The Rule of Law Effects of Commercial Arbitration from a Socio-Legal Perspective

This chapter suggests a vision of investment treaty arbitration filtered through the lens of political systems theory. Political systems theory was developed in the 1950s and 1960s by David Easton, an eminent political scientist. The core idea of Easton’s theory is that political systems can be understood as consisting of inputs from various actors that are aggregated and transformed into outputs, where outputs consist of the authoritative allocation of values. As such, the political systems approach encourages people to move beyond overly reductionist visions of international investment law as a quasi-inevitable product of state and investor interactions, or as the quasi-autonomous and teleological identification and imposition by tribunals of necessarily sensible or correct rules of state behaviour. Indeed, the chapter argues that seeing investment arbitration as political system allows people to bring out elements of its workings with greater clarity. Altogether, this helps people get a better sense of some of the key dynamics of investment arbitration.