Hayek’s Dream: International Investment Law and the Denigration of Politics

Abstract

This paper argues that the operational logic of international investment law, in part, is to tame states by legally requiring that they behave as if they were profit-seeking enterprises. This is suggested by a small set of awards, arising out of contractual disputes, that work a binary between contractual and sovereign behaviour. Non-contractual behaviour is deemed ‘political’ and likely to give rise to liability under investment law strictures. This complements well Hayek’s approach to the rule of law, where, outside of their ‘framework’ functions, states are expected to behave ‘in the same manner as any private person.’ In an age of ever increasing inequality, this renders it more difficult for states and citizens to take up measures for societal self-protection.

Keywords: investment law, Hayek, role of state, neoliberalism