Parting Ways: The Impact of Investor Rights on Mutual Termination of Investment Treaties
(2014) 29(2) ICSID Review - Foreign Investment Law Journal 451-473
23 Pages Posted: 12 Dec 2013 Last revised: 5 Feb 2016
Date Written: December 10, 2013
Several States have terminated international investment agreements ('IIAs') in recent years — some alarmed at unexpected outcomes in certain investor — State cases, and others simply updating their IIAs as they conclude wider economic partnership agreements. States’ attempts to extinguish investor rights through the consensual termination of an IIA raise complex legal issues. As a threshold matter, investors are capable of deriving legal 'rights' under an IIA that may interfere with attempts at termination. However, the grant of such rights under an IIA depends on its specific wording and context. Moreover, although a pre-existing treaty breach for which a formal claim has already been brought cannot be affected by a subsequent termination, States parties to an IIA are free to agree to extinguish investor rights that have not yet been exercised, even with respect to a pre-existing breach. In terminating an IIA on the basis of mutual agreement, States parties also have (and have been shown to exercise) the power to override so-called 'survival' or 'sunset' clauses commonly found in IIAs, thereby excluding all future rights, obligations and claims under the treaty. This conclusion is based on fundamental precepts of the law of treaties and is unaffected by any alleged doctrine of 'acquired rights' in public international law or international investment law.
Keywords: International Law, International Investment Law, International Investment Agreements, IIAs, Mutual Termination, Survival Clauses, Sunset Clauses, Acquired Rights, Investors' Rights, Exercised Rights, Unexercised Rights, Direct and Derivative Rights
JEL Classification: K33
Suggested Citation: Suggested Citation