Politicized Dispute Settlement in the Pre-Investment Treaty Era: A Micro-Historical Approach
48 Pages Posted: 16 May 2017
Date Written: May 16, 2017
The case for the desirability of the modern system of investment treaty arbitration rests on certain stylized historical claims. Those claims serve to demonstrate that the pre-modern system of dealing with investor-state disputes was inferior compared to current arrangements, which allow foreign investors to initiate highly legalized (or “depoliticized”) arbitration against host state governments for alleged violations of investment treaties. The implication of the historical comparison is that we should accept, and perhaps even expand, investment treaty arbitration to avoid a return to the bad old days. This Article challenges the historicity of this standard story through an in-depth examination of a forgotten but important episode of expropriation from the 1970s, Mauritania’s seizure of the MIFERMA iron ore operations. As I show below, politicized dispute settlement need not entail, nor even risk, resort to force. It can even be successful, especially where both home and host state government perceive mutual gains from continued cooperation. This does not mean that investors get everything they want, when they want it. In politicized dispute settlement the investor does not control the process — though he can certainly influence it — and the investor’s interests are not the only ones in play. More generally, the Article suggests the utility of micro-historical analysis of investor-state disputes as a methodology for gaining a more realistic understanding of how legalized investor-state dispute settlement coexists and interacts with, and may even support, “diplomatic protection”, broadly construed, and negotiated outcomes.
Keywords: arbitration, MIFERMA, Dispute Settlement, investor-state, disputes, diplomatic protection, negotiated outcomes, investment treaty, Mauritania
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