Project leader(s)

When Philip Morris brought an international arbitral claim against Australia challenging the Tobacco Plain Packaging Act, most Australians had not heard of investment treaties or investment treaty arbitration. However, this claim was based on a bilateral investment treaty between Australia and Hong Kong that is not unique. In fact, there are more than 3500 Bilateral Investment Treaties and Free Trade Agreements with investment chapters in existence throughout the world. Investment protection is also a key feature of many of the new mega-regional trade agreements that are being negotiated, including the TPP, RCEP and TTIP.

Investment treaty agreements provide legal protections for investors from one treaty party who invest in another treaty party. If the investor believes its rights have been violated, these treaties frequently (though not always) give the investor a right to bring an international arbitral claim directly against the state in which they have invested. Some of these claims turn on specific representations made to or treatment of particular foreign investors, while others implicate a state’s right to regulate for public welfare more broadly. Most of these treaties were signed in the 1990s and most of the claims have been brought since 2000.

Early investment treaties were typically short, broadly worded, and full of gaps and ambiguities. Because these treaties permitted investors to bring arbitral claims, investment treaties transferred considerable interpretive power from states (as treaty parties who draft these agreements) to arbitral tribunals (who were delegated the power to interpret and apply these agreements in the context of resolving particular investment treaty disputes). A number of early claims and awards led to considerable controversy among states and civil society.

A key element of this project is to examine mechanisms within existing and future investment treaties and public international law that permit states to re-engage with the investment treaty system in order to better protect their interpretive rights as treaty parties and their regulatory autonomy as host states. These mechanisms include:

Project background

Different paradigms and expert communities

A key challenge in the investment treaty field is how to conceptualise these unusual hybrid treaties. Investment treaties have typically been understood as a union of public international law (because of their treaty basis) and international commercial arbitration (because they permit investor-state arbitration). However, these two fields often suggest radically different solutions to problems that arise in the investment treaty system across a wide range of areas from transparency to appropriate standards of review. These problems are explored in Power and Persuasion, Clash of Paradigms , Judicial Review and Divergence and Convergence [7].

In addition to public international law and international commercial arbitration, this project explores ways to reconceptualise investment treaties by reference to other relevant fields of law, including public law, international trade law and international human rights law. It also examines the clash of different expert communities coming from different fields who bring diverse assumptions, insights and perspectives to bear on this emerging field. These controversies are explored in Clash of Paradigms, Triangular Treaties, Standards of Review and Judicial Review.

Re-engagement of states in the investment treaty field

Early investment treaties were typically short, broadly worded, and full of gaps and ambiguities. Because these treaties permitted investors to bring arbitral claims, investment treaties transferred considerable interpretive power from states (as treaty parties who draft these agreements) to arbitral tribunals (who were delegated the power to interpret and apply these agreements in the context of resolving particular investment treaty disputes). A number of early claims and awards led to considerable controversy among states and civil society.

Reframing the object and purpose of investment treaties

Early bilateral investment treaties were often very protective of investors’ rights without containing any or many express protections for state sovereignty. As a result, arbitral tribunals often interpreted the object and purpose of investment treaties as being to protect foreign investors and to depoliticise investor-state disputes. In line with newer investment treaties, this project reframes the object and purpose of investment treaties to show that (1) investor protection is a means to the end of increasing economic development, rather than an end in and of itself and (2) that this is a qualified rather than an absolute goal that needs to be weighed against other policy goals, such as environmental protection and protection of health and safety.

The reframing of the object and purpose of investment treaties is explored in State-to-State Arbitration and Triangular Treaties. This reframing has important implications for a range of controversies, such as the definition of investors and investments, the regulatory autonomy of states, the relevance of other fields of policy expertise (such as protection of health and the environment) to investment treaty protections, the permissibility of states more actively engaging with the investment treaty system through mechanisms such as joint interpretations and state-to-state disputes, and the convergence and divergence of different fields of international law and public policy.

Citations

A number of the articles in this project have played an influential role in shaping debates in academia and practice about the investment treaty system. For instance, Power and Persuasion in Investment Treaty Interpretation: The Dual Role of States is the second most highly cited international law article in the American Journal of International Law over the last 5 years. Clash of Paradigms: Actors and Analogies Shaping the Investment Treaty System is also highly cited, picking up new citations at an even faster rate than Power and Persuasion .

Awards

Power and Persuasion won the 2011 Francis Deák Prize, which is awarded by the American Society of International Law for the best article published in the American Journal of International Law by a scholar under 40 years of age. The Article was shortlisted by OGEMID (the main international arbitration list serve) for the International Dispute Resolution Article of the Year (2011).

Adoption of proposals by international organisations

The proposals in Power and Persuasion for states to play a more active role in the interpretation and application of their investment agreements has been picked up by a variety of international organisations, including the United Nations Conference on Trade and Development (UNCTAD) in their Report on ‘Interpretation of International Investment Agreements: What States Can Do’ and the OECD in their Reports on ‘Investment Treaties over Time - Treaty Practice and Interpretation in a Changing World’ and ‘The legal framework applicable to joint interpretive agreements of investment treaties’. These proposals have also been endorsed by a variety of NGOs and think tanks in reports such as ‘State Control over the Interpretation of Investment Treaties‘and ‘State Interpretations of Investment Treaties: Feasible Strategies for Developing States’.

Influence in international law

Power and Persuasion has been discussed in the leading practitioner publications and list serves, including International Arbitration Reporter and OGEMID. It has been cited by states in cases like Ecuador v United States and Mobil v Canada and by arbitral tribunals in cases like Bureau Veritas v Paraquay. It has also been discussed by leading arbitrators, including Gabrielle Kaufmann-Kohler, and government figures, such as the Attorney General of Singapore, in public speeches. It has also been discussed on the two main international law blogs (EJIL Talk! and Opinio Juris ) and on the International Economic Law and Policy Blog. Outside of the investment treaty field, the article has been influential in the context of the International Law Commission’s ongoing project on Treaties Over Time.

Trade, investment & IP 440x440

Trade, investment & intellectual property

This cluster looks at the impacts of the trade, investment and intellectual property regimes on the regulatory sovereignty and capacity of states and the consequences that flow from those impacts.

Updated:  10 August 2017/Responsible Officer:  Director, RegNet/Page Contact:  Director, RegNet