Interpretation Of Investment Treaties Research Articles

Interpretation of Investment Treaties over Time

Interpretation of Investment Treaties over Time

Police Powers in a Pandemic: Investment Treaty Interpretation and the Customary Presumption of Reasonable Regulation

Police Powers in a Pandemic: Investment Treaty Interpretation and the Customary Presumption of Reasonable Regulation

A Sliding Scale Approach to Travaux in Treaty Interpretation: The Case of Investment Treaties

Abstract Materials produced during the negotiation of treaties, commonly called travaux préparatoires (‘travaux’), are given formal significance as a ‘supplementary means’ of treaty interpretation under article 32 of the Vienna Convention on the Law of Treaties (VCLT). Travaux present both risks and opportunities for treaty interpretation, and international adjudicators have differed in how they define the rationale for referring to travaux, how they use these materials, and even more fundamentally, what materials they classify as travaux. This article proposes a methodology to guide the more structured identification and use of travaux. Under the proposed sliding scale approach, treaty interpreters assess the utility of material to the interpretive exercise by reference to its precise qualitative features and the context of interpretation, rather than by categorizing materials as ‘travaux’ or not. The article uses the interpretation of investment treaties in investor-state arbitration as a case study to illustrate the proposed approach and its utility. The discussion, including the proposed sliding scale approach, is nonetheless equally relevant for interpreting all manner of treaties.

Contractual Renegotiations and International Investment Arbitration: A Relational Contract Theory Interpretation of Investment Treaties.

Contractual Renegotiations and International Investment Arbitration: A Relational Contract Theory Interpretation of Investment Treaties.

Disintegration and Change in the International Law on Foreign Investment

Abstract Resistance to the law made through expansionist interpretation of investment treaties by arbitral tribunals has led to the disintegration of the resulting structure of investment protection. The creation of an inflexible system of investment protection through arbitral interpretation undermines the exercise of power of states to take measures to protect the public interest. The process of disintegration of this unjust system must be hastened through the creation of new norms that ensure that obligatory rules deter the misconduct of multinational investors. If investment treaties are necessary, the regulatory power of states to promote the public interest should be given priority over investment protection.

Restrictive Interpretation of Investment Treaties: A Critical Analysis of Arbitral Case Law

This article critically discusses the recourse to the principle of restrictive interpretation (in dubio mitius) by treaty-based investor-state arbitral tribunals. Although its status as a rule of international law is at best controversial, in dubio mitius has been applied by a number of arbitral tribunals interpreting umbrella clauses and most-favoured-nation (MFN) provisions contained in investment treaties. This article shows that restrictive interpretation is inappropriate and undesirable. It highlights, first of all, that no rational justification for in dubio mitius exists and that the sovereignty-based rationale put forward is obsolete, illogical and largely dysfunctional. It also shows that restrictive interpretation frequently clashes with other, more fundamental, rules of treaty interpretation and that in dubio mitius interpretation of investment treaties has an inherently discriminatory effect on investors. Investment Treaties, Treaty Interpretation, Restrictive Interpretation, In Dubio Mitius, Umbrella Clause, Mfn Provision, State Sovereignty, Investment Law

Arbitral interpretation of investment treaties : problems and remedies for the debate on "legitimacy"

The last couple of decades have seen a considerable increase in the submittal of investment claims to Arbitral Tribunals – a process which has often been linked to the “proliferation” of investment treaties. Alongside, a debate on the so-called “legitimacy” of the Investor-State dispute settlement mechanism not only emerged (and prompted calls for reform) but also refuses to go away. Treaty interpretation has not been in the forefront of discussion. Authorized (“authoritative”) interpretation – as performed by Arbitral Tribunals – is perhaps one of the issues of least (if any) concern. This Article explores the distinction between authentic and authorized interpretation vis-a-vis the multiple issues arising from vesting excessive significance in authorized interpretations of Investor-State Arbitral Tribunals, in the events in which States Parties to the relevant investment treaty do not have opposing views on the construction of a conventional clause. Drawing on the referral to the notable cases in which this issue has arisen, this Article will present a few recommendations.

Leaders in the Expansive and Restrictive Interpretation of Investment Treaties: A Descriptive Study of ISDS Awards to 2010

Leaders in the Expansive and Restrictive Interpretation of Investment Treaties: A Descriptive Study of ISDS Awards to 2010

The Principle of Proportionality and the Problem of Indeterminacy in International Investment Treaties

An ongoing challenge for the field of international investment law concerns the interpretation of open-textured treaty language. Although state treaty-making practice has evolved substantially over the past ten years, in the majority of investment treaties currently in force states have agreed to textual standards that, although directly addressed to the state’s capacity to regulate freely within the public sphere, generally fail either (1) to articulate an underlying political and economic settlement as to the public values necessary to give those standards determinate, coherent or predictable meaning, or (2) to create constitutional-administrative structures, for example, courts, which might serve to develop such a settlement. This combination of vague standards and ad hoc, treaty-specific arbitral resolution poses profound practical and theoretical concerns about the nature of the legal obligations and rights under investment treaties and, ultimately, their legitimacy. Over the past several years a number of arbitral tribunals and academic commentators have sought to address the problem of indeterminacy in investment treaties by making reference to principles of public law, such as proportionality, to act, it is argued, as a guiding framework for the application and interpretation of investment treaties. Under these proposals, proportionality is set up as a universal principle by which wheat may be separated from chaff and, it is said, the systemic integration of investor and state rights and obligations may be achieved and a coherent “system” of international investment law revealed. This article challenges these claims and critically examines what kind of proportionality it is that proponents have been advocating should enter international investment law. In addition to raising threshold objections to the legitimacy of introducing into international legal analysis a principle not acknowledged either as a “general principle of law” or a customary norm, this article challenges more theoretically whether the principle of proportionality can – on its own terms – lead to coherent interpretation and application of any treaty standard without at the same time reaching some kind of a priori conclusion on other fundamental (if not to say “constitutional”) matters, such as (1) the relative strength and commensurability of the rights or interests which are to be balanced in the proportionality analysis, and (2) the relative competences of the adjudicator vis-a-vis the parties. This article argues that it is not possible to do so and that without further elucidation by states themselves of the rights and interests to be balanced in a proportionality analysis, the introduction of the principle of proportionality tends to obfuscate the lack of underlying normative agreement with respect to the standards in question, and may lead arbitral tribunals to act exces de pouvoir of the ad hoc jurisdiction conferred upon them.

The WTOs DSU Article 23 as Guiding Principle for the Systemic Interpretation of International Investment Agreements in the Light of TRIPs

The Philip Morris tobacco group and the pharmaceutical company Eli Lilly claim in investment disputes initiated against Uruguay, Australia, and Canada that the respective host states did not treat their intellectual property rights in accordance with the relevant investment treaties. Since the claimants also substantiate their assertions by alleging violations of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) committed by the host states, the need to better understand the interaction between investment treaties and TRIPs has increased significantly. This article suggests using Article 23 of the WTO Dispute Settlement Understanding (DSU) as a guiding principle for the systemic interpretation of investment treaties in the light of TRIPs. The provision as such prohibits the enforcement of WTO law outside the WTO Dispute Settlement Body. In the context of systemic interpretation, DSU Article 23 instructs arbitral tribunals not to use investment treaties as vehicles for redressing violations of TRIPs committed by the host state.

Regulatory Freedom and Control in the New ASEAN Regional Investment Treaties

The expanding universe of regional investment agreements of the Association of Southeast Asian Nations (ASEAN) illustrates the difficulties of accepting host States’ expansive regulatory freedoms, while neglecting to design durable institutional controls for regionally-coordinated investment treaty compliance and regionally-harmonized investment treaty interpretation. Since its transformation from a loose economic cooperation into a rules-based organization discharging binding executive-legislative functions under its 2008 Charter, ASEAN has already entered into regional investment treaties applicable within the ten ASEAN Member States (2009), as well as with China (2010), India (2014), Australia and New Zealand (2009), Korea (2009), and Japan (2008). Negotiations are pending with the United States, the European Union, and Canada. Institutional deficits in the monitoring and implementation of ASEAN regional investment treaties could be addressed by strengthening the mandate and capacity of the ASEAN Investment Area (AIA) Council. An intergovernmental centralized appellate mechanism could help facilitate harmonized interpretation of these regional treaties.

The conflict of legal norms and interests in international investment law: Towards the Constitutional-General International Law Imperatives Theory

There is extensive literature on the implications of the investment treaty regime for public interest regulation. However, little systematic attention has been paid to the capacity of states to make investment treaties and the obligations states can or cannot agree to under those treaties in light of their public interest obligations. This issue is of fundamental importance because both the duty to regulate in the public interest and the capacity to conclude investment treaties are determined by constitutions and general international law. Does a state the constitution of which requires it to act within its constitution and general international law in the public interest have the capacity to conclude investment treaties that directly or indirectly prohibit the performance of that duty? With reference to Ghana, this article argues that the legal source and public purpose of the State's powers prevent it from concluding agreements that directly prohibit public interest regulation or indirectly achieve that effect. Accordingly, it is suggested that the express and implied limitations on the duty to regulate in the public interest placed on investment treaty making powers of the State must inform the making and interpretation of investment treaties.

Principles of Non-Discrimination after US – Clove Cigarettes, US – Tuna II, US – COOL and EC – Seal Products and their Implications for International Investment Law

Recent disputes have clarified principles of non-discrimination under WTO law. US – Clove Cigarettes clarifies that under the Agreement on Technical Barriers to Trade, a regulation modifying conditions of competition to the detriment of imported products will not be discriminatory if that detrimental impact stems exclusively from a legitimate regulatory distinction. This test was applied in US – Tuna II and US – COOL, which begin to clarify how to judge whether a regulation is based exclusively on a legitimate regulatory distinction. EC – Seal Products clarifies that in the context of the General Agreement on Tariffs and Trade (GATT) 1994, whether a measure is legitimate in regulatory terms is to be adjudged solely under the general exceptions and not provisions governing non-discrimination. Although generalizing about the implications of WTO disputes for investment treaty interpretation is perilous, these disputes raise new questions, particularly for interpretation of investment chapters in trade agreements.

Do States Have a Duty to Cooperate in the Interpretation of Investment Treaties?

Do States Have a Duty to Cooperate in the Interpretation of Investment Treaties?

Investment Arbitration, Investment Treaty Interpretation, and Democracy

It has become a widespread concern in recent years that there exist frictions between international investment law and arbitration and democratic governance. In particular, investor-state tribunals can issue awards that may reverse, at least de facto, decisions by democratically legitimated and democratically accountable domestic decision-makers that are deemed pivotal, by those decisionmakers, for the pursuit of the public interest of their constituency. The pressure on domestic and regional decision-makers to find responses to such frictions, through treaty-drafting or otherwise, has increased considerably in recent years and arguably has led to a shift in the official policy of traditional proponents of the established system of international investment law and arbitration. This paper explores the potential and the pitfalls of democracy as an argumentative topos informing our view on investment arbitration and the interpretation of international investment agreements, with a specific focus on the allocation of interpretative authority among the contracting parties, investor-state tribunals and state-state tribunals.

Do States Have a Duty to Cooperate in the Interpretation of Investment Treaties?

Do States Have a Duty to Cooperate in the Interpretation of Investment Treaties?

Delegating Interpretative Authority in Investment Treaties: The Case of Joint Commissions

ISDS is at a crossroads and many alternative solutions have been proposed for reforming the system. One has been neglected in the discussion: the role of joint commissions of the state parties resolving certain problems in investment treaties. This alternative 'withdraws' interpretative authority from tribunals and directs it to state agencies; tribunals gain interpretative authority only as a default rule. In order to answer the question of whether this alternative is viable and extendable, this contribution draws on rationalist approaches for answering the question of why and to whom interpretation of investment treaties should be delegated. The current system of ISDS is used as a benchmark against which other possibilities of outsourcing interpretation are judged on certain criteria (credibility of commitment and relevant expertise). A comparative analysis between this solution and the current delegation of interpretation to arbitral tribunals is offered.

Human Rights and Investment in Economic Emergencies: Conflict of Treaties, Interpretation, Valuation Decisions

This article examines a host State’s obligation to comply with the “minimum core obligation” owed to its constituents under the International Covenant on Economic, Social, and Cultural Rights (ICESCR), simultaneously with the obligation to compensate investors for breaches of investment treaty obligations arising from governmental measures taken during economic emergencies. Host States undertaking social protection measures purely to maintain good faith observance of ICESCR minimum core obligations during economic emergencies, and not as a pretext against expropriation or non-expropriation compensation, can argue various legal bases to diminish the quantum of damages owed to investors collaterally injured by such governmental measures. Part I (ICESCR Applicability in Economic Emergencies) discusses the ICESCR minimum core obligation during economic emergencies, and the determinability of its content on a case-to-case basis. Part II (Conflict of Treaties and VCLT Article 30: the ICESCR and the Investment Treaty) then proceeds to depict the conflict of treaties situation faced by the host State under Article 30 of the Vienna Convention on the Law of Treaties (VCLT), and why this rule could also privilege the ICESCR as the prevailing applicable treaty in certain instances. Part III (VCLT Article 31 and ICESCR-Sensitive Investment Treaty Interpretation) shows the possibilities of accepting the ICESCR minimum core obligation as part of the host State’s laws. Where the investment treaty requires that an investment be established “in accordance with host State law” and be continuously subjected to such host State law throughout the life of the investment, the host State could potentially invoke the ICESCR minimum core obligation as a subsisting condition for the maintenance of investment treaty protection. Finally, Part IV (The Principle of Political Decision: Recasting the Valuation Decision) considers how arbitral tribunals could still mitigate the level of compensation ultimately owed by the host State, by reconceptualizing the “fair market value” standard when applied to an economic emergency. The Conclusion affirms the joint and complementary importance of human rights and investment protection to the defense of the public interest.

Legitimacy and Reflexivity in International Investment Arbitration: A New Self-Restraint?

There are at least two views within investment arbitration about how to respond to legitimation problems associated with inconsistent rulings, latitudinal interpretations, and arbitral bias and conflicts of interest. Some prefer to keep the regime on course and not respond to these outside perturbations. Others prefer to take into account external influences, such as human rights and environmental commitments, in the course of investment treaty interpretation. Both understand that, whatever the response, these questions will be determined by lawyers, scholars, and arbitrators operating within the system of international investment law and not by actors operating outside of it. Both views, in other words, are congenial to systems-theoretic accounts. As articulated by Teubner, there is a proliferation of functional legal sub-systems, developing autonomously of states, each of which, in the course of maximizing internal rationality, potentially is on a collision course with other operative sub-systems. These can only be forestalled if sub-systems act reflexively by devising strategies of self-limitation that selectively internalize objections emanating from external spheres. As this maps on to selfunderstandings of actors operating within investment arbitration, this paper takes up systems theory as a heuristic for assessing the regime’s responsiveness to outside influences. In order to take stock of the degree of reflexivity, the paper examines the direction investment law is taking in a few key areas: first, in the shift in emphasis away from expropriations (the ‘takings rule’) to the fair and equitable treatment standard, which is performing similar functions; second, in the attempt to merge global standards by embracing World Trade Organization Appellate Body decision making; and third, the hesitant embrace of proportionality doctrine as a means of weighing public interests into the equation. These moments of reflexivity turn out to be modest in reach and so unlikely to calm objections emanating from states and social movements. What likely will be necessary is

Scrutinizing States’ Power in a Liberalized Economy: A Comparative Analysis of the International Investment Regime and the International Trade System

The design of an institution affects both the way it functions and its outputs; from rulemaking to dispute resolution, institutional configuration plays a crucial role in the way an organization attains its ultimate goals. This paper will consider institutional design as an independent variable that has an effect on both the treatment and resolution of disputes in international economic law. It will focus particularly on how the lack of a proper institutional framework shapes the investment field, contrasted with the highly institutionalized trade system.The investment and trade mechanisms share a core function which is to scrutinize state regulatory activity in its local economy, especially by discriminating legitimate regulation from arbitrary and illegal action. Their mission is very delicate: While economic globalization requires certainty and stability of certain rules across the world, this aim can only be achieved if states remain capable of correcting market failures and providing essential public goods.As a consequence, this equilibrium requires scrutinizing state activity in order to secure the balance that the international community has adopted as fair and legitimate. In particular, such a function implies considering not only international commitments, but also legitimate domestic necessities like social values and development goals. In the international trade field, authors like John Ruggie and Jeffrey Dunoff focus on the importance of maintaining this equilibrium, which is accepted as a basic function of this system. Conversely, this element is missing in the investment field, which is signaled as a cause of concern by many authors, including William Burke-White, Ernst-Ulrich Petersmann, Brigitte Stern or Gus Van Harten. Primarily, the core critique lies on an alleged “unbalanced” interpretation of investment treaties, affecting the output of the dispute settlement mechanism and, therefore, distorting states’ abilities to pursue legitimate goals, like the implementation of policies designed to advance foreign investment benefits for the host economy.Both trade and investment law are sources of concern for civil society, NGOs and developing countries. This article will argue that an institutionalized framework is better positioned to cope with these issues and achieve better solutions.Presented at the SIEL 2010 Conference in Barcelona.