The Great Asymmetry and the Rule of Law in International Investment Arbitration

Abstract

International investment arbitration can be said to be built on a great asymmetry: on the one hand, foreign investors are endowed with a set of significant rights, most notably the right to initiate disputes before arbitration tribunals; on the other hand, States and citizens of the host State affected by the investment do not enjoy comparable rights. This article assesses whether the in-built asymmetry of investor-state arbitration runs counter to the rule of law. Clarifying the relationship between the rule of law and the system of investment arbitration is of crucial importance, given that one of the rationales to have investor-state arbitration in international treaties is the enhancement of the rule of law; at least, many jurists so profess. While there is a rich literature (empirically) studying the effects of investment treaties on the rule of law, few studies have addressed whether the investment arbitration itself has the qualities of the rule of law. This article bridges this gap by showing how the in-built asymmetry of the system runs counter to the rule of law. Drawing on the rule of law research field, two conceptions of the rule of law - a teleological and a reflexive one – are presented and employed as basis for the the main analysis of this article. In light of the examination of the great asymmetry and of its clash with the rule of law, the article’s concluding remarks hint at possible reforms that would rebalance the asymmetry of current investment arbitration law.