The foundations of international investment law : bringing theory into practice

Cover......Page 1
The Foundations of International Investment Law......Page 4
Copyright......Page 5
Table of Contents......Page 6
European Court of Human Rights......Page 10
International Centre for Settlement of Investment Disputes (ICSID)......Page 11
International Court of Justice......Page 18
Inter-State Arbitrations......Page 19
Permanent Court of International Justice......Page 20
UNCITRAL Arbitrations......Page 21
World Trade Organization......Page 23
United States......Page 24
Treaties, Conventions and Agreements......Page 26
Free Trade Agreements......Page 30
Bilateral Investment Treaties (BITs)......Page 31
EC Legislation......Page 33
United States......Page 34
List of Abbreviations......Page 36
List of Contributors......Page 42
Introduction......Page 46
PART I: INFRASTRUCTURE AND CHARACTERISTICS OF THE INTERNATIONAL INVESTMENT REGIME......Page 54
1. Introduction......Page 56
2.1 Decentralized composition......Page 59
2.2 Organic emergence......Page 60
2.3 Highly contested but dynamically stable......Page 61
3. The Multilayered, Accidental Evolution of IIL......Page 63
3.1 The `state of nature´ or bedrock of IIL......Page 64
3.2 Gradual limits on the sovereign powers of both host and home states......Page 65
3.3 Diffusion and interplay between generations of FCN treaties, domestic investment laws, and state contracts......Page 68
3.4 First generation BITs: conservation rather than revolution......Page 70
3.5 ICSID as an ideologically neutral and flexible, opt-in model......Page 72
3.6 Breeding ICSID with second generation BITs: the emergence of IIL......Page 74
3.7 The silent revolution of AAPL v Sri Lanka......Page 76
3.8 Breeding US FCN treaties and second generation European BITs: investor-state arbitration becomes mainstream......Page 78
4.1 Incremental evolution rather than rational design......Page 80
4.2 More symmetrical than traditionally assumed......Page 81
4.3 Private standing as decentralization, not commitment......Page 83
4.5 The puzzle of BITs amongst developed countries......Page 84
4.6 Limited evidence showing that BITs actually increase foreign direct investment......Page 85
5. Conclusion......Page 87
1. Introduction......Page 90
2.1 Sources......Page 91
2.2 Beneficiaries and parties......Page 93
A) Direct access......Page 103
B) Nationality......Page 104
C) Exhaustion of local remedies......Page 107
D) Jurisdiction ratione materiae......Page 110
E) The role of consent......Page 113
2.4 Enforceability......Page 115
3. Conclusions......Page 117
1. Introduction......Page 118
2. Investment Protection Law and Analogies......Page 121
2.1 International human rights law......Page 124
2.2 Law of treaties regarding third parties......Page 126
2.3 Law of diplomatic protection......Page 127
3. Analogies: Interpretation and Law-making......Page 130
3.1 Interpretation and subsequent agreement and practice......Page 131
3.2 Interpretation and comparative public law......Page 135
3.3 Interpretation and inaccessible materials......Page 137
3.4 Interpretation and law-making and investors´ practice......Page 139
3.5 Law-making and the treaty-making by states......Page 141
4. Analogies: State Responsibility......Page 144
4.1 Circumstances precluding wrongfulness: consent and countermeasures......Page 145
4.2 Content of international responsibility of a state......Page 147
4.3 Waiver of state responsibility......Page 149
5. Conclusion......Page 150
1. Introduction......Page 154
2. International Investment Law between Bilateralism and Multilateralism......Page 156
2.1 Ordering paradigms and their relevance......Page 157
2.2 Bilateralism-multilateralism-multilateralization......Page 158
3. The Multilateralization of International Investment Law......Page 160
3.1 Investment treaty-making......Page 161
A) The entrenchment of bilateral treaty-making in multilateral processes......Page 162
B) Most-favoured-nation clauses......Page 164
C) Nationality planning (or treaty shopping)......Page 166
3.2 Investment treaty arbitration......Page 167
B) The use of precedent......Page 169
3.3 Recalibration and multilateralization......Page 174
4. Ordering Paradigms and Investment Treaty Arbitration-A Case Study......Page 175
4.1 Interpretative methodology and reason-giving......Page 176
4.2 The role of arbitrators......Page 179
5. Conclusion......Page 182
1. Introduction......Page 188
2. The Sociological Dimension of International Economic Relations......Page 189
3. The Investment Arbitration Community......Page 191
4.1 Investment tribunals´ approach to human rights law......Page 193
4.2 Socio-cultural distance and legal fragmentation......Page 197
5.1 Formal rejection and de facto acceptance of precedent......Page 203
5.2 De facto precedents, social control, and reference groups......Page 207
6. Concluding Remarks......Page 212
1. Introduction......Page 214
2. Background Overview: Regime Differences Between Trade and Investment and the Existing Intersection......Page 217
3. Influence on Regime Architecture......Page 223
4. Influence on Investment Treaty Formation......Page 230
5. Influence on Substantive Treaty Provisions......Page 240
6. Influence on Investment Treaty Interpretation......Page 246
7. Conclusion......Page 252
PART II: BUILDING BLOCKS OF INTERNATIONAL INVESTMENT LAW AND ARBITRATION......Page 256
1. Introduction......Page 258
2. Formal Sources of Foreign Investment Law: The Concurrence of International Law and Domestic Law......Page 261
A) BITs......Page 262
NAFTA......Page 264
ASEAN......Page 265
C) Customary international law......Page 266
2.2 The concurrence of domestic law......Page 267
3. Precedent as the Material Source of Foreign Investment Law......Page 268
3.1 Presentation of the survey: empirical findings......Page 271
3.2 Interpretation of the survey: prior decisions as `pre-emptive´ reasons......Page 275
4. Conclusion......Page 278
1. Introduction......Page 280
2. Origins: A Procedural Functionalist Enterprise......Page 282
3. Function of Remedy: Three Different Goals......Page 283
3.1 Background......Page 284
3.2 Procedural justice: guarantee of bargaining power......Page 288
3.3 Corrective justice: compartmentalization of international economic conflicts......Page 289
3.4 Deterrence: prevention of opportunistic behaviour of states......Page 291
4.1 Background......Page 293
4.2 Third-party rights: access to justice and dispute settlement......Page 294
4.3 Direct rights: de-politicization and compensation......Page 296
4.4 Delegated rights: risk assessment and conflict prevention......Page 298
5. Conclusion......Page 301
1. Introduction......Page 302
2. Understanding the Legitimacy Challenge......Page 304
3. Investment Arbitration and the Logics of Delegation......Page 312
4. Consistency and/or Coherence?......Page 314
5. Identifying Applicable International Law (with a Focus on Custom)......Page 325
5.1 Category 1: the customary plea of necessity......Page 329
5.2 Category 2: the asserted customary defence of police powers......Page 334
6. Conclusion......Page 340
1. Introduction......Page 342
2. An Axiom......Page 343
3. Following Prior Cases......Page 346
4. Functions of Dispute Settlement......Page 348
5. The Rule of Law......Page 353
6. The Value of the Rule of Law......Page 356
7. Investment Arbitrators as Regulatory Actors......Page 358
8. Conclusion......Page 360
1. Introduction......Page 362
2. Dissecting Sovereignty......Page 364
3.1 Some preliminary clarifications......Page 370
A) Rationale......Page 371
B) The police powers doctrine in arbitral practice......Page 373
i. An autonomous customary concept......Page 374
ii. A concept of general application......Page 376
iii. Legal nature and burden of proof......Page 381
iv. Police powers and specific assurances......Page 384
D) The police powers doctrine conceptualized......Page 388
A) Rationale......Page 389
B) Emergency and necessity clauses in arbitral practice......Page 391
i. The nature of the concepts and its legal consequences......Page 393
ii. Relationship between treaty and custom......Page 396
iii. Sovereignty and the nature of protected interests......Page 398
D) Emergency and necessity clauses conceptualized......Page 402
4.1 A room of its own?......Page 404
4.2 Bringing sovereignty back in......Page 405
1. Introduction......Page 408
2. The Common Denominator of `Investment´......Page 410
3. Different Conceptions of Investment for Different Purposes to Justify Different Outcomes: the TV Nova cases against the Czech Republic......Page 412
3.2 Merits......Page 413
4.1 The concept of property rights......Page 414
A) The bundle of rights view of property......Page 415
C) Which view of property is to be preferred?......Page 416
A) Jurisdiction......Page 417
B) Expropriation......Page 420
C) Full protection and security......Page 424
5.1 The concept of contractual rights......Page 425
A) Jurisdiction......Page 427
B) Umbrella clause......Page 432
C) Fair and equitable treatment......Page 434
D) Expropriation......Page 436
6.1 The concept of expectations......Page 438
6.2 Investment-as-expectations in investment law......Page 443
B) Expropriation......Page 445
7.1 The concept of value......Page 447
B) Quantification of damages......Page 448
8. Conclusion......Page 450
PART III: MANAGING REGIME STRESS WITHIN INTERNATIONAL INVESTMENT LAW......Page 452
1. Introduction......Page 454
2.1 Economic contract theory......Page 455
2.2 Principal-agent theory......Page 458
3.1 Substantive law......Page 460
3.2 Interpretative methods......Page 464
3.3 Interaction of national and international procedures......Page 469
3.4 Selection of arbitrators and ethics codes......Page 470
3.5 Appeal mechanisms and annulment proceedings......Page 472
3.6 Authoritative interpretation by states......Page 473
3.7 Delegation to non-political experts......Page 474
3.8 Exit and amendments......Page 476
4. Limits to Control Mechanisms......Page 477
4.1 Reputation......Page 478
4.2 Rights of individuals and rule of law......Page 479
5. Conclusion......Page 480
1. Introduction......Page 482
2. Investment Treaty Negotiations as Interest Balancing......Page 484
2.1 The negotiating position of State A......Page 486
2.2 The negotiating position of State B......Page 487
2.3 Relative negotiating strength......Page 488
2.4 Conclusions......Page 489
3.1 The absence of the investor´s home state......Page 490
3.2 External influences......Page 493
3.3 The interests of the arbitrators......Page 496
3.4 Uncertainty and textual dynamism......Page 500
3.5 Conclusions......Page 501
4. Treaty Interpretation and Interest Balancing......Page 502
5. Conclusions......Page 509
1. Introduction......Page 512
2.1 Malaysian Historical Salvors v Malaysia......Page 515
2.2 Suez, SGAB, & Vivendi v Argentina......Page 516
2.3 Victims of the Stanford Ponzi Scheme v United States......Page 517
3. The Three-dimensionality of Investor-state Disputes......Page 519
3.1 The socio-legal continuum (individual to societal)......Page 520
3.2 The territorial continuum (local to transnational)......Page 521
3.3 The political continuum (commonplace to contested)......Page 522
4. Three Cases in 3-D......Page 524
4.1 A path-breaking dispute: Asian Agricultural Products Ltd (AAPL) v Sri Lanka......Page 525
4.2 An extraordinary crisis dispute: Abaclat v Argentina......Page 529
4.3 An ordinary regulatory dispute: Philip Morris Asia v Australia......Page 535
5. Conclusion: Toward a Methodology of Differentiation......Page 540
1. Introduction......Page 544
2. Coordination Tasks......Page 546
2.1 The lack of stare decisis in investment arbitration......Page 548
2.2 Coordination of `related´ investment proceedings......Page 550
2.3 Class actions and mass claims......Page 551
A) Derivative claims and reflective loss in corporate law......Page 553
B) Derivative claims and reflective loss in international investment law......Page 555
C) Shareholder rights as creatures of domestic corporate law......Page 556
D) The special case of shareholder rights under the NAFTA......Page 559
3. The Political Economy of Coordinating Adjudication Processes......Page 561
3.1 Claimant interests......Page 562
3.2 Host state interests......Page 563
4. Coordination Techniques......Page 564
4.1 Waiver of alternative remedies......Page 565
A) Res judicata......Page 567
B) Lis pendens......Page 568
C) Fork-in-the-road clauses......Page 570
4.3 De facto consolidation: appointing identical tribunals......Page 571
4.4 Formal consolidation......Page 572
5. Conclusion......Page 574
Index......Page 576