How to Kill a BIT and Not Die Trying: Legal and Political Challenges of Denouncing or Renegotiating Bilateral Investment Treaties

Abstract

The backlash against the expansive interpretation of key disciplines of international investment law by arbitral tribunals has prompted a host of strategies, implemented mostly by developing countries, aimed at walking away from the system. These range from denouncing the ICSID Convention and withdrawing consent to the exercise of jurisdiction by other arbitral bodies to denouncing the Bilateral Investment Treaties (BITs) to which they are parties. The purported objective of these initiatives is to reduce the legal exposure of these countries to international claims before arbitral tribunals, either by depriving foreign investors of a forum in which to pursue their claims or by completely extinguishing their rights under the treaties. The present paper focuses on these strategies and argues that none of them produce the desired results, at least in the short term. It notes that BITs include self-defense mechanisms – particularly, most favored nation (MFN) obligations, tacit renewal and “survival clauses” – that either delay or turn impossible the realization of these exit strategies. Against this backdrop, the paper proposes that developing States may be better off by implementing a strategy of renegotiation of their BITs.