Document Type

Article

Publication Date

2024

Abstract

Several reform initiatives are currently ongoing seeking to cure international investment law from its inherent pro-investor bias. To achieve this goal, recent investment treaties contain enhanced provisions on the right to regulate and seek to increase investor compliance in such areas as environmental protection, sustainable development, and corporate social responsibility. Yet, how to reconcile the ongoing reform efforts at the international and regional levels seeking to create a new, rebalanced system of international investment law? How to achieve this proverbial system where interests of foreign investors are protected without encroaching on the rights of the host states? The answers to these questions remain largely open. This article argues that in the current system of international investment law, where both substantive and procedural laws remain diversified and provide foreign investors with options in structuring their investments and bringing investment claims, the traditional top-down approach (with reliance on universal and regional treaty-making) does not allow achieving uniformity of international investment law with regard to the greater emphasis on the rights of the host state and compliance of foreign investors. As long as sovereign states remain interested in foreign investments, they will be willing to compromise on their rights and risk investment arbitrations in order to gain competitive advantage in the market for foreign investments. In the classic prisoner’s dilemma fashion, driven by self-interests, sovereign states might not cooperate internationally, although such cooperation appears to be in their best interest. In these settings, a better approach might be to leave it to the market and to look at the bottom-up solutions, which provide incentives for the host state not to lower responsible investment standards and for arbitral tribunals and foreign investors—to raise and consider the rights of the host state as part of investor-State dispute settlement.

Publication Title

The International Lawyer

Volume

57

First Page

121

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