An Investment Court that Judges the Judges: A Case of Natural Selection?

41 Pages Posted: 27 Jun 2018  

Kyle D. Dickson-Smith

The Chartered Institute of Arbitrators; The University of Melbourne

Date Written: May 28, 2018

Abstract

Courts and arbitral tribunals have a dynamic and symbiotic relationship. In the field of commercial arbitration, we often perceive the court system to be the institution supporting the arbitral award and process. In the context of investment treaties enforced by investor-state dispute settlement (ISDS), courts have an added dimension. The courts (consisting of a judgment and the judicial process) can form the subject of review by an arbitral tribunal. So, if the international arbitral tribunal judges the fairness of the domestic courts of a state, and a domestic court in turn judges the appropriateness of the findings and process of an international arbitral tribunal, where does that leave the predictability and accountability of the ISDS system?

The Chevron v Ecuador dispute provides an appropriate case study of this phenomenon, which has permeated from the local Ecuadorian courts to various international tribunals and courts of the United States, Canada, Brazil and Europe. Similarly, other ISDS claims have encroached (or come close to encroaching) on the task of judging courts of developed nations, such as the recent Eli Lilly v Canada case. Australia recently survived judgment of its legislature by an investment tribunal in the Philip Morris case, but are the judgments of Australia’s High Court now grounds for attack? The ISDS system has been the subject of criticism, with a particular focus on the inconsistency of tribunal determinations. The question thus arises, as to whether this ostensibly circular system of judging the judges promotes the rule of law.

With case examples to offer context, this article evaluates whether a permanent international investment ‘court’, such as that proposed under the EU-Canada Comprehensive Economic and Trade Agreement (CETA), the EU-Vietnam Free Trade Agreement (FTA), and by the EU under the Transatlantic Trade and Investment Partnership (TTIP), contributes to consistency and the rule of law. In particular, this article identifies certain adequacies and inadequacies of that system in the context of an evolutionary institutional shift from the existing model based on private contract-based arbitration to that of a public ‘court’. Will this model result in an elevated standard of jurisprudence of international investment law, or just similar circular outcomes? The standard of review of this ‘court’ could just as equally promote a divergence, rather than a convergence, of international investment norms. Ultimately, any convergence between domestic and international legal norms is regulated by the reciprocal standard of deference and the willingness of states to consent to a particular investment treaty standard.

Keywords: Investment Court, CETA, TTIP, Deference, Philip Morris, Australia, Chevron v Ecuador

JEL Classification: K33

Suggested Citation

Dickson-Smith, Kyle D., An Investment Court that Judges the Judges: A Case of Natural Selection? (May 28, 2018). Available at SSRN: https://ssrn.com/abstract=3198430 or http://dx.doi.org/10.2139/ssrn.3198430

Kyle D. Dickson-Smith (Contact Author)

The Chartered Institute of Arbitrators ( email )

12 Bloomsbury Square
London, WC1A 2LP
United Kingdom

The University of Melbourne ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

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