The Applicable Law in Foreign Investment Disputes
Jan H. Hendrik Dalhuisen
King's College London
Andrew T. Guzman
USC Gould School of Law
January 30, 2013
Many foreign investment disputes include important disagreements on the question of applicable law. Though treaty text, passed decisions, and academic commentary are all relevant to the question, there remains considerable uncertainty on the question of how a tribunal should decide what law applies. The dominant approach distinguishes situations in which relevant treaty text provides for party autonomy with respect to choice of law (e.g., ICSID) and those in which no such choice of choice is invited (e.g., NAFTA). It is commonly thought that the parties have greater power to choose the applicable law in the former case than in the latter. This article demonstrates that the distinction between these two situations is illusory. The degree of party autonomy is virtually identical in the two situations. The real question for a tribunal is to determine which choices are at the free disposition of the parties and which are, instead mandatory.
Number of Pages in PDF File: 16
Keywords: foreign investment, applicable law
JEL Classification: K33
Date posted: January 30, 2013 ; Last revised: June 6, 2014
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