Abstract
Investor–State arbitration has become an integral fixture in today’s global commerce. The facility meets an evident demand for neutral fora able to resolve disputes between sovereigns and foreign investors and to establish minimum international standards that guide future conduct. Along with the growth in international commerce, the number of investment arbitrations has burgeoned over the past two decades. The prestige of the institution has been enhanced by the intellectual and ethical caliber of the arbitrators, who have concluded hundreds of arbitrations without scandal or corruption. In many ways a remarkable success, investor–State arbitration is nascent, and concerns about its legitimacy and efficacy could imperil its future. Some doubt the propriety of private arbitrators judging the acts of sovereign nations against often-malleable principles of international law. Others see diminished utility in the final awards, which typically are slow in coming, expensive, and both too narrow and too long. Critical to the continued vitality of the enterprise is how the arbitral bench and bar respond to its evolution. This note discusses some of the challenges and offers a few practical suggestions for the future. Whether to promote confidence in the rule of law or as a matter of commercial necessity, many States have consented by treaty or statute to resolve disputes with foreign investors through international arbitration. The confluence of foreign investment and State involvement in the marketplace has led to increasingly large and complex international disputes. With billions of dollars and the legitimacy of sovereign acts at stake, these cases are subject to intense public scrutiny and carry with them sensitive political and social issues. Despite their importance, these arbitrations are typically decided on narrow grounds, with more space in the award dedicated to rehearsing the parties’ arguments than to elaborating the reasons for the panel’s decision. Belated and costly decisions that do little to guide future conduct risk alienating parties and undermining the relevance and credibility of the institution. 1 The authors are members of Jones Day’s Global Disputes Practice Group and adjunct professors at Washington & Lee University School of Law. The views expressed are their own and should not be attributed to their Firm or its clients.
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