The International Regime for Investment: A History of Failed Multilateralism

Abstract

In this chapter, we discuss two interrelated questions: (1) Why is there no multilateral agreement on investment? (2) Do we need a multilateral investment agreement? We begin with a broad examination of the historical roots of investment protection, and revisit hallmark efforts at reaching a multilateral accord. We then elaborate on the decentralized regime that has been instituted instead, with a focus on bilateral investment treaties and investment treaty arbitration. Next, we consider three sets of explanations for why the formal efforts at reaching a multilateral agreement have failed – an ideational account, political explanations, and various technical explanations. We also discuss why some actually view the decentralized treaty-based regime as a multilateral system in and of itself. We end our discussion by reviewing the recent legitimacy crisis surrounding the investment regime, and debate whether regionalism may be an expedient alternative to formal multilateralism in future global investment protection