Investment Treaty Arbitration as a Species of Global Administrative Law

Abstract

The article outlines a simple thesis: that international investment arbitration-pursuant to regional and bilateral investment treaties-offers the clearest example of global administrative law, strictly construed, yet to have emerged. We present this thesis by explicating four key features of investment treaties: they permit investor claims against the state without exhausting local remedies; they allow claims for damages; they allow investors to directly seek enforcement of awards before domestic courts; and they facilitate forum-shopping. Our argument is that, owing to this unique conjunction of features, the regulatory conduct of states is, to an unusual extent, subject to control through compulsory international adjudication. Having highlighted these features, we then claim that investment arbitration is best analogized to domestic administrative law rather than to international commercial arbitration, especially since investment arbitration engages disputes arising from the exercise of public authority by the state as opposed to private acts of the state. Further, we claim that the linkages between investment arbitration and domestic legal systems are more direct and more closely integrated than other forms of international adjudication in the public sphere. For these reasons, we argue that the emerging regime of investment arbitration is to be understood as constituting an important and powerful manifestation of global administrative law.

Investor–state dispute settlement

“…On the issue of who should be protected, there are ongoing debates about the definition of the fundamental terms 'investor' and 'investment', but another fundamental problem is 'treaty shopping'-when a multinational corporation establishes a holding company in one IIA party to access arbitration when a dispute arises over its investment in the territory of another IIA party (Van Harten and Loughlin 2006). One oft-cited example of a treaty shopping investor is the American firm Bechtel.…”

Restructuring the State through Economic and Trade Agreements: The Case of Investment Disputes Resolution

“…They can also expose sub-national units like states or provinces to court sanction and even expropriation of property internationally if they did not enforce ISDS or declined to pay penalties appropriately. Evolving jurisprudence in the US and other jurisdictions may permit claimants aggrieved at national or sub-national policies to sue in foreign courts and have assets of those states or provinces seized as compensation (Van Harten & Loughlin, 2006).…”

Towards a politics for human rights

“…64 For example, through developments in international trade law institutional sovereignty is increasingly located not with state officials but with authorities empowered to resolve disputes between investors and states. 65 Honig supplements this understanding of positional sovereignty by focusing on the role of bureaucrats, rather than judges and executives, whose powers lie in the everyday administration of government. These powers, however, are not only effective as conduits of sovereign decisions; they can challenge sovereign authority and exercise their own independent power.…”