Foreign Investors and Greater Transparency in Investor-State Dispute Settlement: Reevaluating Confidentiality Expectations in International Investment Arbitration

Abstract Thailand was initially cautious with its bilateral investment treaties (BITs), consistently eschewing investor-state dispute settlement (ISDS). From 1989 it began agreeing to ISDS, but only if both states were party to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, which Thailand signed in 1965 but never ratified. From 1993, BITs increasingly provided for ad hoc arbitration. Major disputes emerged from the 1990s instead under contracts with foreign investors containing arbitration clauses. From 2004 concession contracts required Cabinet pre-approval. This limitation was extended to all public contracts from 2009, after the first treaty-based ISDS award against Thailand, although two further claims have been filed recently. A 2002 Model bit was revised in 2013 to incorporate more pro-host-state provisions, but Thailand had net foreign direct investment (FDI) outflows in 2011 and still concludes treaties with ISDS. These patterns suggest ‘more than bounded’ rationality.

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Investor-State dispute settlement (ISDS) cases and India: affronting regulatory autonomy or indicting capricious state behaviour?

Journal of International Trade Law and Policy ◽

10.1108/jitlp-10-2021-0053 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Prabhash Ranjan

Keyword(s):

Public Interest ◽

Dispute Settlement ◽

Due Process ◽

International Investment ◽

Public Power ◽

Foreign Investors ◽

Content Type ◽

International Investment Law ◽

Global Context ◽

State Behaviour

Purpose The dominant narrative in the investor-State dispute settlement (ISDS) system is that it enables powerful corporations to encroach upon the regulatory power of developing countries aimed at pursuing compelling public interest objectives. The example of Phillip Morris, the tobacco giant, suing Uruguay’s public health measures is cited as the most significant example to prove this thesis. The other side of the story that States abuse their public power to undermine the protected rights of foreign investors does not get much attention. Design/methodology/approach This paper reviews all the ISDS cases that India has lost to ascertain the reason why these claims were brought against India in the first place. The approach of the paper is to study these ISDS cases to find out whether these cases arose due to abuse of the State’s public power or affronted India’s regulatory autonomy. Findings Against this global context, this paper studies the ISDS claims brought against India, one of the highest respondent-State in ISDS, to show that they arose due to India’s capricious behaviour. Analysis of these cases reveals that India acted in bad faith and abused its public power by either amending laws retroactively or by scrapping licences without following due process or going back on specific and written assurances that induced investors to invest. In none of these cases, the foreign investors challenged India’s regulatory measures aimed at advancing the genuine public interest. The absence of a “Phillip Morris moment” in India’s ISDS story is a stark reminder that one should give due weight to the equally compelling narrative that ISDS claims are also a result of abuse of public power by States. Originality/value The originality value of this paper arises from the fact that this is the first comprehensive study of ISDS cases brought against India and provides full documentation within the larger global context of rising ISDS cases. The paper contributes to the debate on international investment law by showing that in the case of India most of the ISDS cases brought were due to India abusing its public power and was not an affront on India’s regulatory autonomy.

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Investor Responsibility as Familiar Frontier

AJIL Unbound ◽

10.1017/aju.2018.94 ◽

2019 ◽

Vol 113 ◽

pp. 28-32

Author(s):

Jackson Shaw Kern

Keyword(s):

International Investment ◽

Foreign Investors ◽

Investment Arbitration ◽

New Frontier ◽

Modern Era

This essay suggests that amidst the various criticisms of investor-state arbitration, the most potent is the present inadequacy of this mechanism to establish a reciprocal responsibility of foreign investors. The founders of the modern era of international investment arbitration never intended to build a one-way street. In this sense, to seek a regime of investor responsibility may not be to reach toward a new frontier so much as to return to one that is familiar, though underexplored.

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Transnational Public Policy as a Vehicle to Impose Human Rights Obligations in International Investment Arbitration

The Journal of World Investment & Trade ◽

10.1163/22119000-12340188 ◽

2020 ◽

Vol 21 (6) ◽

pp. 809-846

Author(s):

Jean-Michel Marcoux

Keyword(s):

Public Policy ◽

Human Rights ◽

International Investment ◽

International Consensus ◽

Foreign Investors ◽

Material Sources ◽

Investment Arbitration ◽

Human Rights Norms ◽

The Right

Abstract International investment arbitration has been criticized for its general reluctance to consider human rights concerns related to foreign investors’ activities. By contrast, arbitration tribunals have relied on transnational public policy to prevent a claimant whose investment is tainted with illegality from obtaining redress. This article explores how human rights norms could be conceptualized as part of transnational public policy to impose obligations on foreign investors. It proceeds in three steps. First, it addresses the role of transnational public policy in investment arbitration. Second, the article identifies the material sources considered by tribunals to delimit the content of the doctrine. Third, it focuses on three norms – the protection of fundamental human rights, a corporate responsibility to respect human rights and the right of Indigenous Peoples to be consulted – for which tribunals have found an international consensus and that could be conceptualized as norms of transnational public policy.

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ISDS Regimes and Democratic Practice: Creating Conflict of Interests between Governments, Investors and Local Populations

Croatian International Relations Review ◽

10.2478/cirr-2019-0002 ◽

2019 ◽

Vol 25 (84) ◽

pp. 36-52

Author(s):

Martin Karas

Keyword(s):

Decision Making ◽

Dispute Settlement ◽

Good Governance ◽

Scholarly Work ◽

Foreign Investors ◽

Local Populations ◽

Investment Arbitration ◽

Democratic Practice ◽

Recent Debate ◽

The Relationship

Abstract The recent debate over the Investor-State Dispute Settlement (ISDS) regimes of international arbitration has resulted in concerted efforts aimed mainly at protecting the rights of states to regulate, improving transparency of proceedings and eliminating inconsistency in decision making of the tribunals. While the existing scholarly work frequently addresses issues of the relationship between the existing investment regimes and good governance in general, increased attention is rarely paid to the effects that investment arbitration has on democratic practice. The article applies an “action-based” approach to democracy, in order to analyse the role that the ISDS regimes play in exacerbating conflicts between the local populations, foreign investors and governments. The analysis leads to a conclusion that the ISDS regimes create incentives for the governments and foreign investors to disregard sound democratic practice. The article represents an attempt to move the discussion about the ISDS regimes away from the question of legitimacy of the regimes to the question of the impacts that the regimes have in practice.

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Counterclaims and the Rule of Law in Investment Arbitration

AJIL Unbound ◽

10.1017/aju.2018.96 ◽

2019 ◽

Vol 113 ◽

pp. 33-37 ◽

Cited By ~ 1

Author(s):

Tomoko Ishikawa

Keyword(s):

Rule Of Law ◽

International Investment ◽

Access To Justice ◽

Foreign Investors ◽

The Rule Of Law ◽

International Investment Law ◽

Rule By Law ◽

Investment Arbitration ◽

The Law ◽

Broad Interpretation

While the rule of law was originally developed with reference to domestic constitutional orders, it is also widely embraced by international lawyers. This essay argues that the admission of counterclaims in certain circumstances helps investment arbitration advance the rule of law on several counts. The rule of law is defined here to include not only formal elements such as rule-by-law and formal legality, but also “thicker” elements attached to certain substantive values, including fundamental human rights. The UN's work on the rule of law clearly adopts a broad interpretation of this concept. This essay examines the potential for counterclaims to bridge the gap between the lack of effective mechanisms to hold foreign investors accountable for their conduct and the extensive protection of foreign investors in international investment law. By doing so, counterclaims in investment arbitration may promote the thicker elements of the rule of law such as accountability to the law, access to justice, and fairness in the application of the law.

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“Missing Links” in Investment Arbitration: Quantification of Damages to Foreign Shareholders

The Journal of World Investment & Trade ◽

10.1163/22119000-01403002 ◽

2013 ◽

pp. 434-479

Author(s):

Jimmy Skjold Hansen

Keyword(s):

Law And Economics ◽

International Investment ◽

Foreign Investors ◽

Legal Principles ◽

Investment Arbitration ◽

Corporate Entity ◽

Share Value

This article focuses on the tensions between law and economics which inevitably occur in connection with the quantification of damages in international investment disputes between foreign shareholders (foreign investors) and host states. In this context, four contemporary approaches to quantification are addressed. These concern 1) full loss of the investment or invested amounts, 2) lost share value, 3) lost dividends, or 4) discretionary compensation. It is analyzed to what extent these approaches comply with the fundamental, legal principles which are in play in most investment disputes today, that is a) identification of the protected investment, b) recognition of the corporate entity, c) “full reparation” of injury, d) causation and certainty of losses, and e) avoidance of double recovery. It is demonstrated that each approach may pose challenges in respect of one or more of these legal principles.

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Chorzów Factory – intellectual property and the continuity of international law in investor-state dispute settlement

10.31228/osf.io/2f3u9 ◽

2020 ◽

Author(s):

P. Sean Morris

Keyword(s):

Intellectual Property ◽

Property Rights ◽

International Law ◽

Intellectual Property Rights ◽

Dispute Settlement ◽

International Investment ◽

International Investment Law ◽

Investment Arbitration ◽

Fair Compensation ◽

Investment Law

One of the most important cases in the jurisprudence of international law – Chorzów Factory – has a hidden secret, so much so that, even when in plain sight, legal post-mortems of the case fail to mention this well-kept secret. Chorzów Factory was about intellectual property rights, specifically patents and trade secrets, and this narrative has never been fully addressed. When the developments in international investment law and arbitration are fully considered it is worth looking back at Chorzów Factory to associate it with new streams of contemporary investor-state disputes that include issues such as intellectual property rights. Because Chorzów Factory has established the full reparation standard for unlawful expropriation, the standard has enabled a continuity of international law and underscores its importance for contemporary investment arbitration. However, the intellectual property narrative of Chorzów Factory has been neglected, and, in this article, I want to develop the intellectual property narrative of Chorzów Factory and to demonstrate the nexus between fair compensation, intellectual property rights and the continuity of international law.

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Civil Society and International Investment Arbitration

The Oxford Handbook of International Arbitration ◽

10.1093/law/9780198796190.003.0012 ◽

2020 ◽

pp. 303-327

Author(s):

Nathalie Bernasconi ◽

Martin Dietrich Brauch ◽

Howard Mann

Keyword(s):

Civil Society ◽

Dispute Settlement ◽

International Investment ◽

Public Law ◽

International Arbitration ◽

Commercial Arbitration ◽

Investment Treaty ◽

Investment Arbitration ◽

International Investment Agreements

This chapter discusses the role of civil society in international investment arbitration. Much of the civil society focus on international arbitration has been on the investor–state dispute settlement (ISDS) process included in many international investment agreements. However, the historical role of commercial arbitration as the progenitor of investment treaty arbitration and the procedural and structural links between ISDS and commercial arbitration are important for the discussions on civil society engagement. Civil society recognized early on the problems of using a commercial arbitration model for investment arbitration, which involves public law matters, and concluded that this created a misappropriation of a tool that up to that time had only been used for private commercial purposes or very well-defined state-to-state purposes. The crossing of these purposes and actors to create public law arbitration between investors and states is what created this sense of misappropriation and led to a spotlight being shone on the regime by civil society. The chapter then looks back at the beginnings of civil society engagement with international arbitration through the experience with investment treaties, including the advancement of transparency and the ability to submit amicus curiae briefs.

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11 “The Premier International Investment Arbitration Facility in the World”

10.1093/law/9780198767466.003.0011 ◽

2017 ◽

Author(s):

Parra Antonio R

Keyword(s):

Dispute Resolution ◽

Dispute Settlement ◽

International Investment ◽

Bilateral Investment Treaties ◽

Investment Arbitration ◽

The World ◽

Energy Charter Treaty ◽

Investment Law ◽

New Challenges ◽

Investment Treaties

This chapter examines activities of the Centre from the start of 2011 to the end of June 2015. Almost 50 percent more cases were registered at ICSID in that period compared to the previous five years. The chapter provides some statistics on the cases of this period. As in the decade before, it shows, most the cases were brought to ICSID on the basis of the dispute settlement provisions of investment treaties, mostly bilateral investment treaties (BITs) (in over 60 percent of the cases). A large proportion of the cases (more than ten percent) came to ICSID under the Energy Charter Treaty (ECT). Cases submitted to the Centre pursuant to the dispute resolution clauses of investment contracts made up for a smaller share of the total. A handful (5 percent) of the cases were initiated under dispute settlement provisions of an investment law of the host State. The chapter then looks at institutional developments of ICSID during the period and considers new challenges that ICSID might meet in the future.

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