Primary and Secondary Remedies in International Investment Law and National State Liability: A Functional and Comparative View

Published in: Stephan Schill (ed.), International Investment Law and Comparative Public Law (Oxford: Oxford University Press 2010), pp. 721-754.

U. of St. Gallen Law & Economics Working Paper No. 2009-06

38 Pages Posted: 6 Aug 2009 Last revised: 16 Jul 2014

See all articles by Anne van Aaken

Anne van Aaken

University of Hamburg, Law School; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods

Date Written: August 1, 2009

Abstract

International investment law creates an international level of review for (illegal) national regulations and laws and the conduct of administrative entities for foreign investors. It is state liability law for foreign investors. In the municipal legal orders, the law of available remedies against the state for injured right holders forms part of administrative and oftentimes constitutional law. In spite of the similarities of factual circumstances, the legal environment for dealing with national investors or citizens and the one for foreign investors varies considerably. Whereas in national law, a right holder needs to take all (usual administrative and judicial) steps to have the illegality of an act reviewed, in investment law, the investor often has immediate access to courts without the exhaustion of local remedies and may immediately claim damages. This difference justifies a functional comparison of national state liability regimes with international investment law. Of special interest are the circumstances under which legal order refers a private (legal) person to primary remedies or secondary remedies. In this article, the remedies in international investment law and the remedies for similarly situated cases in some municipal legal orders are compared. By this comparison, fundamental differences between international investment law and national state liability law in how to deal with state measures interfering with private rights or entitlements are highlighted. To summarize upfront: Whereas municipal legal orders tend to be reluctant to grant pecuniary damages and require the use of primary remedies against the (illegal) act per se, international investment law most heavily relies on secondary remedies. Why is this so? Why does an investor not need to use at least effective remedies in the host state in order for a claim to damages to be “ripe”? What are the rationales discussed for the different remedies found in national state liability law and in investment law? And do they have a rational justification in general and depending on the case in specific circumstances? The paper proposes possible interpretations of investment treaties to have mix of national and international remedies.

Keywords: International investment law, primary remedies, secondary remedies, state liability

JEL Classification: K33, K41, F53, F55, D23, K23

Suggested Citation

van Aaken, Anne, Primary and Secondary Remedies in International Investment Law and National State Liability: A Functional and Comparative View (August 1, 2009). Published in: Stephan Schill (ed.), International Investment Law and Comparative Public Law (Oxford: Oxford University Press 2010), pp. 721-754.; U. of St. Gallen Law & Economics Working Paper No. 2009-06. Available at SSRN: https://ssrn.com/abstract=1444253

Anne Van Aaken (Contact Author)

University of Hamburg, Law School ( email )

Johnsallee 35
Hamburg, 20148
Germany

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

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