related principles of openness and independence. Absent these criteria being met, one does not have a system that depoliticizes disputes and subjects them to the rule of law, or that warrants the utmost respect of all parties, above all developing states

Who Has Benefited Financially from Investment Treaty Arbitration? An Evaluation of the Size and Wealth of Claimants

We collected data on the size and wealth of the foreign investors that have brought claims and received compensation due to ISDS. Our main findings are that the beneficiaries of ISDS, in the aggregate, have overwhelmingly been companies with more than USD1 billion in annual revenue – especially extra-large companies with more than USD10 billion – and individuals with more than USD100 million in net wealth. ISDS has produced monetary benefits primarily for those companies or individuals at the expense of respondent states. Incidentally, we also found that extra-large companies’ success rates in ISDS, especially at the merits stage, exceeded by a large margin the success rates of other claimants. It was evident that ISDS has also delivered substantial monetary benefits for the ISDS legal industry

Contributions and Limitations of Empirical Research on Independence and Impartiality in International Investment Arbitration

The use of investment treaty arbitration to decide public law raises concerns about judicial independence and impartiality. These concerns arise from the absence of institutional safeguards of independence that are otherwise present in public law adjudication at the domestic or international level. In this article, opportunities to use empirical methods to study possible bias in investment arbitration are surveyed. The discussion includes a brief consideration of qualitative methods and a critique of two quantitative studies on outcomes in investment arbitration. The discussion then turns to the methodology of an ongoing project involving legal content analysis of decisions by investment treaty tribunals. The main conclusion reached in the paper is that empirical research can make important contributions to scholarly understanding of investment arbitration. On the other hand, empirical research has important limitations in its ability to demonstrate the presence or absence of actual bias, even at a systemic level, thus reinforcing the need for institutional safeguards

Arbitrator Behaviour in Asymmetrical Adjudication: An Empirical Study of Investment Treaty Arbitration

The study examines arbitrator behaviour in the uniquely context of investment treaty arbitration. It employs the method of content analysis to test hypotheses of systemic bias in the resolution of jurisdictional issues in investment treaty law. Unlike earlier studies, the study examines trends in legal interpretation instead of case outcomes and finds statistically significant evidence that arbitrators favour (1) the position of claimants over respondent states and (2) the position of claimants from major Western capital-exporting states over claimants from other states. There is a range of possible explanations for the results and further inferences are required to connect the observed trends to rationales for systemic bias. The key finding is that the observed trends exist and that they are unlikely to be explained by chance. This gives tentative empirical evidence of cause for concern about the use of arbitration in this context

Fairness and Independence in Investment Arbitration: A Critique of Susan Franck\u27s Development and Outcomes of Investment Treaty Arbitration

This short article provides a critique of a prominent study, Franck (2009), that used quantitative research tools in order to evaluate potential bias in investment treaty arbitration. The study has been referenced in policy and academic discussions in order to allay concerns about an apparent lack of fairness and independence in investment treaty arbitration. This critique does not suggest that there is evidence of actual bias in investment treaty arbitration. Rather, it is argued that (1) the study by Franck contained findings and conclusions that were unsupported by the results of the study, (2) there is far too little available information upon which to base reliable conclusions about possible bias using quantitative research methods, and (3) the more pressing concern is perceived bias arising from institutional factors