International Investment Law Research Articles

دور حقوق الإنسان في التحكيم الاستثماري: نحو تكامل أوثق

This article examines the role of human rights in international investment arbitration. A review of the historical origins of human rights and international investment law shows that the two fields are inextricably connected and share significant similarities, particularly in terms of their norms and principles. However, their separate origins and development has also given rise to ambiguities and tensions as to how human rights considerations can be invoked in international investment arbitration and by whom. The article examines the various contexts of such invocations and analyzes human rights references in investment treaties. It argues that ambiguities and tensions are especially problematic because they carry not merely theoretical but practical implications. It shows that the trend of convergence and overlap between the two fields is growing and concludes by arguing that greater integration of human rights law into international investment law and arbitration is not only desirable but essential for the unification of public international law and addressing many of its ambiguities.

Reforming Investment Protection: A Comparative Analysis of the EU and China

This article provides a comparative analysis of the European Union’s (EU’s) and China’s approaches to international investment law reform. While the EU has been referred to as a ‘systemic reformer’, which promotes significant institutional reform, China’s emerging model of investment protection remains unclassified. In the first part, this article describes the progressive emergence of China’s investment law regime. It argues that the Chinese model of investment protection may be viewed as an outright tool of foreign economic policy. Accordingly, China’s reform’s approach is a middle ground between systemic and incremental reforms. By contrast, due to its democratic nature, the EU has adopted a value-driven model. In this respect, this article posits that the political science scholarship on democracy may shed a different light on the EU’s institutional approach, and thus enrich the debate on investment law reform. The second part analyses the proposed Comprehensive Agreement on Investment (Proposed CAI) between the EU and China, which has been signed but not ratified. After showing that convergence was achieved on substantive protection, it argues that democratic imperatives explain the EU’s preference for a court system. Nevertheless, non-democracies often do not face the same incentives, which may generate disagreements regarding the dispute settlement design for investment claims. European Union, China, CAI, international investment law, democracy, dispute settlement

Compensation or Competitive Advantage? Reconciling Investment Arbitration with EU State Aid Law

Abstract —International investment law and EU State aid law have clashed on multiple occasions, most famously in the Micula case but also in disputes over subsidies in the renewable energy sector. In the view of the European Commission, investors should not be able to use investment arbitration to obtain compensation for the withdrawal of unlawful State aid, as this would jeopardize the effectiveness of EU State aid law. For this reason, the Commission has intervened in numerous investment arbitrations, arguing that investors cannot have legitimate expectations in respect of State aid that was granted in violation of EU law, and that any compensation awarded by a tribunal in such circumstances would also constitute State aid. This article argues that while EU State aid law should inform an assessment of the investor’s legitimate expectations, tribunals need to conduct a comprehensive evaluation that also considers other relevant factors, such as the respondent State’s representations and the foreseeability of the State aid qualification. If a tribunal determines that an investor was entitled to legitimate expectations despite EU State aid law, any compensation awarded by the tribunal should be accepted as damages that fall outside the scope of EU State aid law. In this way, a conflict between the two fields of law, which only encourages investors to seek enforcement outside the European Union, can be avoided.

Investment Treaties & the Legal Imagination: How Foreign Investors Play by Their Own Rules

Once considered a highly specific domain, international investment law has come to the forefront of legal debates and is one of the most divisive areas of international law. Under international investment treaties, foreign investors enjoy rights, have limited obligations, and can rely on a highly efficient dispute settlement mechanism: investor–state arbitration.1 In Investment Treaties & the Legal Imagination, Nicolás M. Perrone investigates how this regime evolved from a historical perspective. The book highlights that international investment law as we know it is the outcome of the project of business leaders, bankers, and lawyers in the 1950s and 1960s. For Perrone, these figures successfully developed a legal imagination (i.e. a vision of international investment relations) that gradually shaped and still pervades international investment law. Far from celebrating this vision, Perrone successfully illuminates what this worldview has focused on (investors’ rights) and what it has silenced, marginalized, and made invisible (local communities and Indigenous peoples’ needs). He then calls for the emergence of a new, more inclusive legal vision that considers not only investors’ needs but also those of local communities to achieve inclusive, sustainable development and peaceful, just, and prosperous relations among nations.

Revisiting Proportionality in Investment Arbitration: Theory, Methodology, and Interpretation

Abstract The increasing tensions between a government’s right to regulate and investment protection are fueling the constantly increasing number of international environmental disputes and human rights disputes, in particular with respect to renewable energies, water services, and waste management. As a result, investor-State arbitration is facing greater criticism than ever before because of its potential to contradict international environmental agreements and international human rights agreements. Concerns about State sovereignty are on the rise; particularly the perception that investment tribunals have failed to strike a proper balance between investors’ economic interests and general interests of host States to further their environmental policies and interests. Against this background, this Article investigates the methodological justification for the application of proportionality analysis while discussing potential channels in investment law to crystallize such application which would have deep practical ramifications for the global energy market. At a more conceptual level, this Article proposes an alternative viewpoint in understanding constitutionalization of international investment law and argues proportionality is indispensable discourse in investor-State arbitration.

International Investment Law as a Framework to Protect Private Actors in Outer Space

International Investment Law as a Framework to Protect Private Actors in Outer Space

Article: European Union Law and Global Investment Regime: Unshell Proposal as a Next (Mis)step of the EU Against Investment Treaty Arbitration?

This article addresses a largely unchartered interdisciplinary research area of the global investment regime and European Union (EU) law with an emphasis on the prevention of international tax avoidance in the EU. It focuses on the intersections between newly proposed anti-tax avoidance legislation by the European Commission that is known as the Unshell Directive (UD) and international investment agreements (IIAs). In this article, the author sets a stage for the intersections by discussing the Court of Justice of the European Union (CJEU) case law and the commission’s actions aimed against the most powerful enforcement tool in the global investment regime, i.e., the investor-state dispute settlement (ISDS) mechanism, by attempting to render it illegal and ineffective within the EU. The corresponding reactions from the arbitral tribunals are also addressed. The discussion evolves to identify and analyse the interplay between the proposal of the UD (also the Unshell Proposal or UP) and the IIAs to reveal that the impact of the former on the latter is ambiguous by design in order to minimalize legal certainty vis-à-vis protection of foreign investment in the EU via shell entities. This constitutes a foundation for potential, seismic tensions between the UD and the global investment regime that are not beneficial for marketing and development of the EU internal (single) market and may thus weaken the EU’s global competitiveness in the area of foreign investments. international investment law, EU law, good faith, ISDS, tax avoidance, shell entities

Hayek’s dream: International investment law and the denigration of politics

AbstractThis article argues that the operational logic of international investment law, in part, is to tame states by legally requiring that they behave as if they were profit-seeking enterprises. This is suggested by a small set of awards, arising out of contractual disputes, that work a binary between normal contractual behaviour and sovereign acts of public authority behaviour. Non-contractual behaviour is deemed ‘political’ and likely to give rise to liability under investment law strictures. This complements well Hayek’s approach to the rule of law, where, outside of their ‘framework’ functions, states are expected to behave ‘in the same manner as any private person’. In an age of ever-increasing disparity, this renders it more difficult for states and citizens to take up measures that Polanyi associates with the protective counter movements, shielding citizens from the deleterious effects of free markets.

Izazovi reforme mehanizma rešavanja investicionih sporova

Criticisms addressed to the mechanism for resolving disputes between foreign investors and host countries, i.e. investment arbitration, have led to various proposals and attempts to find optimal reform options. Within the framework of UNCITRAL's Working Group III, since 2017 proposols from various stakeholder have been considered. This paper analyzes the main objections to the dominant investor/state dispute settlement system, as well as the most important reform options, which appear in the literature and practice of international organizations, primarily UNCITRAL. Although this process is still ongoing, it is evident that, on the one hand, there is a plurality of different interests and proposals of the main actors of international investment law, while, on the other hand, there is a wider consensus on the necessity of certain reforms in order to establish and strengthen consistency, uniformity and predictability of arbitration decisions. Certain reforms are already being implemented in practice through new investment agreements.

The International Settlement of Disputes Under the (Draft) CAI

Abstract The EU-China Comprehensive Agreement on Investment (CAI) establishes a sophisticated inter-State dispute settlement mechanism, directly inspired by the World Trade Organization (WTO) and adapted to a bilateral context, as is also found in recent preferential trade agreements. The novelty here lies in its extension to the field of investment entry and investment facilitation. Some variations in detail are also important. Because of partial material overlap, it is necessary to consider how choice of forum is organized between CAI procedures and those under WTO or other agreements, and to clarify the possible interplay with bilateral investment treaties previously concluded by China with EU Member States. The attention given in CAI to specific procedures for sustainable development and subsidies is also notable. In sum, the solutions adopted show a willingness on the part of the two powers to exert a certain influence on developments in international investment law, without upsetting the methods of dispute resolution.

The Waiving of Jurisdictional Concerns in Arbitration: A Case Study of the IMFA v. Indonesia Arbitration

As a field of law that is constantly developing, International Investment Law relies quite heavily on past arbitration awards or jurisprudence to derive the applicable laws in each respective case. This means that every new arbitration award should ideally be studied in order to identify what possible ramifications it may have for a future arbitration case. It is therefore of utmost importance that arbitral tribunals formulate and state their reasoning when they come to a conclusion regarding a disputed issue in a case. Doing this would provide insight as to the tribunal’s legal reasoning and would clear up any possible issues of legal certainty for the case in question as well as be of benefit for future tribunals. This is the reason for scrutinizing the IMFA v. Indonesia award. The tribunal in IMFA v. Indonesia had decided to forego coming to a conclusion on some of the jurisdictional arguments on the grounds that the merits of the case were found to be in favor of the Respondent (as the party who challenged the tribunal’s jurisdiction). This sort of waiving of Jurisdictional concerns is not advisable considering the precedent it would set, and also considering the fact that it would run counter to the Kompetenz-Kompetenz doctrine and right to present one’s case. This article aims to use the IMFA v. Indonesia case as a study to elaborate on why such a waiving is inadvisable and would set a bad precedent. Keywords: Arbitration, Jurisdiction, Kompetenz-Kompetenz DOI: 10.7176/JLPG/123-07 Publication date: August 31 st 2022

The expanding universe of international tax disputes: a principled analysis of the OECD international tax dispute settlement proposals

ABSTRACT This article analyzes the dispute settlement proposals contained in the October 2020 OECD Pillar One Blueprint. We concentrate on the actual proposals found in the Blueprint and analyse them against critical issues that are relevant to the development of public international law dispute settlement processes more broadly, fostering a better contextualization of the analysis. Invariable, these tax disputes arise from measures taken by governments, or responses to Base Erosion and Profit Shifting (BEPS) measures by companies. In some cases, the government measures reflect deep concerns over the lack of tax revenues from foreign investors. This focus on government action has been married to corporate-centred concepts of tax certainty, leading to a ‘tax certainty’ design in the Blueprint that risks distorting dispute settlement in international tax for many years to come. Fortunately, the proposals leave many issues to be resolved during the drafting process set to take place over 2021–2022. This means that the international tax law regime, especially in this moment of major reform, has an opportunity to open its thinking, and its integration, into the broader corpus of public international law, as trade and investment law have done before. A failure to do so risks putting its future credibility at risk.

Investor-state dispute settlement and tax matters: limitations on state’s sovereign right to tax

ABSTRACT More and more countries are coordinating at the international level to implement taxation measures to counter the problem of tax avoidance by multinational corporations (MNCs). This has led to increasing internalization of taxation measures, which, in turn, will lead to greater normative dialogue between international taxation and other branches of public international law such as international investment law (IIL). This paper argues that MNCs and foreign investors have not shied from using the IIL framework to challenge sovereign taxation measures of States before investor-State dispute settlement (ISDS) tribunals. These challenges, part of the increasing judicialization of international tax measures, have generated a rich body of case law. While ISDS tribunals are generally deferential towards State’s sovereign right to tax, they clearly recognize certain limits on this sovereign power. ISDS tribunals have not hesitated from laying down principles where abuse of taxation powers or imposition of taxes that are not reasonable or proportionate have been held to be inconsistent with the country’s investment treaty obligations. Even carving-out taxation measures from the ambit of the investment treaty are no surety that an ISDS tribunal will not exercise jurisdiction over such tax measures especially when they are not exercised in a bona fide manner. As countries find ways to tax MNCs to counter the problem of tax avoidance, they should keep these important jurisprudential principles in mind.

Proportionality and the fight against international tax abuse: comparative analysis of judicial review in EU, international investment and WTO law

ABSTRACT This contribution considers the use of the principle of proportionality to review measures combatting international tax abuse (avoidance and evasion). Our claim is that proportionality, which tends to be viewed as the key analytical tool to balance tax equity against the interests of taxpayers, is ill-suited to the review of such measures. This we will demonstrate from a theoretical angle, but also through the analysis of the CJEU, international investment tribunals and WTO adjudicatory bodies: rather than balancing tax certainty against tax equity or focusing on the efficiency of the anti-tax abuse measures in the pursuit of substantive policy goals (the types of enquires normally associated with proportionality), what we observe is an assessment and gradual demarcation of the rightful territorial extent of the State’s taxation powers.

Bridging the Gap between Foreign Investor Rights and Obligations: Towards Reimagining the International Law on Foreign Investment

AbstractThis article proposes to see the history of the international law on foreign investment as about the promotion of investor rights as much as the resistance to investor obligations. The argument is that the divide between investment protection and the responsibility of foreign investors is one of the most significant features of international investment law. The article shows that the different treatment of rights and obligations is grounded in the same business project and legal imagination. Maintaining this divide has never been easy, as this model faced resistance, particularly from Latin America, trade unions and human rights activists. The analysis concludes by noting that academics can contribute to reimagining the international law on foreign investment by bringing investment treaty law and business and human rights closer. This shift is already happening.

РОЛЬ ИНВЕСТИЦИОННЫХ СОГЛАШЕНИЙ В РАЗВИТИИ ЦИФРОВОЙ ЭКОНОМИКИ И ИХ РЕАЛИЗАЦИЯ НА ВНУТРИГОСУДАРСТВЕННОМ УРОВНЕ

This article explores the issues of legal regulation of investment agreements in the digital economy in a period of enhanced technology development. Economic and political imperatives are combined with technological innovation to drive the growth of the digital economy, with growth rates particularly high in developing countries. The strategy for this growth should be private sector driven, government driven, and reviewed by civil society and academia. Over the past decades, one of the most remarkable developments in international investment law has been the extraordinary increase in the number of agreements concluded regarding the protection or liberalization of foreign investment, where the investment regimes provided by States and the position of foreign investors play a special role. However, the foundations for these actions are missing with the definitions, concepts, and indicators of the digital economy, which is currently in quite a mess. The main purpose of the article is to reveal the essence of the digital economy, bilateral investment agreements, investment activities, crypto assets, as well as issues of improving the understanding of tokens and cryptocurrencies, including them in agreements from the point of view of the prospects for the development of the digital economy in accordance with the new adopted regulatory legal acts of the Republic of Uzbekistan.

Rethinking the Role of Indigenous Peoples as Rightsholders, Stakeholders, and Valuable Market Participants in the Global Trade and Investment Spaces

ABSTRACT At the Margins of Globalization and Indigenous Peoples and International Trade are remarkable in the sense that only few texts have successfully undertaken any meaningful and comprehensive analyses, from a multidimensional perspective, of the situation of indigenous peoples within the context of global economic development and international trade and investment law. The pertinence of the many critical issues explored by Sergio Puig in At the Margins of Globalization, and Jon Burrows and Risa Schwartz in Indigenous Peoples and International Trade, in terms of facilitating greater understanding about the connectedness of the fields of global economic development, trade, and investment with indigenous peoples’ rights, and the implications brought about by such connection, cannot be overstated. This review therefore interrogates not only how the issues explored in the two books significantly contribute to the framing of discussions about the indigenous peoples’ participation in the market space, but also how those discussions fit into the larger discussion regarding how to improve the sociocultural and economic conditions of indigenous peoples and other marginalized populations.

Between Scylla and Charybdis: Theoretical Reflections on ‘The Protection of Intellectual Property Rights under International Investment Law’ by Klopschinski, Gibson and Ruse-Khan

INTRODUCTION. The relationship between investment protection and intellectual property rights is one of the longstanding issues in international investment law — intellectual property rights have long been recognised as a form of ‘investment’ entitled to protection under bilateral investment treaties and other international investment agreements. The book co-authored by Simon Klopschinski, Christopher Gibson, and Henning Grosse Ruse-Khan, and entitled The Protection of Intellectual Property Rights under International Investment Law [Klopschinski, Gibson,Ruse-Khan 2021] provides a welcome contribution to the debate on the issue by addressing the problem from an informed theoretical standpoint. However, this issue, as correctly pointed out by the authors, is not merely a theoretical one, but rather one with significant consequences in terms of the integration of other concerns and values in investment treaties and arbitral cases, such as intellectual property rights protection.MATERIALS AND METHODS. The materials for the article were the book co-authored by Simon Klopschinski, Christopher Gibson, and Henning Grosse Ruse-Khan, The Protection of Intellectual Property Rights under International Investment Law (2021), in light of the relevant academic literature in the field of international investment law and IP. The methodological basis of the research consists of general scientific and special methods.RESEARCH RESULTS. Without doubt, this book is a comprehensive and stimulating study by the experts in both fields that will deepen understanding of the relationship between IP and investment. The authors masterfully bring together discourses that are taking place between scholars and practitioners in each regime, but frequently in relative isolation from each other.DISCUSSION AND CONCLUSIONS. With regard to the subject-matter, it is clear that no matter how specialised the fields of international law already are, and will increasingly become in the future, they maintain common roots and traits. Once this path of mutual exchange is taken, many positive cross-fertilisation effects can be expected in the future. The greatest part of the book consists of an analysis of shared procedural and substantive norms. Klopschinski, Gibson and Ruse-Khan focus on how substantive provisions are articulated across the two legal regimes and identifies commonalities and differences in framing and in how they are interpreted in dispute settlement.

THE CABO DELGADO INSURGENCY AND MOZAMBIQUE’S OBLIGATION TO PROVIDE FOREIGN INVESTORS WITH FULL PROTECTION AND SECURITY

Mozambique is currently facing a violent and rapidly escalating insurgency within its Cabo Delgado province. The province is rich in mineral resources and has attracted substantial foreign investment. In terms of most of its bilateral investment treaties, Mozambique has agreed to provide foreign investors with full protection and security (FPS) within its territory. This article explores the extent of a state’s obligations to foreign investors under the FPS standard in international investment law. It finds that tribunals have adopted diverging interpretations of the standard and critiques several of these approaches. In particular, it expresses concern over the extent to which investment law forces the state to choose between protecting its people and protecting investors’ assets. It also reflects on what these diverging interpretations mean for Mozambique and the extent to which it may be liable to compensate investors for harm caused to their property by the insurgents. It is argued that investment tribunals should be alive to the various demands on state resources and not simply base liability on the foreseeability of harm. It also concludes by suggesting that Mozambique should seek an agreement with its treaty partners to temporarily restrict the extent of its liability under the FPS standard.

Full Protection and Security (for Racial Capitalism)

ABSTRACT Scholars and practitioners of international investment law have repeatedly attempted to legitimise the field by presenting it as an antidote against the arbitrary and excessive powers of the (postcolonial) state. Early cases, such as AAPL v. Sri Lanka, have contributed to this popular, yet ultimately unpersuasive, argument by seemingly constraining the conduct of warfare in the Global South. My contribution questions this received wisdom and in so doing it shows that repressive state violence is not simply permitted but even mandated by international investment law. My analysis focuses on the obligation of host states to provide ‘full protection and security’ (FPS) to foreign investors. My argument unfolds in three steps. First, I examine in detail the tribunal’s approach to FPS in the von Pezold case, an award that stands out amongst the jurisprudent of investment tribunals due to its explicit engagement with questions of race/ism. Secondly, I construct a theory of FPS that draws from US legal realism in order to show that international investment law does not create bilateral legal relations (state-investor) but rather directly determines (and in particular, diminishes) the sphere of lawful action of a potentially indefinite number of actors subject to the host state’s jurisdiction. In other words, I read FPS as a legal standard that aims to create an authoritarian form of statehood and mobilise the state against the exploited and racialised sections of its population. Finally, I link the above observation to broader debates about ‘racial capitalism’. I show that the FPS demands a particular form of racial sovereignty in defence of global capitalist accumulation, and it does so as a matter of structural allocation of violence, and not simply due to bigoted or insensitive language.