No. 4/10 – THE INTERNATIONAL INVESTMENT REGIME: SOVEREIGNTY, INVESTOR SECURITY, AND DISPUTE SETTLEMENT SINCE THE 1980S

Title: The International Investment Regime: Sovereignty, Investor Security, and Dispute Settlement Since the 1980s

Abstract: The international legal regime for the protection of international investments is an extraordinary set of arrangements that gives investors unique rights in public international law. These rights are contained in a large body of mostly bilateral investment treaties (BITs) whose numbers exploded in the 1990s. This article argues that the spread and development of this regime can be understood in a bargaining context: the more developing countries want to attract capital, the higher the sovereignty costs they are willing to pay for it. This is reflected in the timing of BIT ratification, as well as their content. While there is little evidence to suggest that BITs attract more capital, it is pretty clear they do attract litigation, if the cases before ICSID are any measure. In a number of ways – including efforts to get awards annulled, non-payment of awards, and the renegotiation or even termination of treaties themselves – there seems to be a growing evidence of backlash against the system. However, change may be underway as states reassert their interests in a wider policy space vis-à-vis investors’ rights.

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