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This chapter introduces investment law and arbitration by examining the historical conflict between capital-exporting and capital-importing countries over proposals for a multilateral investment treaty, and by arguing that this legal conflict is interwoven with the social and economic history of European expansion and colonialism, and the corresponding efforts of newly independent countries to achieve greater regulatory autonomy over foreign-owned assets within their territory. It provides an overview of the present system of investment treaty arbitration and the manner in which its use has expanded as multinational firms have capitalized on the opportunity to bring claims against middle-sized developing and former communist states. Finally, it offers an explanation for why capital-importing countries have agreed in bilateral and regional treaties to accept an intensity of adjudicative supervision and investor protection that they long opposed at the multilateral level.

This chapter focuses on particular challenges in the interpretation of investment treaties before international tribunals. Interpretation of authoritative texts (divine, legal, or scholarly) is always difficult and apt to provoke engaged challenges. This is even more so if the community within which and for which application takes place does not share a widespread homogeneity of political, ideological, religious, or professional values. Investment arbitration by ad hoc tribunals is a novel and therefore unfamiliar form of international adjudication; as a result, it needs to make more effort to achieve political legitimacy — whatever the legal legitimacy founded on international treaties. The best approach is a resolutely technical and professional approach, that is, an approach that employs increasingly detailed drafting techniques in treaty-making, but also a predominantly textual approach linked to identifiable common elements of modern practice in interpretation.

This chapter deals with the applicable procedure in investment treaty arbitration. It notes that although investment treaty arbitration has a public law character, the applicable procedure typically follows the model of international commercial arbitration. With this in mind, the chapter considers whether some features of the procedure that is applied in domestic public law litigation — in particular, in judicial review proceedings before domestic courts — might be relevant and applicable to investment treaty arbitration, so that it might better reflect its public law function. It then reviews the applicable procedure in such proceedings in the United Kingdom, Australia, the United States, Germany, and France, and suggests that the following aspects of procedure are worthy of consideration by investment treaty tribunals: the evidence-gathering powers of domestic tribunals, aspects of the inquisitorial process, the regime for access to the courts for non-disputing parties, and the diverse range of available remedies.

This chapter focuses on the problems arising from the use of arbitration to resolve regulatory disputes. Four criteria of public law adjudication — accountability, openness, coherence, and independence — are reviewed in order to identify flaws with the present system. A framework for reform of the system is proposed, involving the establishment by like-minded states of an international judicial body to replace the existing system of investment treaty arbitration.

This chapter examines how investment treaty arbitrators have exercised their power. Four broad approaches emerge from the jurisprudence to date. Two of them emphasize a reciprocal legal framework in their conceptualization of investment treaty arbitration: the first by treating it as a form of commercial arbitration; the second as public international law. In contrast, the third and fourth approaches to the subject recognize the regulatory character of the underlying relationship between investors and state. The first does so by comparing investor protection to the protection of human rights; the second by applying a more prudential public law framework which moderates state liability in order to preserve governmental discretion. Each of these approaches is examined, informed by the view that the appropriate approach is to accept the regulatory context for investment disputes, and thus the relevance of public law, within the boundaries set by the inter-state bargain of an investment treaty.

This chapter illustrates the risk of false friends in international arbitration by looking at one example of transplant from public international law into commercial law, and one from commercial arbitration into investment arbitration. The purpose of this exercise is to draw attention to how investment arbitration and commercial arbitration, in spite of clear parallels between the two, cannot be considered as fully corresponding to each other and cannot always automatically be used as a source for each other.

The last decade has seen a significant rise in the number of international arbitrations involving three or more parties. In the interest of efficiency and consistency, arbitral institutions have sought to manage and coordinate these multiparty arbitrations. This chapter discusses the fundamental need for consent as well as the various due process issues that may arise in such multiparty investment treaty arbitrations, with special reference to the procedures and proceedings before the International Centre for Settlement of Investment Disputes (ICSID), the Iran-United States Claims Tribunal, and North American Free Trade Agreement (NAFTA) arbitral tribunals.

This chapter addresses one of the crucial tensions facing modern investment arbitration: that between confidentiality and privacy, on the one hand, and transparency and inclusiveness, on the other. It begins by reviewing how investment arbitration frameworks have addressed this tension so far, noting the traditional focus on confidentiality and privacy and the more recent trend towards transparency and inclusiveness of proceedings before ICSID and/or NAFTA tribunals. The chapter then compares domestic public law approaches to questions of transparency and public interest representation. Having reviewed US, English, French, German, and Greek law, it shows that domestic public law seems to accept the principle of transparency and provides for various forms of indirect public interest representation (e.g., through amicus curiae briefs) but also different forms of public interest claims. While this approach cannot be directly transposed to investment arbitration, it clearly can, and arguably should, guide the approach of investment lawyers.

This chapter analyzes the impact of human rights interventions of civil society organizations (CSOs) in international investment arbitration proceedings. It provides a history of the amicus submissions so far made by CSOs, and highlights the prevalence of human rights arguments in these submissions. It argues that there is a clear rationale for engaging with a range of issues raised in investment arbitration cases utilizing a human rights framework. The language and legal obligations of human rights appear to have an important impact in terms of ensuring that amicus submissions of civil society groups are accepted by tribunals. But there are fundamental problems in the way that this mechanism has been utilized by tribunal panels. The chapter concludes by arguing that continued superficial engagement with human rights by investment panels might weaken the edifice of international law in the eyes of those outsiders to the international legal system who seek to engage with it.

This chapter examines the relationship between the concerns raised about the quality and consistency of ICSID awards, on the one hand, and, on the other, the existence and efficiency of any respective remedy. It begins with a review of the four generations of annulment proceedings followed by a review of ICSID arbitral awards. It then considers the use of precedent in ICSID arbitration, ICSID control over quality and consistency of arbitral awards, and remedies for consistency and legitimacy lacunae inherent in Article 52.

This chapter discusses the role of human rights in international investment arbitration, focusing on issues such as jurisdiction, applicable law, and invocation of human rights during proceedings. It highlights certain similarities among human rights law and investment law, e.g. regarding substantive norms such as prohibition of discrimination and protection of property, that are common to both investment and human rights law. It also describes how human rights and investment law differ dramatically. The chapter points out that the role of human rights in investment arbitration is likely to increase; yet, it remains controversial whether the arbitral system is the best suited for dealing with breaches of human rights, for example in view of the lack of transparency and legitimacy of confidential arbitration proceedings without adequate legal safeguards for third parties and general citizen interests that may be adversely affected by investment disputes.

ICSID prescribes that the ICSID arbitrator must ‘be relied upon to exercise independent judgment’. This chapter begins by comparing this requirement with the formulation found in other arbitral rules and various national laws. It then considers the decisions in both ICSID and other arbitrations concerning challenges, based on (i) the relationship between an arbitrator and a party; (ii) the relationship between an arbitrator and a counsel; and (iii) issue and subject matter conflict. The chapter concludes by recommending that the legal test and procedure for determining arbitrator challenges in ICSID proceedings should be changed.

The spate of recent investment arbitration cases against repeat-respondent States, as well as the increasingly strident legal and political pushback these cases have begun to engender, call into question in various ways whether ICSID arbitration will continue to be a useful and legitimate forum for resolving international disputes. This chapter evaluates the continued viability of ICSID arbitration in light of these developments. Section A describes the relative legal finality and binding nature of ICSID awards as compared to other forms of adjudicating international disputes and observes that an individual ICSID award entails one of the legally most final and binding dispositions in international law, subject only to a few narrow ‘remedies’ against an award (the most notable being annulment). Section B describes that there is no formal general doctrine of binding precedent or stare decisis in ICSID arbitration and thus how an ICSID award, final and binding though it may be for an individual case, does not bind subsequent tribunals faced with the same or similar issues. Finally, it discusses the recent decision by the ad hoc (annulment) committee in CMS Gas Transmission Co v Argentine Republic, which shows that the ICSID system not only maintains the finality of individual awards, but also provides an opportunity for such a committee at least to comment on the reviewed tribunal's application of the law in a particular case and thus contribute to the corpus of international investment law.

This chapter argues that the emergence of the system of investment treaty arbitration, when viewed against the canvass of international law, marks a major transformation in international adjudication. This is because investment treaties uniquely combine various innovative features of international adjudication to formulate a singularly far-reaching and potent system that uses arbitration to review and control states. The elements of investment treaty arbitration, and thus of the wider adjudicative power granted to arbitrators, are examined. It is argued that they establish investment treaty tribunals as the closest the world has come to an international court that has comprehensive jurisdiction over individual claims in the regulatory sphere.

This chapter considers the issues that arise when the activity (or inactivity) of domestic courts becomes an issue in investment arbitration. Topics covered include types of ‘denial of justice’; two preliminary issues for an investor seeking redress against the host State — a fork in the road provision and an (implied) waiver of the BIT arbitration offer; when to go to arbitration; and whether an objection in domestic proceedings is necessary in order to preserve an error for review by international arbitration.

Few concepts of public international law admit of more varied interpretations than denial of justice. Apart from considering the historical development of the concept, this chapter identifies substantive provisions in investment treaties and human rights instruments providing the basis for claimants to advance elements of a denial of justice violation. It then highlights factual underpinnings commonly arising in the investment arbitration and human rights contexts, and suggests that the general thrust and approach of tribunals and organs in these two specialized areas of public international law share similarities. Finally, after considering the extent to which investment and human rights guarantees concerning elements of a denial of justice have been shaped by distinct particularities and practices in the realms of investment and human rights adjudication, the chapter concludes that the concept of denial of justice is considerably more malleable in the former.

This chapter reviews the notion of ‘investment’ in contemporary treaties to demonstrate that the system affords to arbitrators a broad jurisdiction over a wide range of sovereign acts. It argues that the treaties typically apply broadly framed standards of review by looking at three key standards — national treatment, the minimum standard of treatment, and compensation for expropriation — which reveal the interpretive and governmental discretion that is delegated to arbitrators. The aim here is not to demarcate precisely the boundaries of arbitrator authority or the meaning of particular standards, but merely to show that within those boundaries a wide expanse of regulatory activity is subject to intensive review.