The Legitimacy of Investment Arbitration: Empirical Perspectives

Cover
Half-title
Series information
Title page
Copyright information
Contents
List of Figures
List of Tables
Notes on Contributors
1 Introduction: The Legitimacy Crisis and the Empirical Turn
	1.1 Introduction
	1.2 Assessing Legitimacy Claims Empirically
		1.2.1 Normative and Sociological Legitimacy
		1.2.2 Legitimacy and Legitimation
		1.2.3 Empirical Assessments: Approaches, Possibilities and Limitations
	1.3 Forms of Legitimacy and Overview of the Book
		1.3.1 Process Legitimacy: Independence and Impartiality
		1.3.2 Process Legitimacy: Legal Reasoning
		1.3.3 Output Legitimacy
		1.3.4 Legitimation Strategies
	1.4 Concluding Thoughts
2 The International Investment Regime and Its Discontents
	2.1 Introduction
	2.2 Mapping Exposure and Access to Investor-State Dispute Settlement
	2.3 Mapping the ISDS Regime
	2.4 Charting the Legitimacy Discourse
		2.4.1 Overview
		2.4.2 The Precursor with Few Specific Concerns (1987-1994)
		2.4.3 Rumblings - A Building Legitimacy Crisis (1995-2003)
		2.4.4 A Maturing Legitimacy Discourse (2004-2010)
		2.4.5 Reflective Legitimacy Crisis (2011-2016)
		2.4.6 From Crisis to Reform (2017-2020)
	2.5 Concluding Perspectives: The Dynamics of the Regime
Part I Process Legitimacy: Independence and Impartiality
	3 Testing Cognitive Bias: Experimental Approaches and Investment Arbitration
		3.1 Introduction
		3.2 Empirical Research in International Investment Law
			3.2.1 Lines of Research in the Field
			3.2.2 Research on Biases and Its Limitations
			3.2.3 Survey Experiment as an Empirical Strategy
		3.3 An Experiment on How Arbitrators Allocate Costs
			3.3.1 Design of the Experimental Survey
			3.3.2 Brief Analysis and Discussion of Results
		3.4 Conclusion: The Future and Limitations of Experimental Approaches to Investment Arbitration
	4 The Influence of Law Firms in Investment Arbitration
		4.1 Introduction
		4.2 Conflict of Interest in ISDS
			4.2.1 The Challenge of Law Firms in ISDS
			4.2.2 The Legal Frameworks of ISDS Cases
			4.2.3 Case Law
			4.2.4 Concluding Remarks
		4.3 Empirical Methods
			4.3.1 Calculating Relations - Statistical and Network Analysis
			4.3.2 Scope and Caveats
		4.4 Expanding the Perception of Law Firms' and Arbitrators' Relationships through Network and Statistical Analysis
			4.4.1 Network Ranking of Law Firms and Individuals
				4.4.1.1 Adapting Behn, Langford and Lie's Approach
			4.4.2 The Relationships between the Law Firms and Arbitrators
			4.4.3 Conclusions
		4.5 Discussion - Grand Old Women and Men and Their Friends at the Firm?
			4.5.1 Access to Gatekeepers
			4.5.2 Closed Loops
			4.5.3 Implications for Conflicts of Interest and Perceived Legitimacy
		4.6 Concluding Remarks
	5 Arbitrator Challenges in International Investment Tribunals
		5.1 Introduction
		5.2 Challenges of Arbitrators: An Analysis of Available Data
		5.3 Removing Arbitrators: Applicable Rules
			5.3.1 The ICSID Convention and Arbitration Rules
			5.3.2 The UNCITRAL Arbitration Rules
			5.3.3 The SCC Arbitration Rules
			5.3.4 The ICC Arbitration Rules
		5.4 Removing Arbitrators: Reasons to Challenge
			5.4.1 Familiarity with Other Participants in the Proceedings
			5.4.2 Reasons Linked to the Conduct of Arbitrators during the Proceedings
			5.4.3 Statements Made by the Arbitrators on Issues Related to the Dispute
		5.5 Conclusion
	6 Dissents in Investment Arbitration: On Collegiality and Individualism
		6.1 Introduction
		6.2 Appointing Arbitrators
		6.3 Dissenting in Collegial Panels: On Collegiality and Individualism
			6.3.1 The Market Pressures of Arbitrators
			6.3.2 The Dynamics of Collegial Panels: On Unanimity and Dissents
		6.4 Methodology and Results
		6.5 Conclusions
Part II Process Legitimacy: Legal Reasoning
	7 Foreign Investors, Domestic Courts and Investment Treaty Arbitration
		7.1 Introduction
		7.2 Delimitation, Theory and Methodology
			7.2.1 Setting the Framework
			7.2.2 Research Questions and Hypotheses
				7.2.2.1 Do Foreign Investors Rely on Domestic Courts If Given the Chance to Pursue ITA?
				7.2.2.2 To What Extent Do Foreign Investors Appeal against the Decisions of Domestic Courts?
				7.2.2.3 What Types of Cases Do Foreign Investors Bring and against Whom?
				7.2.2.4 What Is the Success Rate of Foreign Investors before the Domestic Courts of the Host State?
			7.2.3 Selecting the Countries
			7.2.4 Selecting the Cases
		7.3 Assessing the Four Countries
			7.3.1 Do Foreign Investors Rely on Domestic Courts If Given the Chance to Pursue ITA?
			7.3.2 To What Extent Did Foreign Investors Appeal against the Decisions of Domestic Courts?
			7.3.3 What Types of Cases Do Foreign Investors Bring and against Whom?
			7.3.4 What Was the Investors' Success Rate in Domestic Courts?
		7.4 Why Would Investors Rely (or Not) on Domestic Courts?
			7.4.1 Why Would Investors Rely on Domestic Courts?
				7.4.1.1 Investors Did Not Know about ITA and Its Advantages; or Should They Have Known?
				7.4.1.2 Domestic Disputes Are a 'Different Animal'
				7.4.1.3 Other Considerations
			7.4.2 Why Would Investors Not Rely on Domestic Courts?
				7.4.2.1 Domestic Courts Are Less Efficient
				7.4.2.2 Investors Might Perceive Domestic Courts as Biased against Them
				7.4.2.3 A 'Fork-in-the-Road' Clause Might Hinder Investors from Having Recourse to Domestic Courts
		7.5 Should Investors First Resort to Domestic Courts?
			7.5.1 Ensuring Increased Legitimacy of ITA and of a Future Multilateral Investment Court
			7.5.2 Investors Already Rely on Domestic Courts
			7.5.3 Protection of Sovereignty
			7.5.4 What about Bias and Inefficiency?
		7.6 Conclusions
		Annexes
			Explanations for all the tables
	8 Ensuring Correctness or Promoting Consistency? Tracking Policy Priorities in Investment Arbitration through Large-Scale Citation Analysis
		8.1 Introduction
		8.2 The Choice of Precedent as an Expression of Tribunals' Policy Preferences
			8.2.1 Studying Preferences of Judicial Institutions through Citation Behavior
			8.2.2 The Selection of 'Relevant' Precedent as Signal of Underlying Policy Preferences
		8.3 Methodology and Dataset
			8.3.1 Disclaimer on the Promises and Limitations of Empirical Research
			8.3.2 The Dataset
			8.3.3 Building a Treaty-Citation Network
			8.3.4 Quantifying Treaty Similarity
		8.4 Analysis: Quantifying the Preference for Correctness and Consistency
			8.4.1 The ISDS Treaty-Citation Network
				8.4.1.1 Few IIAs Have Many Disputes, Many IIAs Have Few Disputes
				8.4.1.2 Precedent Is Skewed towards Few IIAs
			8.4.2 Self-Citations: NAFTA Tribunals are about Correctness, ECT Tribunals Are about Consistency
			8.4.3 Similarity: Most Citations Connect Highly Dissimilar Treaties
			8.4.4 Summary of Findings
		8.5 Conclusion: A Mismatch between State and Tribunal Policy Priorities
	9 Fair and Equitable Treatment: Ordering Chaos through Precedent?
		9.1 Introduction
		9.2 Three Tales of FET
			9.2.1 Tecmed v. Mexico (2003)
			9.2.2 Waste Management v. Mexico (2004)
			9.2.3 Occidental v. Ecuador (2004)
		9.3 Dynamics of Precedent
			9.3.1 Three Strands of Case Law
			9.3.2 New Contenders
		9.4 Dynamics of Codification
		Appendix
Part III Output Legitimacy
	10 The West and the Rest: Geographic Diversity and the Role of Arbitrator Nationality in Investment Arbitration
		10.1 Introduction
		10.2 The International Investment Treaty Regime
		10.3 Theorizing Nationality
			10.3.1 Home Region Bias
			10.3.2 The First Competing Hypothesis: No Bias
			10.3.3 The Second Competing Hypothesis: Reverse Bias
		10.4 Descriptive Data
			10.4.1 Coding Citizenship and Dominant Residence
			10.4.2 Diversity of Arbitrators
			10.4.3 Distribution and New Entrants over Time
			10.4.4 Panel Role and Appointing Body
			10.4.5 Personal Identity of Arbitrators
		10.5 Analysis
			10.5.1 Research Design
			10.5.2 Operationalization
			10.5.3 Regression Results
			10.5.4 Claimant Investor Bias and Regional Analysis
		10.6 Conclusion and Prospects
	11 Mixing Methodologies in Empirically Investigating Investment Arbitration and Inbound Foreign Investment
		11.1 Introduction
		11.2 Methodology in Econometric Analysis of Foreign Investment
			11.2.1 Empirical Literature Review
			11.2.2 Method
			11.2.3 Estimation Results from the Econometric Analysis
		11.3 Potential and Challenges for Qualitative Analysis of ISDS and Investment Treaties
			11.3.1 Survey- versus Interview-Based Research in Potentially Polarised Media Environments
			11.3.2 The Pros and Cons of Participant Observation in Public Inquiries
		11.4 Conclusions: Lessons from Social Psychology in Assessing and Communicating Empirical Findings
		Statistical Appendix
		Sensitivity Tests
		Summary
	12 Double Jeopardy? The Use of Investment Arbitration in Times of Crisis
		12.1 Introduction
		12.2 The Legitimacy of Arbitration: Two Generically Different Contexts
		12.3 Governance, Economic Crisis and Investment Arbitration: Conditional Legitimacy?
		12.4 Research Design
			12.4.1 Dataset and Variables
			12.4.2 Independent Variables
				12.4.2.1 Independent Variables for Governance
				12.4.2.2 Independent Variables for Economic Crises
			12.4.3 Control Strategy
		12.5 Results
		12.6 Conclusion
		Annex I A Few Facts about Our Database
		Annex II
	13 Who Has Benefited Financially from Investment Treaty Arbitration? An Evaluation of the Size and Wealth of Claimants
		13.1 Introduction
		13.2 Limitations, Dataset and Methodology
		13.3 Findings
			13.3.1 Ordered Financial Transfers by Size or Wealth of Beneficiary
			13.3.2 Apparent Forum-Shopping
			13.3.3 The Yukos Cases
			13.3.4 Legal Outcomes by Size or Wealth of ISDS Beneficiary
			13.3.5 Size or Wealth of Claimants and Ordered Financial Transfers Compared to ISDS Costs
		13.4 Concluding Summary
		Annex 1 Excluded cases
		Annex 2 Breakdown of cases
	14 Explaining China's Relative Absence from Investment Treaty Arbitration
		14.1 Introduction
		14.2 Chinese Participation in the International Investment Regime
			14.2.1 The Period of Narrow ISDS Provisions (1982-2006)
			14.2.2 Later Expansion: Broader ISDS Provisions (2007-19)
		14.3 Patterns of Chinese Inward FDI from 2007: Further Adding to the Puzzle?
			14.3.1 Amounts of FDI
			14.3.2 FDI by Sectors
		14.4 Understanding China's Relative Absence from ITA
			14.4.1 Introduction
			14.4.2 Pre-dispute Mitigation
				14.4.2.1 Administrative Review Procedures
				14.4.2.2 Cooling-Off Periods
				14.4.2.3 Temporal Jurisdictional Limitations
			14.4.3 Alternatives to ITA
				14.4.3.1 International Commercial Arbitration
				14.4.3.2 Foreign Investors in Chinese Courts
		14.5 Concluding Remarks
		Annex 1 Chinese BITs with No ISDS Provisions
		Annex 2 Chinese BITs with Narrow ISDS Provisions
		Annex 3 Chinese TIPs with ISDS Provisions
		Annex 4 Chinese IIAs Signed but Not in Force/Terminated
		Annex 5 Chinese IIAs Containing Broad ISDS Provisions
Part IV Legitimation Strategies
	15 Does International Arbitration Enfeeble or Enhance Local Legal Institutions?
		15.1 Introduction
		15.2 The Effect of Investment Arbitration on the Domestic Rule of Law
		15.3 An Alternative Account: International Arbitration and the Domestic Rule of Law
			15.3.1 Elites Implementing Arbitration Reforms
			15.3.2 Existing Theories
			15.3.3 Republic of Georgia as a Case Study
			15.3.4 Testable Hypotheses
		15.4 Sample and Data
			15.4.1 Sample
			15.4.2 Rule of Law (Dependent) Variables
			15.4.3 Arbitration Variables
			15.4.4 Control Variables
		15.5 Empirical Results
			15.5.1 Replicating Ginsburg
			15.5.2 Multivariate Regression Results
			15.5.3 Implications
		15.6 Agenda for Future Research
	16 Learning from Investment Treaty Law and Arbitration: Developing States and Power Inequalities
		16.1 Introduction
		16.2 Setting the Scene: Participation in the Investment Treaty Regime as a Form of Learning
		16.3 Power Disparities and Limits of Learning
			16.3.1 How Do States Learn? The Role of Awareness and Internal Capacity
			16.3.2 Lack of Awareness (and Limited Learning): Insights from Empirical Case Studies
			16.3.3 Lack of Capacity as a Barrier to Learning
			16.3.4 Lack of Capacity as a Barrier for Effectuating Change in Investment Treaty Practice
		16.4 How Not to Build Capacity: Inadequacy of Existing Approaches to Power Inequalities
		16.5 Conclusion
	17 Legitimation through Modification: Do States Seek More Regulatory Space in Their Investment Agreements?
		17.1 Introduction
		17.2 Capturing State Regulatory Space in Treaty Design
		17.3 The Changing Landscape of IIAs and Their Content
			17.3.1 SRS ISDS in Signed IIAs
			17.3.2 SRS ISDS in Model BITs
			17.3.3 SRS ISDS in Renegotiated IIAs
			17.3.4 SRS ISDS and IIA Termination
		17.4 Conclusions and Prospects
Index