Who wins in international investment arbitration disputes? Evidence from Latin American and Caribbean countries cases under ICSID

Abstract

During the nineties, an important group of Latin American and the Caribbean (LAC) countries adhered to the International Center for Settlement of Investment Disputes (ICSID) as part of a program of measures that sought to attract foreign investment to the region. Using a dataset of 161 concluded disputes until 2019 corresponding to investments in LAC countries, we find evidence on the influence of parties’ characteristics, the subject discussed in cases, and characteristics of the tribunal on the arbitration outcomes. We find that 50% of tribunal decisions have been favorable to either claimant investors or host countries. However, this result may be subject to sample bias if information of settlements and discontinued cases is not taken under consideration. We also find evidence in favor of selection and party capability theories that helps to explain the determinants of international investment arbitration dispute outcomes. In particular, the results reveal that disputes related to direct expropriations have a relatively higher probability of being considered founded by tribunals than other legal controversies. Likewise, the indicators of the relative strength of parties, such as experience in international arbitration system, have an important influence on tribunal awards. Furthermore, country’s time of experience within ICSID is found to have an important influence on the selection of disputes.