Investment Arbitration: Promoting the Rule of Law or Over-Empowering Investors? A Quantitative Empirical Study
European Journal of International Law, 2014, Forthcoming
30 Pages Posted: 22 Feb 2014 Last revised: 13 May 2014
Date Written: February 20, 2014
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: Suggested Citation