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Investment Arbitration: Promoting the Rule of Law or Over-Empowering Investors? A Quantitative Empirical Study

European Journal of International Law, 2014, Forthcoming

King's College London Law School Research Paper No. 2014-16

30 Pages Posted: 22 Feb 2014 Last revised: 13 May 2014

Thomas Schultz

King's College London – The Dickson Poon School of Law; Graduate Institute of International and Development Studies

Cedric G. Dupont

Graduate Institute of International and Development Studies (IHEID)

Date Written: February 20, 2014

Abstract

Investor-state arbitration, also called investment arbitration, is often accused of harming developing states facing economic hardship, for the benefit of a wealthy few from the Global North. Its proponents respond that it is the only available means to resolve disputes impartially, and that its increased use clarifies international law. In this article, the authors investigate the empirical manifestations of the uses and functions of investment arbitration, with an original dataset that compiles over 500 arbitration claims from 1972 to 2010. The study reveals that until the mid-to-late nineties, investment arbitration was mainly used in two ways. On the one hand, it was a neocolonial instrument to strengthen the economic interests of developed states. On the other, it was a means to impose the rule of law in non-democratic states with a weak law and order tradition. But since the mid-to-late nineties, the main function of investment arbitration has been to provide guideposts and determine rights for investors and host state, and thus to increase the predictability of the international investment regime. In doing so, however, it seems to favor the “haves” over the “have-nots”, making the international investment regime harder on poorer than on richer countries.

Keywords: international law, investment arbitration, foreign investment, empirical studies, investment law

JEL Classification: k33

Suggested Citation

Schultz, Thomas and Dupont, Cedric G., Investment Arbitration: Promoting the Rule of Law or Over-Empowering Investors? A Quantitative Empirical Study (February 20, 2014). European Journal of International Law, 2014, Forthcoming; King's College London Law School Research Paper No. 2014-16. Available at SSRN: https://ssrn.com/abstract=2399179 or http://dx.doi.org/10.2139/ssrn.2399179

Thomas Schultz (Contact Author)

King's College London – The Dickson Poon School of Law ( email )

Somerset House East Wing
Strand
London, WC2R 2LS
United Kingdom

Graduate Institute of International and Development Studies ( email )

Geneva
Switzerland

Cedric G. Dupont

Graduate Institute of International and Development Studies (IHEID) ( email )

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