Investing in Development: The Role of Democracy and Accountability in International Investment Law

Abstract

This article explores whether international investment agreements (IIAs) have the potential to impede democratic expression and, as a result, hinder sustainable development. The author first demonstrates that democracy plays an essential role in the promotion of sustainable development and provides a normative (rather than procedural) definition of democracy. The three ways in which IIAs can limit democracy are then addressed. First, they can limit the policy space of developing countries. This is demonstrated through an analysis of how types of provisions commonly found in IIAs can negatively affect policy flexibility. Second, democracy can be indirectly limited through the decisions of international investment tribunals which give little deference to the decisions of domestic democratic forums. Third, democracy can be undermined if foreign investors are not accountable to any democratic government. In this regard, it is necessary for IIAs to impose obligations on home states and investors to ensure that investors behave in socially responsible ways. The article concludes with suggestions for ways in which developing countries can structure IIAs to support democracy rather than detract from it.