Listening to Investors (and Others): Audi Alteram Partem and the Future of International Investment Law
Armand de Mestral (ed.), Second Thoughts: Investor State Arbitration between Developed Democracies (Montreal and Kingston: McGill-Queen's University Press, 2017)
26 Pages Posted: 11 Aug 2016 Last revised: 8 Mar 2017
Date Written: March 7, 2017
This paper inquires into an alternative foundation for investor rights linked to a theory of deliberative democracy and a procedural right to be heard. Theoretical accounts seeking to justify the rules-based system of international investment law typically rely on procedural defects in extant political systems. Investors, it is argued, are not well represented within host state political processes in which case the checking mechanism of investment arbitration provides ‘virtual representation’ to the otherwise unrepresented. The problem with this story is that it is not well supported by the empirical literature. It turns out that investors have a variety of means available to them by which they can make their preferences known to political actors or that help to mitigate the diminution of investment value as a result of political risk.
This paper seeks to formulate a version of investor rights that corresponds better to concerns typically advanced to justify the investment law’s strictures, namely, that the interests of foreign investors fail to get taken into account within host states. Drawing upon historical and contemporary accounts within political theory, the project advances a justification for investor protection that is limited principally to procedural protections associated with the Latin maxim audi alteram partem. After outlining the foundations for this approach in English administrative law and political theory, the paper turns to selected arbitral awards in order to illustrate how a right to be heard would be advantageous to all of the interests involved. The project proposes bringing together theory, history, and practice in order to ground a theory of investor protection that better reconciles power, politics, and democracy.
Keywords: Investment Law, Deliberative Democracy, Aliens, Administrative Law
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