The Applicable Law in Foreign Investment Disputes

16 Pages Posted: 30 Jan 2013 Last revised: 6 Jun 2014

See all articles by Jan Hendrik Dalhuisen

Jan Hendrik Dalhuisen

King's College London; University of California, Berkeley; Catolica Global School of Law

Andrew T. Guzman

USC Gould School of Law

Date Written: January 30, 2013


Many foreign investment disputes include important disagreements on the question of applicable law. Though treaty text, passed decisions, and academic commentary are all relevant to the question, there remains considerable uncertainty on the question of how a tribunal should decide what law applies. The dominant approach distinguishes situations in which relevant treaty text provides for party autonomy with respect to choice of law (e.g., ICSID) and those in which no such choice of choice is invited (e.g., NAFTA). It is commonly thought that the parties have greater power to choose the applicable law in the former case than in the latter. This article demonstrates that the distinction between these two situations is illusory. The degree of party autonomy is virtually identical in the two situations. The real question for a tribunal is to determine which choices are at the free disposition of the parties and which are, instead mandatory.

Keywords: foreign investment, applicable law

JEL Classification: K33

Suggested Citation

Dalhuisen, Jan Hendrik and Guzman, Andrew T., The Applicable Law in Foreign Investment Disputes (January 30, 2013). Available at SSRN: or

Jan Hendrik Dalhuisen

King's College London ( email )


University of California, Berkeley ( email )

Berkeley, CA
United States

Catolica Global School of Law ( email )

Palma de Cima
Lisbon, 1649-023

Andrew T. Guzman (Contact Author)

USC Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

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