Investor-State vs. State-State Dispute Settlement
42 Pages Posted: 25 Mar 2020
There are 2 versions of this paper
Investor-State vs. State-State Dispute Settlement
Date Written: March 2020
Abstract
International investment agreements have been intensely criticized, and in particular the "ISDS" mechanisms that enable foreign investors to litigate against host countries. This paper examines the common claim that host countries benefit from state-state dispute settlement (SSDS), since this yields less litigation. It assumes the standard rationale for ISDS, that SSDS causes political litigation costs. It shows how a host country might indeed benefit from SSDS, but that there is no presumption that these conditions will prevail. Furthermore, negotiations regarding dispute settlement will plausibly yield ISDS, regardless of the distributional consequences for host countries, since SSDS is Pareto inefficient.
Keywords: expropriation, IDSD, international investment agreement, regulatory chill
JEL Classification: F21, F23, F55, K33
Suggested Citation: Suggested Citation