The Investment Treaty System as Judicial Review – Vol. 24 No. 3

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Author: Federico Ortino*

Published: December 2013

Description: The emerging system of investment law based on international treaties has attracted much attention from academics, civil society, policymakers, and practitioners alike. The system’s basic features are simple to highlight: (a) the system is based on a network of more than 3,000 international treaties (concluded mostly at the bilateral level); (b) investment treaties embody a few, open-ended norms as the relevant legal disciplines imposed on States for the benefit of foreign investors; and (c) ad hoc international arbitration, modelled along the lines of commercial arbitration, is the chosen dispute settlement mechanism.

The starting point of this article is the realization that it is crucial to properly understand the core nature of the investment treaty system. As nicely mapped out by Anthea Roberts, there are several ways according to which one can understand the investment treaty system, including under public or private international law paradigms, or under public law, international trade law or international human rights paradigms.1 At a more fundamental level, it seems that the debate about the nature of the system revolves around the following two key values: granting maximum protection to foreign investors and safeguarding host States’ ability to regulate in the public interest. Characterizing an award, a treaty provision, an arbitrator, a new policy, or an academic article as “pro-investor” or “pro-State” is a common, almost instinctive, exercise in the investment community. In their recent joint Statement on Shared Principles for International Investment, the European Union (“EU”) and the United States have expressly acknowledged the challenge facing the investment treaty system (albeit without giving any solution). They recognized that “governments should provide the highest possible level of legal certainty and protection against discriminatory, arbitrary, and otherwise unfair or harmful treatment to all investors and investments in their territories,” accompanied by the conviction that “governments can fully implement these principles while still preserving the authority to adopt and maintain measures necessary to regulate in the public interest to pursue certain public policies.”

In order to move away from the simplistic, binary “pro-investor v. pro-State” dichotomy and put forward instead a methodology (or mindset) capable of properly balancing investment protection and the sovereign right to regulate, the …

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*Reader in International Economic Law, King’s College London. The author would like to thank Roger Brownsword, David Caron, Piet Eeckhout, Filippo Fontanelli, Peter Muchlinski, Cian Murphy, Stephan Schill, Chris Townley, Alex Türk, Lorenzo Zucca, and the participants in the London School of Economics public international law seminar for their very useful comments.