The Repudiation of Investor–State Arbitration and Subsequent Treaty Practice: The Resurgence of Qualified Investor–State Arbitration

Abstract

This article contributes to the existing literature on investor–State arbitration (ISA) by analysing the subsequent treaty making practices of the States that pledged to abolish ISA. The article concludes that instead of rejecting ISA or withdrawing from the International Centre for Settlement of Investment Disputes (ICSID), these States are continuing to provide for ISA in their treaties. However, they are increasingly qualifying access to investor–State arbitration. Specifically, the study notes the increased presence of various provisions allowing State parties to vary from their treaty obligations. Thus, the latest treaties examined in this study resemble the first generation of bilateral investment treaties (BITs) in terms of their restrictiveness. While the first-generation treaties construed investment and investor rights in narrow language, the recent treaties of countries which initially rejected ISA have instead limited investor rights by emphasizing various exceptions to treaty obligations. However, of great significance, while all the agreements analysed qualify access to ISA, they differ significantly in their approaches to regulating arbitral proceedings. These divergent treaty practices present challenges to various ISA reform proposals.

Keywords: investor–State arbitration, ISA, International Centre for Settlement of Investment Disputes, ICSID, treaty obligations, bilateral investment treaties, BITs