Domestic Politics and Investor–State Arbitration

Abstract

Abstract This chapter examines the argument that domestic political contestation contributes to state actors choosing to pursue policy objectives at the expense of investors’ interests. Following in the tradition of international political economy work on trade, this chapter looks at the contribution of domestic interest groups and political institutions to investor–state arbitration cases. Building on the empirical findings presented in Chapter 2 that cases of investor–state arbitration are clustered in highly politicized industries, such as extractives and utilities, this chapter puts forth an argument about which interest groups will advocate for policies that may violate international investment agreements and under what conditions they will do so. This chapter finds significant evidence that links domestic politics with the likelihood of an investment arbitration.