Investment Chapter Research Articles

Is Investor-State Arbitration Publicc?

The essay critiques prevailing descriptions of investor-state arbitration (ISDS) that see this mechanism as a form of ‘public’ adjudication requiring exclusively ‘public law’ reforms going forward, culminating in, as the European Union has recently suggested in the course of negotiations for the investment chapter of the Trans-Atlantic Partnership, its replacement by a permanent international investment court in lieu of arbitration using party-appointed arbitrators. It is skeptical of the ostensible public/private divide and most of the ten reasons advanced in the literature, premised on that divide, for concluding that the international investment regime, and particularly ISDS, is public. It next critiques ten widely praised public law prescriptions for change to the regime or ISDS. It concludes with ten broad lessons for why ISDS, in its current form, is best viewed as a ‘hybrid’ between public and private.

Increasing the Host State's Regulatory Flexibility Under FTA Investment Chapters: US Approaches Under NAFTA, the AUSFTA and the TPP

Building on the negotiation of U.S. bilateral investment treaties beginning in the early 1980s, U.S. free trade agreements incorporating specific host-state obligations to foreign investors and binding investor-state dispute settlement (ISDS) have been a feature of U.S. trade and investment policy since 1992 (when the NAFTA negotiations were concluded). Presidents Ronald Reagan, George H.W. Bush, Bill Clinton, George W. Bush and Barack Obama have all endorsed ISDS, despite opposition by many Democratic legislators, organized labor and environmental groups. Yet the content of these investment chapters shows a significant evolution from NAFTA to the Australia — United States FTA (AUSFTA) (with investor protection but without ISDS), the United States — Chile FTA and the Singapore — United States FTA (2003) to the Trans-Pacific Partnership (TPP) (2015). The changes have been driven largely by the concerns of civil society and government officials over the dozens of NAFTA investment claims filed against the NAFTA Parties. They also reflect the perceived need for the United States and other host governments to maintain a higher level of regulatory flexibility and discretion, particularly in such areas as protecting the environment and maintaining public health. The United States’ Trade Promotion Authority (TPA) legislation enacted in 2002 and 2015 also mirrors these post-NAFTA changes. The newest iteration of the mechanism (Chapter 9 of the TPP) thus affords host governments far more regulatory discretion than earlier agreements such as NAFTA, along with increased transparency, making it more difficult for foreign investors to prevail against host governments with claims of denial of “fair and equitable treatment” and “regulatory takings.” The evolution of U.S. sponsored investment protection provisions into a significantly more host government friendly, regulatory friendly, process, is the principal theme of this paper.

Investment Arbitration under Mega-Regional Free Trade Agreements: A 21st Century Model

Investment obligations and investor-State arbitration provisions normally have been negotiated under BITs; in recent years, however, and with increasing frequency, such provisions have been negotiated in the larger context of FTAs. For investment provisions, the movement from BITs to FTAs recently has taken an additional, significant step: the negotiation of such provisions in the even larger context of mega-regional FTAs.This shift in context — from BITs to FTAs, and now from FTAs to mega-regional FTAs — will significantly affect the content and operation of investment provisions. Indeed, investment arbitration under mega-regional FTAs likely will be distinctive in several important respects. This chapter addresses five distinctive characteristics of investment arbitration under mega-regional FTAs. First, a significant number of claims likely will require tribunals to address distinctions between trade and investment activities. Such claims would arise in the context of international production networks, which mega-regional FTAs are intended to encourage and support. By clarifying the outer limits of “investor” activities, tribunals constituted under mega-regional FTAs could build upon the groundbreaking guidance provided by the TPP, which limits damages under the investment chapter to those incurred by a claimant in its “capacity” as an investor.Second, mega-regional FTAs could provide particularly good opportunities for the development of effective appellate mechanisms. Appellate tribunals tied to individual mega-regional FTAs could have a systemic impact on the international investment law regime (given the active investment arbitration practice likely to develop under each treaty); at the same time, such tribunals - each of which would oversee the interpretation of only one treaty - could avoid the temptation to understate the significance of textual distinctions across treaties (which can arise from a perceived need to achieve greater consistency in the case law). Third, mega-regional FTAs likely will increase the availability of investment liberalization commitments. By offering compelling trade benefits (in particular, enhanced access to regional and global value chains), mega-regional FTAs could encourage developing States to agree to robust investment commitments that otherwise would be difficult to secure. Fourth, mega-regional FTAs can encourage investment liberalization in another respect: by relying on existing momentum for trade liberalization to create momentum for investment liberalization (particularly when combining the negotiation of reserved sectors that apply both to trade and investment commitments). Fifth, mega-regional FTAs that include a large number of signatories could give rise to coordination challenges. Such coordination challenges could weaken the effectiveness of joint interpretation mechanisms — a form of control mechanism on which States can rely to limit the independence of tribunals constituted under a particular treaty. In response to the risk of coordination challenges, policymakers should consider a wide range of alternative control mechanism options, including soft law options, which recently have been used effectively by the NAFTA Parties (when developing non-binding “Statements” on arbitral procedure) and UNCITRAL (when developing transparency rules that apply largely on a voluntary, opt-in basis). With the conclusion of the TPP, and likely conclusion of an RCEP agreement, these distinctive characteristics of investment arbitration under mega-regional FTAs ultimately could be seen, more generally, as characteristics of 21st century investment arbitration.

From Sea to Sea: Regulatory Space of Federal and Provincial Governments in Canada Under CETA and TPP Investment Chapters

The aim of this paper is to assess the impact of TPP and CETA investment chapters on the regulatory space of government in Canada. Past treaty practice of Canada will be the yardstick for this assessment, most notably the investment chapter in the North American Free Trade Agreement between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America (NAFTA) and the model Foreign Investment Promotion and Protection Agreement (FIPA) of Canada. Overall neither TPP nor CETA stands out as better protecting or reducing more the regulatory space of government. It depends of the policy area considered. CETA appears to be more innovative, representing a synthesis of the preoccupations of Canada and the EU towards international investment law and ISA. TPP is a blueprint for US foreign legal policy in the Pacific space and elsewhere, representing an orthodox view of international investment law. The systemic issue of legal articulation between CETA, TPP and past Canadian treaties adds an unprecedented layer of complexity to the matter at hand. It is argued that contradictions in the international obligations of Canada is likely to create confusion both for regulators and arbitrators, while investors might simply make the best of it.

Amicus Curiae Submission Eli Lilly and Company v. The Government of Canada

This amicus brief was submitted to the North American Free Trade Agreement (NAFTA) arbitral tribunal in Eli Lilly v. Canada (ICSID Case No. UNCT/14/2) by Amici. Amici are scholars whose research and teaching focus is intellectual property law (Dr. Burcu Kilic, Professor Brook Baker, HU Yuanqiong, Professor Cynthia Ho, Dr Luke McDonagh, Pratyush Upreti and Yaniv Heled, J.S.D.). The brief was accepted by the Tribunal with respect to Dr. Burcu Kilic (Washington DC, United States), Professor Brook K. Baker (Boston, United States), Professor Cynthia Ho (Chicago, United States), and Mr. Yaniv Heled J.S.D. (Atlanta, United States), denied with respect to the other academics for lack of standing.In September 2013, the Claimant Eli Lilly and Company (Lilly) launched a CDN $ 500 million claim against the Government of Canada under the North American Free Trade Agreement’s (NAFTA) investment chapter. The Claimant is challenging Canada’s invalidation of secondary patents related to the previously-known and patented active ingredients atomoxotine (Strattera) and olanzapine (Zyprexa), drugs used to treat attention deficit hyperactivity disorder, schizophrenia and bipolar disorder. Lilly is challenging the decision of Canadian courts to invalidate two patents for failing to comply with Canada’s requirement of usefulness after failing to prevail in Canadian courts. The challenge is under the “investment” chapter of NAFTA, rather than the IP chapter. Lilly argues that this “improper” and “discreditable” invalidation of its patents constitutes a NAFTA-prohibited “indirect expropriation” and a breach of NAFTA’s guarantee of a “minimum standard of treatment” for foreign investors. This case against Canada is a case of first impression and the first case pursuing investor-state dispute resolution (ISDS) with respect to intellectual property rights affecting pharmaceuticals, the case has heightened significance. The outcome of this case will be instructive about whether other foreign investors pursue future attacks on substantive policies embedded in national patent systems through the arbitral proceedings challenging differences in patentability standards that frustrate their “expectations”.Of particular concern is that this challenge may make countries hesitant to use legitimate flexibilities under the Agreement on Trade Related Aspects of Intellectual Property (TRIPS). In addition, the invalidated patents are secondary patents that Eli Lilly seeks to use to extend its patent term after initial patents expired, but without substantial evidence that these new inventions are in fact useful. Although Canada bars such patents under the “promise of a patent” for usefulness that is unique, other countries similarly bar such patents, under different patentability doctrines.The Brief addresses, amongst other issues: • NAFTA Chapter 17 patentability standards • Patentability standards in Canada and their judicial interpretation• Secondary patents and patent evergreening • Evolving nature of patent law• Abuse of the system of international investment protection and misuse of the system• Adverse chilling effect of the case on efforts to enhance access to medicines globally

The New Gold Standard? Empirically Situating the Trans-Pacific Partnership in the Investment Treaty Universe

The Trans-Pacific Partnership (TPP) has been labeled a ‘new, high-standard trade agreement’. But just how ‘new’ and ‘high’ are the standards it sets? To answer that question we combine traditional legal analysis with computational text comparisons situating the TPP in the universe of international investment agreements (IIAs). We find that the TPP investment chapter offers few truly novel features — 81% of its text is taken from prior American treaties. Compared to the majority of IIAs, however, the TPP goes beyond existing practice: it sets high levels of investment protection, explicitly safeguards host state sovereignty and establishes a sophisticated investment arbitration architecture. Nevertheless, the TPP is unlikely to revolutionize the IIA universe. Its innovations are open to circumvention given that older treaties remain in force parallel to the TPP. Moreover, as disagreement persists with Europe and BRICS countries, the TPP is unlikely to serve as a template for future multilateralization.

TPP 투자챕터의 실체규정 - 한중FTA와의 비교를 중심으로-

환태평양동반자협정(TPP)이 2016년 2월 4일 서명되어 참가국의 비준을 앞두고 있다. TPP 투자챕터의 실체규정은 지난 수십여 년 간 투자협정의 운용에 대한 경험을 바탕으로 외국인 투자보호에 충실을 기하면서도 투자유치국의 공공정책 시행을 위한 신축성과의 균형을 맞추려는 노력의 현주소를 보여준다. 네거티브접근법을 취하여 설립 시에서부터 무차별대우를 보장하는 것을 원칙으로 한 것, 이행요건금지의 구체화 등에서 보듯이 투자시장의 개방 폭과 투자보호의 실질화에서 TPP가 한중FTA보다 넓고도 두텁다. 한국과 중국 양국이 적극적인 해외투자보호 정책을 취한 결과, 한중FTA도 일단 이루어진 투자의 보호에 있어서는 만전을 기하려는 의도가 투자의 정의를 넓게 규정한 부분 등에 나타난다. 하지만 최혜국대우의 적용에 있어 지나치게 광범위한 예외를 인정한 것, 고위경영진 및 이사회 구성 관련 요건 금지 규정의 부재 등은 한중FTA의 한계와 그 규범의 명확성과 충실도를 제고할 필요를 노정한다고 할 것이다. 후속 협상에서 이 부분에 진전이 있기를 기대한다. TPP가 투자보호와 국가공공정책 간에 균형을 도모하고자 노력한 것은 투자계약의 정의, 분쟁해결에의 최혜국대우 적용배제, 간접수용에 해당하지 않는 정당한 규제조치와 예외조치의 명시 규정 등에 나타난다. 이와 같은 TPP 투자챕터의 균형감각은 한중FTA 후속협상을 비롯한 한국의 향후 국제투자협정 체결과정에 적극적으로 수용할 필요가 있다.

The Past, Present and Future of International Investment Arbitration in Thailand

This paper offers the first detailed English-language analysis of international investment arbitration law and practice in Thailand. Part 1 briefly introduces burgeoning foreign direct investment (FDI) and investment treaties in the Asian region, followed by more recent emergence of significant investor-state dispute settlement (ISDS) claims. Part 2 sketches the expansion of inbound FDI into Thailand from the 1980s, and more recent outbound investment especially into neighbouring developing countries. This expansion prompted Thailand to enter into dozens of Bilateral Investment Treaties (BITs), including ISDS-backed protections especially from the mid-1990s, and Free Trade Agreements including investment chapters from 2004.Part 3 outlines the first two treaty-based claims filed against Thailand, especially the 2009 arbitration award in favour of Walter Bau due to a lack of ‘fair and equitable treatment’ related to a Don Muang airport tollway concession project. However, Part 3 also examines cases where the Thai government has been subject to arbitration claims under concessions or other contracts with foreign investors. Thailand’s policy response has focused on restricting the capacity of public authorities to agree to arbitration clauses in concession contracts (in 2004) and other public contracts (in 2009, partly liberalised in 2015). Thailand also revised its Model BIT to somewhat reduce parallel treaty-based protections for foreign investors, but only from 2013.Nonetheless, Thailand joins other countries in the region (like Vietnam, Korea and Australia) that have weathered high-profile ISDS claims, but have decided not to let old investment treaties expire (as in Indonesia). Instead, they are negotiating future treaties with provisions recalibrating the rights of foreign investors and host states. However, Thailand has maintained the comparatively unusual extra response of maintaining restrictions on public authorities agreeing to arbitration in investment contracts.

The TPP Investment Chapter and Investor-State Arbitration in Asia and Oceania: Assessing Prospects for Ratification

The Trans-Pacific Partnership (TPP) Agreement was signed in February 2016 by 12 Asia-Pacific economies that already account for 40% of world GDP, including the United States, Japan and Australia. If ratified, economists model significant economic growth prospects, especially for smaller and/or less developed member states, with a considerable impetus coming from greater cross-border investment. Further economic benefits are expected if others join the existing signatories, with expressions of interest already coming from leaders in several Asian states. However, whether the treaty will be ratified and come into force remains unclear, partly because of some ongoing opposition to the TPP’s investment chapter provisions even among existing signatories, for example from some quarters within Australia. One focus of criticism is the extra option of investor-state dispute settlement (ISDS), aimed at more credibly enforcing the substantive protections and liberalisation commitments of host states. The first part of this paper therefore assesses prospects for ratification in light of investment trends and treaty practices in Asia and Oceania, including current and possible future TPP states. It shows how many have now weathered occasional claims from foreign investors, without abandoning ISDS from subsequent treaties. The second part introduces the ISDS-backed substantive provisions of the TPP investment chapter, particularly compared to other recent Australian free trade agreements (FTAs). These provisions continue a trend for over a decade, following the lead of the United States and evident in the FTA practice of many other Asia-Pacific states, of including provisions more favourable to host states compared to an earlier era of stand-alone bilateral investment treaties, which often followed a simpler European template. As such, the investment chapter seems less likely to prevent ratification of the TPP, although the broader politics in countries like Australia remain complex. In addition, the paper concludes with a wider question as to whether and how investment treaties in the region may develop an even more pro-host-state stance. This is now being be promoted by the European Union in negotiations with the US, but also several Asia-Pacific states, both in terms of substantive provisions and an “investment court” in lieu of ad hoc ISDS arbitration panels.

Defining Indirect Expropriation: The TTIP Approach and the (Elusive) Search for Greater Certaintyy

The paper critically assesses the definition of indirect expropriation included in the recent EU proposal for an investment chapter within the context of the TTIP negotiation. The paper argues that, while the EU proposal is likely to have narrowed the scope of the concept of indirect expropriation, in terms of providing ‘greater clarity’, we are not there yet. Like similar attempts before it, the EU proposal refers to different legal approaches without sufficiently clarifying their content and relationship. While this lack of clarity shows the indecision among policy makers, including the EU, about where to draw the line between an indirect expropriation (that entails compensation) and a legitimate regulatory measure (that does not), it ultimately suggests that there are still doubts about the proper function of international investment law.

Is The Trans-Pacific Partnership's Investment Chapter The New 'Gold Standard'?

The TPP’s investment chapter pursues a reform path within the existing international investment regime that many other states, including the US, support. But the fact that mega-regionals like the TPP may advance the economic and security interests of hegemons does not mean that, on balance, they may not also advance the interests of even small states like New Zealand. Most treaties — and indeed perhaps most of customary international law — have been the product of exercises of asymmetric power games. The TPP is made up of package deals of no less consequence than in the Law of the Sea Convention or on-going efforts to control climate change. It incorporates tradeoffs between regulatory discretion and the benefits anticipated for trade in goods and global value chains. These tradeoffs merit sober reflection.

TPP and Investor-State Dispute Settlement: An Intertwined Spectrum of Options for Investors?

Once ratified, Chapter 9 of the TPP (the Investment Chapter) will provide important protections to investors through the Investor-State Dispute Settlement (ISDS) system. While the Investment Chapter has triggered certain criticism, TPP members have relied for years on the ISDS system as an effective mechanism to solve disputes under pre-existing international investment agreements (IIAs). The new ISDS provisions are not revolutionary but reflect an effort by TPP members to regulate and include public concerns in the Investment Chapter. There is, however, a remarkable absence in the TPP: there is no provision addressing the “coexistence” between TPP and preexisting IIAs. This absence—which very likely will result in investor-State treaty shopping— will offer alternatives to investors to bring arbitration claims under preexisting investment treaties.

Trans-Pacific Partnership Provisions in Intellectual Property, Transparency, and Investment Chapters Threaten Access to Medicines in the US and Elsewhere.

Brook Baker describes the potential harms to global health from the Trans Pacific Partnership Agreement and its failure to balance the interests of patients and the public with those of industry.

Recent Developments in the Most Controversial Aspects of EU International Investment Agreements: Portfolio Investments and Investor-State Dispute Settlement

The most controversial issues regarding EU international investment agreements are, on the one hand, the actual extent of the EU’s exclusive external competence over international investments and, on the other, the opportunity to include investor-state dispute settlement (ISDS) clauses in these agreements. The former issue is mainly a legal question, and it especially concerns the inclusion of portfolio investments in the EU’s exclusive external competence. In this respect, this article seeks to provide some insights on the opinion that the European Commission has recently requested from the Court of Justice on the free trade agreement between the EU and Singapore on the basis of the latest developments in the case law of the Court of Justice of the European Union. By contrast, the second issue is mainly a political question and focuses on the inclusion of ISDS in the investment chapter of the Comprehensive Trade and Economic Agreement (CETA) between the EU and Canada. In this respect, while highlighting the main criticisms of the inclusion of ISDS in CETA, it is argued that the right response to European concerns about ISDS provisions in CETA and in TTIP should not be the removal of ISDS from those agreements. Instead, in order to reduce the asymmetric conditions related to the regulatory powers of the parties to CETA, it would be opportune to ask whether it may be appropriate to adopt, in the EU, a system of control on foreign investments like the one existing in Canada and in the United States. In particular, it is demonstrated how the solution can be found in Articles 64(2) and 207(2) TFEU that could be used to adopt a regulation establishing an EU committee on foreign investment in charge of the review of inflow investments coming from non-EU countries in order to protect the EU’s general interests — first, EU security and welfare — just as the Committee on Foreign Investment in the United States and the Minister of Industry of Canada already do.

State-Owned Enterprises as Claimants in International Investment Arbitration

Reflecting the significant amount of foreign investment by State-owned enterprises (SOEs), a number of claims against States by SOEs have been submitted to investor-State arbitration. Such claims raise the issue of whether, for purposes of determining standing as ‘investors’ in investment arbitration, tribunals should apply the same analysis to State-owned and privately owned corporations. Existing bilateral investment treaties and investment chapters of free trade agreements, with only a few isolated exceptions, are available to SOEs as claimants, at least when acting in a commercial capacity. The more challenging questions concern, first, whether those agreements also are available to SOEs as claimants when acting in a governmental capacity and, second, if not, how to distinguish commercial from governmental conduct by SOEs. With respect to those two issues, this article recommends that decision-makers, first, look primarily to the applicable definition of ‘investor’ when determining whether treaty protections extend to sovereign conduct and, second, rely on well-developed customary international law attribution principles—which have been applied in a variety of settings when there is a need to determine the boundaries of sovereign conduct—to distinguish commercial from governmental conduct. With respect to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention)—which does not extend to State-to-State disputes, even in a subrogation context—this article recommends that decision-makers again look to customary international law attribution principles to distinguish between claims brought by SOEs in a commercial capacity (which can be submitted against States under the ICSID Convention) and a governmental capacity (which cannot be submitted against States under the ICSID Convention). Consistent with customary international law attribution principles, tribunals should consider not only the nature, but also the purpose, of an SOE’s activities when determining the boundaries of sovereign conduct.

Korea’s Experience with International Investment Agreements and Investor-State Dispute Settlement

Korea’s network of international investment agreements (IIAs), comprising 94 BITs and nine FTAs with investment chapters, demonstrates that attracting foreign investment to Korea and protecting Korean investors overseas has been an important policy aspect. However, little attention was paid to these agreements until 2006 when negotiations for the Korea-United States (KORUS) FTA began. These negotiations sparked public criticism and heated debates of investor-State dispute settlement. Whereas Korea had routinely accepted the IIA provisions presented by developed counter-parties and used them as a template when negotiating with developing economies in the past, Korean IIA practice changed substantially following the KORUS FTA. In the face of heightened public scrutiny, Korea began to critically review key features of its IIAs and developed its own position on some important issues. This article examines these developments, considering that Korea will play a key role in shaping international investment law in the future, particularly in Asia.

Comparing Investment Provisions in India’s FTAs with India’s Stand-Alone BITs

Rising investment treaty arbitration claims against India have resulted in India taking first steps towards a new investment treaty practice. This article argues that this practice should aim at reconciling investment protection with investment regulation. By comparing the formulation of key jurisdictional and substantive provisions in India’s stand-alone bilateral investment treaties (BITs) with those in investment chapters in India’s free trade agreements (FTAs), this article shows that formulations in FTAs investment chapters often present a better textual basis to reconcile investment protection with investment regulation. This could be made part of India’s new investment treaty practice. The article also assesses the provisions in the 2015 draft Model Indian BIT and concludes that the draft tilts the balance too much in favour of the host State’s regulatory power.

Economic policy - Public health linkage and the importance of a regional platform: The case of tobacco control.

Southeast Asia has been the source of some recent encouraging developments on the health front, particularly in the area of tobacco control. In December 2012, the Philippines passed a landmark sin tax legislation that restructures the decade-old tax system for tobacco and alcohol products, updates the tax rates and indexes them for automatic increases, and earmarks its incremental proceeds for universal health financing. In August 2013, Malaysia proposed to exclude tobacco from the Trans-Pacific Partnership Agreement (TPPA), a bid to protect tobacco control measures from any state-to-state or investor–state challenge. Earlier in July 2012, it was reported that Health Ministers of the Association of Southeast Asian Nations (ASEAN) agreed to withdraw tobacco from the ASEAN Free Trade Agreement (AFTA). While their actual Joint Statement made no mention of trade, the language referring to tobacco control was clear (ASEAN, 2012).

The Evolution of Foreign Investment Regulation, Treaties and Investor-State Arbitration in Australia

This paper outlines the historical evolution of Australia’s foreign direct investment (FDI) regulation generally, under national law and more recently bilateral investment treaties (BITs) or investment chapters of free trade agreements (FTAs). This sets the stage for closer analysis of the policy and politics in Australia over treaty-based investor-state dispute settlement (ISDS), particularly the binding arbitration mechanism since 2010. The paper concludes by highlighting some key contrasts with ISDS debates in New Zealand, a close trading and investment partner. It has retained more bipartisan support for ISDS in recent years, and FTAs generally, despite emergent concerns in the context of the Korea and Trans-Pacific Partnership FTAs.

Investor-State Arbitration between Developed Democratic Countries

Investor-state arbitration (ISA) is a treaty-based form of arbitration by which a state agrees, in advance, to be the object of a claim in arbitration by a private investor who claims to have suffered financial loss as a result of violation of one or more standards of treatment set out in the treaty. These treaties usually take the form of bilateral investment treaties (BITs), but, in recent decades, many provisions for foreign investment protection are to be found in the investment chapters of regional trade agreements (RTAs) and latterly in so-called mega-regional trade agreements between major countries or blocs of countries, such as the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union, the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP). BITs and RTAs with investment chapters have come to represent a global phenomenon. The United Nations Conference on Trade and Development (UNCTAD) calculates that there are more than 3,200 international investment agreements (IIAs). It is more difficult to obtain an accurate number of those treaties that contain ISA, but they comprise the great majority of those signed since the negotiation of the first modern BIT between Germany and Pakistan in 1959. The economic impact of ISA, which came into widespread use only in the 1970s, is much debated, but its proponents consider that it should be seen as an essential guarantee of respect of the standards set out in BITs. They argue that it is key to protecting the interests of foreign investors and foreign investments against the possible failure of the host country to respect treaty standards, and that this protection encourages the flow of foreign investment. This paper seeks to establish how many agreements exist or are planned between economically developed liberal democracies. It reviews legal and policy reactions to investor-state arbitrations taking place within these countries and summarizes the substantive grounds upon which claims are being made and their impact on public policy making by governments.