How Best to Ensure Respect for the Right to Regulate in the Face of Foreign Investment Commitments: A Reformed ISA Process or a Return to the WTO

Abstract

Since the genesis of modern international investment law dating back to 1959 with the first bilateral investment treaty (BIT) signed between Pakistan and Germany and the emergence of international trade law in the form of the World Trade Organization (WTO) in 1994, which can be traced back to the GATT 1947, the two fields of law have developed separately. The WTO framework brings together 164 members committed to a single undertaking comprised of a large number of covered agreements, understandings and plurilateral agreements aimed at liberalizing trade in goods and an increasing range of services. International investment law, on the other hand, consists of a web of more than 3,200 separate investment agreements, whether BITs or investment chapters in regional trade agreements (RTAs) including recent mega-regional agreements. Only a small part of international investment law is to be found in the multilateral framework.

This paper seeks to explore the aspects of international trade and investment law which make them different, as well as those aspects which may bring them together. The overriding question posed in this paper is whether the capacity of states to regulate their economies as well as protect the health and the environment of their citizens has been curtailed by either trade or investment law as is feared by many persons around the world. Would these fears be allayed if the two bodies of law were brought united? Or is it preferable to maintain two separate fields of international law, one controlled by states and the other open to the initiative of private interests?

Keywords: International Investment Law, Investment Treaty Arbitration, ISA, ISDS, International Investment Agreements, WTO, Regulatory Powers, Regulatory Chill, Sovereignty, GATS, GATS Mode 3