Legitimacy Crisis and the ISDS Reform in a Political Economy Context

Journal of East Asia and International Law, Vol.15, No.1 (2022), 31-60

University of Hong Kong Faculty of Law Research Paper No. 2022/43

30 Pages Posted: 28 Nov 2022

See all articles by Shuping Li

Shuping Li

University of Hong Kong, Faculty of Law

Shen Wei

Shanghai Jiao Tong University Law School

Date Written: December 19, 2021

Abstract

The variation of countries’ industrial policies and political strategies in a multipolar world brings the investor-state dispute settlement (ISDS) regime to a crossroad. Backlash to the inconsistency, non-transparency, partiality and unfairness of the ISDS regime results from the states’ changing interests and policy priorities, including the rising awareness of democracy. In pursuing the benefits of multilateralism, a multilateral investment court can serve as an alternative to the current investment arbitration regime. States need to clarify the scope of consent based on their political economic considerations. Substantial investment protection standards can be different, whereas the principle of proportionality can serve as an approach to the balance between investment protection and states’ policy arrangements. Meanwhile, there should be efforts to align the interpretation and application of key provisions, possibly through interpretation notes and an appellate body that reviews arbitral decisions, to generalise implicit consensus and to broaden collective acceptance of the regime.

Keywords: ISDS Reform, Legitimacy, Consent, Democracy, Sovereignty, Political Economy

Suggested Citation

Li, Shuping and Wei, Shen, Legitimacy Crisis and the ISDS Reform in a Political Economy Context (December 19, 2021). Journal of East Asia and International Law, Vol.15, No.1 (2022), 31-60, University of Hong Kong Faculty of Law Research Paper No. 2022/43, Available at SSRN: https://ssrn.com/abstract=4166446

Shuping Li (Contact Author)

University of Hong Kong, Faculty of Law ( email )

Pokfulam Road
Hong Kong
Hong Kong

Shen Wei

Shanghai Jiao Tong University Law School ( email )

No.1954 Huashan Road
Shanghai, Shandong 200030
China

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