Investor-State Arbitration Research Articles

UN Treaty on Business and Human Rights or Investor-State Arbitration? A Sober Answer for the Better Protection of Human Rights

Summary The concept of legal personality has been and is currently the object of studies. The doctrine is vast and made of many convincing interpretations. For this reason, an excursus of the main theories will be outlined in the light of recent events which support a specific theoretical orientation. The study will give a clear understanding of how international legal personality applies to Non-State Actors. After removing minor doctrines from the equation, those that remain will be highlighted, and compared with how the same matter is de facto faced in international investment law. The relationship between international investment law and international human rights law with regards to the role played by investors will be scrutinised. In investment arbitration, the position of the State and the investor is equal. This leads to the impression that international investment law is the realm in which to ensure more protection for the victims of human rights violations by business enterprises. So, if respect for international human rights is incorporated into the investment arbitral dispute procedures it could protect and or prevent human rights abuses. The opposite approach is to view business activities as objects. In this case, the role to regulate companies and protect stakeholders will be only on the state, and companies will be indirectly obliged to respect human rights. Therefore, the current draft of the binding treaty on business and human rights will be taken into consideration. The analysis of the two approaches will highlight which represents the more stable option for preventing, protecting and remedying human rights abuses by business enterprises. Specifically, the main questions to be answered are: is the international investment law’s field the future for more effective protection of human rights violations coming from business activities? Or is it a states’ prerogative to set and impose rules to prevent and protect such violations?

Data as Assets in Foreign Direct Investment: Is China's National Data Governance Compatible with its International Investment Agreements?

AbstractTo foreign investors, data, either collected and processed before or after market entry in the host state, can be regarded as a part of the investment and subject to the protection of the applicable international investment agreements (IIAs). China has been developing rigorous and stringent data governance such as data localization requirements and mandatory business-to-government data sharing, and has also concluded the world's second largest IIA regime that provides sweeping investment protection. There is a risk of incompatibility between China's national data policies and its IIA obligations. Foreign investors may challenge China's national laws and practices on data governance, for alleged breaches of investor's protection obligations in Chinese IIAs, or breaches of the data residency provisions in Chinese trade and investment agreements. As a result, potential exists for such claims to be brought against China in investor-state arbitration.

Between the Devil and the Deep Blue Sea—Towards Access to Justice for Local Communities in Investor-state Arbitration or Business and Human Rights Arbitration

Between the Devil and the Deep Blue Sea—Towards Access to Justice for Local Communities in Investor-state Arbitration or Business and Human Rights Arbitration

The Impact of Investor-State Arbitration on Global Climate Protection

The climate change requires global climate protection measures, which means that developed countries should contribute to climate finance and capital export to increase the technological and funds. However, the implementation of such climate-friendly investments can sometimes lead to conflicts between the state's investment protection and climate change measures. Therefore, it is necessary to promote Investor-State arbitration that reasonably to reconcile the protection of the rights and interests between investors and host countries, which could contribute to the development of global climate protection and sustainable development.

ZF Automotive U.S., Inc. v. Luxshare, Ltd. (U.S. Sup. Ct.)

Under 28 U.S.C. §1782(a), the U.S. Congress permits federal district courts to order testimony or the production of documents “for use in a proceeding in a foreign or international tribunal.” For the past two decades, U.S. Courts of Appeals have been split over whether 28 U.S.C. §1782 applies to private international commercial arbitrations. On June 13, 2022, in a unanimous opinion delivered by Justice Amy Coney Barrett, the Supreme Court of the United States held that it does not. To the extent that §1782(a) may apply to investor-state arbitrations, the Court held that the scope of the statute is limited to adjudicative bodies imbued with governmental or intergovernmental authority. Access to U.S. discovery procedures has thereby been narrowed significantly in the context of international arbitration.

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.

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.

Investment for Green Growth: An Analysis of the CAI Environmental Provisions

Abstract Since 2012, international investment tribunals have passed several awards highlighting the interaction between environmental obligations imposed upon foreign investors and the host State’s duties towards investors in terms of green investment. The EU-China Comprehensive Agreement on Investment (CAI) is a step forward in continuing the debate on environmental protection and conservation in the context of investment law. This article focuses on section IV subsection 2 of the CAI and analyses the relevant provisions of the CAI and other Sino-EU BITs having a potential impact on the development of environmental policy and climate change-related measures. This article references publicly available investor-State arbitration decisions to understand the ramifications of environmental standards on foreign investment policymaking. Further, this article also highlights the potential impact of the CAI on green investment and green financing measures undertaken by the European Commission.

ISDS and Nazis or History Without Context: A Reply to Gary Born

Gary Born’s article ‘The 1933 Directives on Arbitration of the German Reich: Echoes of the Past?’ fascinates for good and not so good reasons in almost equal measure. The author skillfully illuminated a rarely-discussed episode of arbitral legal history and aimed to apply its lessons to current debates surrounding investor-state dispute settlement (ISDS) reform. The overarching argument is that criticism and/or reform of investor-state arbitration is reckless and reminiscent of National Socialist efforts to curb private-public arbitration – risking undermining the rule of law and even allowing ‘history to repeat itself’. As much as the legal history part is a worthy contribution, this later part is laden with problematic claims and unfortunate parallels. The criticisms and potential (fairly limited) reforms of ISDS are portrayed as missteps towards a totalitarian abyss. Yet as much as investor-state arbitration can sometimes help promote the rule of law, it is not an indispensable ‘bulwark’ against state oppression. ISDS is a historically recent invention, with an even more recent case law. It deals with wide-reaching and objectively often controversial substantive rules, making reform proposals unsurprising. Crucially, even if investorstate arbitration disappeared completely, the history of Nazi horrors would not repeat itself. commercial arbitration, investor-state arbitration, history of arbitration, ISDS reform, Nazism

The 2022 ICSID Rules: A Leap Toward Greater Transparency in ICSID Arbitration

The International Centre for Settlement of Investment Disputes (ICSID) recently issued an amended set of rules to govern its arbitration proceedings.2 One of the core topics addressed by the new Rules is transparency and the mechanisms by which ICSID arbitrations—traditionally confidential—may be ‘opened’ to the public. On this issue, the 2013 UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration played an influential role in shaping the new ICSID Rules.3 But ICSID took a slightly different approach by giving States more authority to decide which parts of the proceedings will be kept confidential. This note addresses ICSID’s new transparency regime and how it differs from UNCITRAL’s regime. The transparency movement began with the North American Free Trade Agreement (NAFTA) in 2001. The three NAFTA States—Canada, Mexico and the United States—agreed that ‘nothing in the NAFTA precludes [them] from providing public access to documents submitted to, or issued by, a [NAFTA] tribunal’.4 Two years later, they allowed non-disputing parties to comment on the proceedings.5 One year later, they opened NAFTA hearings to the public.6

Non-Pecuniary Remedies Revisited: Expanding Influence of the ILC Articles?

Abstract Although non-monetary remedies for international law violations are a fixture of the International Law Commission’s Draft Articles on Responsibility of States for Internationally Wrongful Acts (ILC Articles), investor-State arbitral tribunals have considered or ordered such remedies only rarely. This article surveys the role that the ILC Articles on non-monetary remedies have, and could have, in investor-State arbitration. It first reviews how tribunals have referenced and applied the ILC Articles, or the legal principles it codifies, when grappling with their power to award non-monetary remedies, the specific content of such non-monetary remedies, and the reasons not to award such remedies. It concludes that, while the ILC Articles have increasing significance, tribunals remain hesitant to award the full range of remedies provided for in the ILC Articles. The article then addresses considerations beyond the ILC Articles that tribunals have referenced in decisions on non-monetary remedies—usually as grounds to reject non-monetary remedies. The most common is concern for the effects of such remedies on State sovereignty, but considerations less frequently raised include questions about enforceability and the need for party consent. These features indicate that some tribunals remain willing to go beyond the ILC Articles in reaching decisions on non-monetary remedies. The article finally considers what lessons may be gleaned from human rights practice on non-monetary remedies. By contrast with investor-State tribunals, human rights adjudicators have enthusiastically embraced non-monetary remedies and their practice provides insights for how such remedies may be employed in disputes between private individuals and sovereign States.

The Confidentiality and Transparency Debate Under Investor-State Mediation


 As an important part of alternative dispute resolution, investor–state mediation is attracting increasing interest from the creators of investment treaties and institutional rules. Traditional mediation mechanisms are inherently confidential. Keeping mediation proceedings and related documents strictly confidential is crucial to successful mediation. However, investor–state disputes, which involve public interests, often do not allow for the strict confidentiality of traditional mediation. Rather, those involved in investor–state mediation face pressure to be transparent. To increase public acceptance and the perceived legitimacy of the investor–state mediation system, it is necessary to establish the right balance between confidentiality and transparency. The degrees of transparency in arbitration and mediation are not the same; there are many institutional differences in their transparency rules, such as those regarding public hearings, access to documents, and non-disputing party submissions. The degree of transparency of investor–state mediation should generally fall between the strict confidentiality of commercial mediation and the transparency of investor–state arbitration. Distinct from investor–state arbitration and its exceptions to transparency and confidentiality requirements, investor–state mediation applies confidentiality in principle, with appropriately expanded transparency exceptions to respond to the need for transparency. When constructing investor–state mediation transparency rules, it is necessary to consider many other factors, as there is no universally applicable optimal degree of transparency.

Missing Masters: Causes, Consequences and Corrections for States’ Disengagement from the Investment Treaty System

Abstract Proponents of the international investment law system have treated the concept of depoliticization as a key justification of the investor–state arbitration mechanism. However, this rationale has been increasingly questioned. The system is itself a reflection of the asymmetrical power relations that exist among various actors. We examine data on states’ exercise of their interpretive powers through unilateral interpretations, as a potential means of shifting power away from capital, and identify the factors that may make such engagement more or less likely. What emerges is the asymmetrical patterns of engagement and influence in shaping the law, tilting the balance not just away from states generally, but from Global South states in particular. We propose various reforms that seek to recognize and address the enduring role of politics in the system, produce more just outcomes, and be more inclusive of all state parties in the development of international investment law.

THE LEGALITY OF A TRIPS WAIVER FOR COVID-19 VACCINES UNDER INTERNATIONAL INVESTMENT LAW

AbstractThis article assesses the arguments and challenges that are likely to arise should investors file an investor–State dispute settlement (ISDS) claim over measures taken in response to a waiver of obligations relating to intellectual property rights (IPRs) under the World Trade Organization's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). After providing an overview of the proposed waiver of IPRs for COVID-19 vaccinations and treatments, it examines the jurisprudence relating to IP and investor–State arbitration and the grounds upon which investors would rely to make a case in ISDS and possible State defences. The analysis, which focuses on fair and equitable treatment and expropriation, concludes that it will be difficult for investors to succeed in claiming that measures taken in response to a TRIPS waiver of IPRs breach any substantive protection provision contained in an international investment agreement. States should, however, seek additional security by revisiting existing treaties and adding additional layers of safeguards to ensure legitimate and non-discriminatory measures taken in response to a TRIPS waiver do not lead to investor claims.

The European Union’s Proposal for the Modernization of the Energy Charter Treaty

After the European Court of Justice seminal decision in Achmea, where consent to investor-State arbitration enshrined in intra-EU bilateral investment treaties was found to be incompatible with the autonomy of the European Union (EU) legal order, the European Commission has presented a draft proposal for the modernization of the Energy Charter Treaty (ECT). The proposal relies markedly on the new investment agreements concluded between the European Union and third states, mainly CETA and the agreements with Singapore and Vietnam. It puts forward some key amendments on substantive provisions, by creating regulatory space for sustainable development and transition to clean energy. As regards the fair and equitable standard, the proposal adds that the ‘the tribunal may take into account whether a Contracting party made a specific representation to an investor to induce a covered investment, that created a legitimate expectation, upon which the investor relied in to make or maintain the covered investment’. This article focuses on the concept of ‘specific representation’, by asking whether it (still) encompasses promises made by the legislator, in order to access the impact that said provision might have on previous ECT arbitration case law concerning renewable energy and climate change. sustainable development, Energy Charter Treaty, legitimate expectations, specific representation, autonomy, investment treaties, fair and equitable treatment, energy transition

State Responsibility and Corruption in the Context of Investor-State Disputes

The question of State responsibility for corruption in the context of investor-State disputes has been little examined by tribunals.3 This gap in the jurisprudence may simply reflect the procedural context in which corruption allegations have generally arisen: rarely as allegations by the investor to ground its claims, and instead most often as an objection by the State to the jurisdiction of the tribunal or the admissibility of the investor’s claims. In this posture, corruption is presented as a threshold issue, as the respondent argues that the tribunal should dismiss all the investor’s claims without considering their merits. On one view, therefore, the comparative lack of attention to State responsibility in this context is unremarkable. If corruption is typically raised as a defence under special rules governing the admissibility of claims in the context of investor-State arbitration, how relevant are concepts of general State responsibility, or the International Law Commission’s...

Briefly Noted

On October 26, 2021, the Court of Justice of the European Union (CJEU) issued its judgment in Case C-109/20 Poland v. PL Holdings. The case concerned an arbitral award issued in favor of PL Holdings against Poland. The arbitration clause which served as the basis for resolving the parties’ dispute is contained in a 2017 bilateral investment treaty between Poland and the Belgium-Luxembourg Economic Union (BLEU BIT). One year after the award was made, the CJEU ruled in Achmea that intra-EU investor-state arbitration clauses in treaties between EU member states are incompatible with EU law. The Court conversely held that commercial arbitration was compatible with EU law because it is an expression of the will of the parties, rather than a consequence of a treaty between states. Poland used Achmea to argue against the arbitral tribunal's jurisdiction, but the objection was considered by the Arbitration Institute of the Stockholm Chamber of Commerce to have been registered too late and Poland was ordered to pay damages to PL Holdings. Poland then brought an action before the Svea Court of Appeal (Svea hovrätt) to set aside the award, based on the invalidity under EU law of the arbitration clause in the BLEU BIT. Though the Swedish court accepted that, based on Achmea, the clause was invalid, it held that Poland's late objection to the jurisdiction of the tribunal and subsequent arbitration with PL Holdings meant that an ad hoc arbitration agreement had been established between the parties that was not precluded by Achmea and thus, the Court denied Poland's request to set aside the award. Poland appealed to the Supreme Court of Sweden (Högsta domstolen), which requested a preliminary ruling from the CJEU as to whether “Articles 267 and 344 TFEU precluded the conclusion of an ad hoc arbitration agreement between the parties to the dispute where the content of that agreement is identical to an arbitration clause that is set out in the BIT and is contrary to EU law.” The CJEU answered this question in the affirmative.

Contributory Fault and Investor Misconduct in Investment Arbitration

Deriving from public international law, the evolution of international investment law (IIL) was accelerated by (at least the first generation of) international investment agreements (IIAs) and investor–State arbitration (ISA). IIAs and, more particularly, the ISA system were conceived of as a form of protection for foreign investors against perceived political risks in jurisdictions with doubtful rule of law.2 Thus, the ISA system is said to ‘have developed a supranational rule of law that has helped to create uniform standards for acceptable sovereign behavior’,3 having ‘a profound impact not only on the development of public international law but also on the development of national law’.4 In this vein, the focus in this field has been on misconduct by (host) States. On the other hand, investor misconduct is left to domestic law and domestic courts, in large part due to notions of State sovereignty, non-interference and territoriality.5 The...

The Transformative Characteristics of Beneficiary State Confutations in Investor-State Arbitration with Particular Innuendo to The Indian Scenario

The Transformative Characteristics of Beneficiary State Confutations in Investor-State Arbitration with Particular Innuendo to The Indian Scenario

Investor-State Arbitration, Human Rights, and Consumer Protection: China’s New Challenges in an Era of Globalization

Investor-State Arbitration, Human Rights, and Consumer Protection: China’s New Challenges in an Era of Globalization