Asymmetric Diffusion: World Bank 'Best Practice' and the Spread of Arbitration in National Investment Laws
114 Pages Posted: 3 Sep 2019
Date Written: August 30, 2019
Globally, 74 countries have domestic investment laws that mention investor-state arbitration and 42 of these laws provide consent to this form of arbitration. That is, they give foreign investors the right to bypass national courts and bring claims directly to arbitration. What explains this variation, and why do any governments include investor-state arbitration in their domestic legislation? To explain this variation, we argue that analytic institutions within international organizations framed arbitration references as ‘international best practice’ and technical assistance carried this framing to governments. Specifically, we argue that governments who receive technical assistance from the World Bank’s Foreign Investment Advisory Service are more likely to include arbitration in their laws. In our analysis, we apply a mixed-methods research design. We first use event history analysis and find that receiving World Bank technical assistance is an exceptionally strong predictor of domestic investment laws with arbitration. Then we illustrate our argument with a case study of the Kyrgyz Republic’s 2003 law. We conclude that templates are usually not copied and pasted directly into domestic investment laws; instead, they are translated, debated, and modified. Yet the drafting of domestic investment laws is, in many countries, a process permeated by international actors.
Keywords: foreign direct investment, national investment laws, investor-state dispute settlement, World Bank, arbitration, technical assistance, templates
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