Reviewing the Use of “Soft Law” in Investment Arbitration

Abstract

This essay surveys the extent to which instruments, such as those issued by the International Bar Association for use in arbitration that are not included in the formal sources of international law, are relied upon in investor-state arbitration. It considers the difficulties of defining what some call ‘soft’ or ‘informal’ law, of empirically measuring the extent to which arbitrators resort to it, and of determining whether its use is consistent with the accepted rules of treaty interpretation. It canvasses the significance of soft law in two recent rulings, Urbaser v. Argentina and Philip Morris v. Uruguay. The author, who previously has addressed the use of European human rights and trade law in investor-state arbitrator, reviews the pros and cons of this particular kind of ‘boundary crossing.’ He concludes that it is as yet too early to say whether resort to soft law will ameliorate or worsen the perceived ‘legitimate deficits’ of the investment regime.