Globalization-Driven Innovation: The Investor as a Partial Subject in Public International Law – an Inquiry Into the Nature and Limits of Investor Rights -

Abstract

Given the current remarkable state of development of international investment law, it is surprising that to date neither the actual nature of the investor’s rights resulting from investment treaties nor the possible consequences which arise for the investor, the states and international law, have been sufficiently defined. This is all the more astounding, as the intrinsic nature and the possible limits of the investor’s rights are not only of theoretical interest, they are also decisive for the resolution of many substantial practical problems as well as for the positioning of international investment law within public international law. Furthermore, recent arbitration rulings concerning the fundamental question of whether the investor’s rights are of a direct, a derivative, or a contingent nature, Archer Daniels (2007), Corn Products (2008) and Cargill (2009), demonstrate diametrically differing approaches. This paper shows in its analysis that neither the procedural nor material rights of the investor are simply derived from the home state but are – in clear contrast to the model of diplomatic protection – in fact to be understood as individual direct rights. The investor is elevated to the status of a (partial) subject in international law. Of course, the states are, and remain, the ‘masters of the treaties’ and can correct or even revoke these at any time with prospective effect. However, as long as investment treaties confer distinct rights on the investor, arbitral tribunals and states have to recognize these direct rights and the states must accept that these can also be applied against them.The direct rights paradigm could have consequences for – inter alia – the continued validity of ‘survival’ clauses in favor of the legal position of the investor even in the case of a mutual revocation of the investment treaty by both treaty states, the limits which the rights of the investor put on declarations and interpretations made by the treaty states during ongoing arbitration proceedings, the interpretation of investment standards more strongly based on human rights elements due to the investor’s international legal personality, and the effect on the validity of the interpretation maxim in dubio mitius. The investor’s rights are limited, however, by the relations between the respective states in international law. Therefore, the investor has to accept permissible countermeasures, yet the quality of its individual direct rights can be seen in the fact that the investor is possibly entitled to receive compensation for this acceptance and the immediate injury suffered. The investor can indeed exercise its rights but, due to the superior interests of the states in the inviolability of the investment treaties they have concluded and their resulting ordering function, cannot impinge on these rights through a waiver. The paradigm of the elevation of the investor to partial subject in international law can be understood as a manifestation of globalization and can be embedded in the broader development of international law. The recognition of the investor by investment treaties as an effective unit in international law contributes to international law itself becoming a realistic and modern legal order not only for states but also for non-state actors.