Return to the Local Remedies Rule in European BITs? Power (Inequalities), Dispute Settlement, and Change in Investment Treaty Law

Abstract

This article will examine the evolving attitudes to the exhaustion of local remedies requirement and its waiver in investment treaty instruments through the prism of inequalities of power between different states and the role of international law in entrenching such inequalities. Focusing on the recent proposal by the European Parliament to re-introduce the exhaustion of remedies requirement in European BITs, this article seeks to demonstrate that, just like in general international law and despite the traditional claims of neutrality and depoliticization, inequalities of power continue to influence the making of investment treaty norms and hold sway over the settlement of investment disputes. Lest its long-term sustainability and credibility is undermined by the existing distortions in investment treaty policy and arbitral practice, the institute investor-state arbitration should be reinvigorated through a greater push for reciprocity in the relationship between international tribunals and national courts in developed and developing states alike.