Judicial Politics and International Investment Arbitration: Seeking an Explanation for Conflicting Outcomes

Abstract

International investment arbitration has been described as a private system of justice addressing matters of high public policy. Yet, despite the very high stakes involved — in terms of both policy room and monetary implications — tribunal awards are sometimes difficult to reconcile. This conflict usually is explained with reference to the fact that these are ad hoc tribunals addressing specific disputes arising under particular investment treaties. Not so easily explained are conflicting tribunal awards drawing on virtually identical facts, invoking the same treaty text, where arbitrators seemingly change their mind from one case to the next without any explanation. This paper takes up a sequence of three tribunal awards issued against Argentina as a result of actions taken during the meltdown of the Argentinian economy in 2001. Two different arbitrators signed onto conflicting awards, each appearing to have changed their minds about whether Argentina was entitled to take advantage of the defense of necessity in the face of this economic crisis. Drawing on work in judicial politics, the paper brings in a number of non-legal variables into the analysis — such as social background, attitudinal behavior, strategic behavior, and institutional concerns — in order to illuminate aspects of arbitral decision making in the investment law context. I conclude that both strategic and institutional approaches better explain arbitral dispositions, allowing arbitrators to act in ways inconsistent with their preferred outcomes but also to self-correct.

Keywords: international law, investment arbitration, judicial politics