Arbitral Decisions as a Source of International Investment Law

Eric De Brabandere, ‘Arbitral Decisions as a Source of International Investment Law’, in Tarcisio Gazzini and Eric De Brabandere (eds.), International Investment Law. The Sources of Rights and Obligations (Leiden/Boston: Martinus Nijhoff Publishers, 2012), pp. 245-288

Leiden Law School Research Paper Forthcoming

29 Pages Posted: 30 Jan 2014

See all articles by Eric De Brabandere

Eric De Brabandere

Leiden University - Grotius Centre for International Legal Studies

Date Written: January 29, 2012

Abstract

Whether judicial and arbitral decisions are a source of law, and thus binding upon international courts and tribunals is from a theoretical perspective a relatively easy question, but nevertheless proves to be a controversial one when taking into account the practice of international courts and tribunals. Judicial decisions are explicitly mentioned in Article 38 of the Statute of the International Court of Justice (ICJ) as ‘as subsidiary means for the determination of rules of law’. While customary law, treaties and general principles, also set out in Article 38 of the Statute of the ICJ, are generally regarded as the main or formal sources of international law, doctrine and judicial decisions are categorised as subsidiary or material sources. Indeed, only customary law, treaties and general principles are a source of obligations for States, while judicial decisions, and the doctrine, cannot in themselves be considered independent sources of obligations for States. The only exception in respect of judicial decisions is the inter partes effect of a binding judicial or arbitral decision which in itself implies that the decision is a formal source of law applicable between the parties to the dispute. The principle that in and of themselves, judicial decisions are not a source or rights and obligations for states, stands in sharp contrast to the practice of many international courts and arbitral tribunals. Despite the absence of any rule on binding precedent in international law generally and in international investment law, many investment tribunals very often refer to previous investment law cases in their decisions.

The question I will address here is whether outside the formal context of the states party to a dispute, a judicial or arbitral decision can be considered as a source of rights and obligations for states in the context of international investment arbitration. It is not the purpose here to be exhaustive in the sense that all cases which have cited previous decisions or which have discussed the notion and use of precedent in international arbitration will be analysed in detail. This chapter will rather focus on certain developments concerning the use of precedent in international arbitration and the cases that underscore this development. In line with the overall theme of the book, the focus will specifically lie on the question whether the use by international investment tribunals in their decisions of previous arbitral decisions can be seen as implying that these decisions amount to a source of rights and obligations for states. More specifically, I will argue that precedents are an important but subsidiary source of international investment law. The practice of arbitral tribunals to rely extensively on previous decisions is not problematic as such, and even a welcome practice since it furthers the development of the law relating to foreign investment. Crossing the line between treating precedents as a material or subsidiary source and as a formal source, when tribunals for example rely on precedents without other argumentation or when tribunals consider it necessary to follow a developed ‘jurisprudence constante’, poses serious problems since it runs counter the very foundational principles underlying investment arbitration and the formal absence of binding precedent in international investment law.

I will first briefly address the status of judicial and arbitral decisions as a source of general international law (1). I will then analyze judicial and arbitral decisions as a source of law in the decisions of international investment tribunals (2). In doing so, the absence of a formal rule on binding precedent in investment arbitration (2.1), the de facto importance of the use of precedent in international investment arbitration (2.2), and decisions of international investment tribunals with a ‘quasi-legislative character’ (2.3) will be discussed. I will finally turn to the question how certain jurisprudential developments have impacted on State practice in international investment law (3). It should be noted from the outset that the use of precedents from courts and tribunals outside the area of international investment law will not be discussed here considering the overall objective of the book to focus on the sources of international investment law only.

Keywords: investment treaty arbitration, sources, investment law, arbitral decisions, precedent

Suggested Citation

De Brabandere, Eric, Arbitral Decisions as a Source of International Investment Law (January 29, 2012). Eric De Brabandere, ‘Arbitral Decisions as a Source of International Investment Law’, in Tarcisio Gazzini and Eric De Brabandere (eds.), International Investment Law. The Sources of Rights and Obligations (Leiden/Boston: Martinus Nijhoff Publishers, 2012), pp. 245-288; Leiden Law School Research Paper Forthcoming. Available at SSRN: https://ssrn.com/abstract=2387547

Eric De Brabandere (Contact Author)

Leiden University - Grotius Centre for International Legal Studies ( email )

Leiden University Law Faculty
P.O. Box 9520
Leiden, 2300 RA
Netherlands
+31 71 527 7399 (Phone)
+31 71 527 7509 (Fax)

HOME PAGE: http://www.law.leiden.edu/organisation/publiclaw/publicinternationallaw/staff/eric-de-brabandere-.ht

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