Winning or Losing in Investor‐To‐State Dispute Resolution: The Role of Arbitrator Bias and Experience

25 Pages Posted: 20 Aug 2018

See all articles by Julian Donaubauer

Julian Donaubauer

University of the German Federal Armed Forces - Helmut Schmidt Universität

Eric Neumayer

London School of Economics and Political Science (LSE)

Peter Nunnenkamp

University of Kiel

Date Written: September 2018

Abstract

When an investor sues a state for alleged breaches of its obligations under an investment treaty or a trade agreement with investment provisions, all that should matter for who wins the case are the merits of the claim itself. Alas, investor‐to‐state dispute settlement (ISDS) does not take place in a vacuum. Such cases are decided by a tribunal typically consisting of three arbitrators, one each nominated by the two parties while the president is mutually agreed upon. We demonstrate that the kind of involvement of these arbitrators in previous ISDS cases matters for the case under dispute. Specifically, we show that what we label the presidents' pro‐investor appointment bias—the number of times they have previously been nominated by an investor minus the number of times they have represented respondent states—raises the likelihood that an investor wins an ISDS case. The same holds for the pro‐investor appointment bias of state‐appointed arbitrators. Given the president's crucial role, the main implication of our findings is that presidents should be drawn from among those who have not systematically represented more one side than the other in previous cases.

Suggested Citation

Donaubauer, Julian and Neumayer, Eric and Nunnenkamp, Peter, Winning or Losing in Investor‐To‐State Dispute Resolution: The Role of Arbitrator Bias and Experience (September 2018). Review of International Economics, Vol. 26, Issue 4, pp. 892-916, 2018. Available at SSRN: https://ssrn.com/abstract=3233287 or http://dx.doi.org/10.1111/roie.12347

Julian Donaubauer (Contact Author)

University of the German Federal Armed Forces - Helmut Schmidt Universität ( email )

Holstenhofweg 85
Hamburg, 22008
Germany

Eric Neumayer

London School of Economics and Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 207 955 7598 (Phone)
+44 207 955 7412 (Fax)

HOME PAGE: http://personal.lse.ac.uk/neumayer

Peter Nunnenkamp

University of Kiel ( email )

D-24100 Kiel
Germany

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