The Global Laboratory of Investment Law Reform Alternatives

Abstract

There are two ways of thinking about institutional choice in the context of multilateral investment law reform. One starts from abstract principles, asking what policy goal investment law is supposed to achieve and what institutional choice most effectively advances that goal. The other one draws on practical experimentation, asking what institutional choices states are making and how these choices perform in real life. Sergio Puig and Gregory Shaffer present a compelling analytical framework for the former, top-down approach to investment law reform. In this essay, I will scrutinize their analysis and argue that the latter, bottom-up approach is more promising. First, I show that Puig and Shaffer’s framework is contingent on specifying investment law’s overarching policy goal as a common yardstick by which to compare institutional choices. Yet, as part of the current reform process, states are not only exploring new institutional alternatives, but are also redefining what investment law is about in the first place. I show empirically that investment treaties are more diverse today than they have ever been, in part, because many states, particularly in the developing world, have shifted from being rule-takers to rule-makers. The current investment regime thus resembles a global laboratory of investment law reform alternatives where states experiment with new policy goals and novel institutional designs. This diversity allows us to observe how a wide range of reform alternatives actually performs in practice. We should let this experimentation run its course in the short term to then distill best practices in the medium term that can guide multilateral reform of investment law from the bottom up.