Locked in Language: Historical Sociology and the Path Dependency of Investment Treaty Design

Abstract

Past legal language exerts an almost magnetic force on negotiators. From boilerplate treaties or copy-and-paste adaptations to the codification of prior jurisprudence – practitioners constantly recycle already existent terms, phrases and concepts into new legal outputs. In this contribution, I link the reproduction of legal language to the concept of path dependency and apply it to international investment agreements. I show that historical sociology rather than rational design helps to explain the path-dependent style and content of today’s investment regime. Using the fair and equitable treatment clause as a case study, I trace how these clauses first emerged haphazardly in investment law, yet then became entrenched through efficiency considerations, sociological forces and cognitive biases. The ensuing path dependency has prevented adaptations of superior treaty design alternatives and instead geared negotiators into reproducing or refining the fair and equitable treatment standard. Differently put, negotiators have become locked in language. I conclude by outlining ways how current reform efforts can overcome the system’s path dependency to allow for innovation inspired not by past practices but by current needs.

Keywords: Investment Law, Investment Treaties, Investment Agreements, Path Dependency, Historical Sociology, Fair and Equitable Treatment, Text as Data, Computational Analysis, Law & Language