Investment Arbitration as Constitutional Law

Abstract

Abstract This chapter argues that investment arbitration serves functions analogous to high courts when interpreting constitutional text. As in the case of high courts issuing authoritative interpretations of constitutional texts, arbitrators are tasked with determining the propriety of state action with reference to open-ended obligations that states owe to foreign investors and their investments. Viewed from this angle, investment arbitration can be likened to the performance of judicial review under national constitutions. This is a proposition that will be resisted by many investment lawyers and arbitrators. Analogizing to constitutional rules and institutions will be seen as contributing to a ‘legitimacy crisis’ presently confronting investor-State dispute settlement (ISDS). Legitimation problems have arisen because legitimacy requires more than merely following correct legal processes. There is expected to be some value beyond mere legality served by the power of coercive law. Indeed, investment arbitration will continue to be of doubtful legitimacy so long as investment arbitration is characterized as performing constitution-like functions.