When the skin of an Australian platypus was first taken to England in the 1700s, scientists thought it was a fake. It looked like someone had sewn a duck’s bill onto a beaver’s body; one scientist even took a pair of scissors to the skin looking for stitches. The animal had fur and was warm-blooded like a mammal, yet laid eggs and had webbed feet like a bird or a reptile. Scientists struggled to categorize this unusual creature. Was it a bird, a mammal, or a reptile? Or was it some strange hybrid of all three?

Comprehending the investment treaty system has proven just as problematic. Investment treaties are clearly creatures of public international law: they are entered into by two or more states and are substantively governed by public international law. However, they are distinct from most public international law treaties because the vast majority of them permit investors to bring arbitral claims directly against host states based on procedural rules and enforcement mechanisms developed largely in the context of international commercial arbitration and investor-state contracts. Accordingly, the system grafts private international law dispute resolution mechanisms onto public international law treaties.

However, there are other ways to understand the beast based on the regulatory relationship that it establishes between host states (as governors) and foreign investors (as governed). Investors are increasingly challenging specific regulatory actions (such as the denial of building or operating permits) or general regulatory measures (such as legislation concerning the economy, environment, human rights, or health and safety) that adversely affect them. Instead of being contractual disputes between private parties, these disputes concern public actions and involve public interests. Accordingly, investment arbitrations permit challenges to governmental conduct in a manner reminiscent of judicial review under domestic public law.

Cite the publication as

American Journal of International Law , Volume 107 , Issue 1 , January 2013 , pp. 45 - 94 DOI: https://doi.org/10.5305/amerjintelaw.107.1.0045