Are BITs Representing the 'New' Customary International Law in International Investment Law?

Penn State International Law Review, Vol. 28, No. 4, pp. 675-701, 2010

27 Pages Posted: 27 Aug 2010

See all articles by Patrick Dumberry

Patrick Dumberry

University of Ottawa - Civil Law Section

Date Written: August 26, 2010

Abstract

The question of the existence of legal protection for foreign investors under customary international law (or “custom”) has always been controversial. As a result of this perceived lack of established customary principles, States concluded thousands of bilateral investment treaties in the 1990s for the promotion and the protection of investments (“BITs”). The number of BITs is now so overwhelming and their scope so comprehensive that a new debate has recently arisen in doctrine about the impact of these treaties on the existence of custom in the field of international investment law. It has been recently argued in doctrine that these BITs represent the “new” custom in this field. For some writers, the content of both custom and BITs is now simply just the same.

This paper rejects this proposition. The main reason is based on the fact that taken together BITs are missing the two necessary elements of customary international law. First, these BITs are very diverse in their content and scope and certainly not consistent enough, taken together, to constitute the basis for any customary rule. Second, BITs also lack any opinio juris. States sign BITs clearly not out of a sense of legal obligation, but for economic motive, i.e. to attract foreign investments and to offer protection to their investors doing business abroad.

This paper also argues that BITs will nevertheless influence customary international law. Thus, BITs will contribute to the consolidation of already existing custom rules (codification). BITs will also contribute to the crystallisation of new rules of customary international law in the future. In this age of BITs proliferation, the determination of the content of customary rules of international investment law remains of fundamental importance. Thus, custom is the applicable legal regime between a foreign investor and the host State in the absence of any BIT. The content of custom remains also essential in cases where BITs make explicit reference to custom. Finally, custom has a gap-filling role whenever a BIT is silent on a particular legal issue.

Keywords: Bilateral Investment Treaties, Bits, Customary International Law, Investment Law, Arbitration

JEL Classification: K33

Suggested Citation

Dumberry, Patrick, Are BITs Representing the 'New' Customary International Law in International Investment Law? (August 26, 2010). Penn State International Law Review, Vol. 28, No. 4, pp. 675-701, 2010. Available at SSRN: https://ssrn.com/abstract=1666218 or http://dx.doi.org/10.2139/ssrn.1666218

Patrick Dumberry (Contact Author)

University of Ottawa - Civil Law Section ( email )

57 Louis Pasteur Dr
Ottawa
Canada

HOME PAGE: http://www.droitcivil.uottawa.ca/index.php?option=com_contact&task=view&contact_id=148&Itemid=118

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