Investment Claims and Arbitrator Comportment

Document Type

Book Chapter

Publication Date

2009

Editor(s)

Jacques Werner & Arif Hyder Ali

ISBN

1-907174-01-8

Publisher

CMP Publishing

Language

en-US

Abstract

Thomas Wälde had such a curious mind that any speculation about his favorite object of inquiry might best be left to the other side of eternity. Without doubt, however, arbitration of investment claims held a special place among the subjects that engaged his intellect. Such arbitration supplied what he called ‘external adjudicatory discipline‘ to investor-state relations, enhancing the rule of law, human rights and cross-border economic cooperation. The proposition that arbitration disciplines investment begs an inquiry into the forces that discipline the arbitrators themselves. Quis custodiet ipsos custodies? What standards constrain the comportment and mindsets of those who make the decisions? Often one hears that integrity is to arbitration what location is to the price of real estate: without it, other things do not matter all that much. Nowhere is that truism more significant than for investor-state proceedings, where arbitration’s treaty basis means that one side (the government) will be bound to arbitrate in a comprehensive way that obviates the need for any contractual arbitration clause. Students of history remember that claims related to mistreatment of a foreign investor traditionally were subject either to the home-court jurisdiction of the expropriating country or to the ‘gunboat diplomacy’ of the investor state’s political and military influence.1 In some instances, arbitration triggered by diplomatic pressure led to significant and controversial debates on legal theories about state responsibility.

In its early days, investor-state arbitration was largely a matter of contract,3 with concession agreements serving as the foundation for arbitrators’ power to hear investor claims for de jure or de facto expropriation.4 During the past several decades, however, bilateral and multilateral treaties have given foreign investors an opportunity to arbitrate disputes even in the absence of any direct concession with the host state.5

The paradigm shift from contract to treaty means that arbitrator integrity has become even more vital to host state acceptance of arbitration as the normal vehicle to resolve investor claims related to expropriation and discrimination, particularly as such claims increasingly affect vital national interests such as the environment, taxation, and administration of justice. While consent remains the foundation of arbitral jurisdiction, government acceptance takes a blanket form through free trade and investment agreements, or even an investment statute.

A treaty-based standing offer to arbitrate gives foreign investors a direct right of action against the host state, exercisable as the occasion arises,6 subject always to the conditions provided in the treaty or statute itself.7 In some instances, there may also be an opportunity for government-to-government arbitration following reimbursement to investors under political risk insurance.

Comments

Entire book available for free download


This book was published in honour of Thomas Walde, who tragically passed away in October 2008. The editors Jacques Werner and Arif Hyder Ali gathered an impressive collection of essays by practioners, arbitrators and professors who knew Thomas Walde in a modest effort to capture Thomas' never ending interests.

This essay was also adapted as "Arbitrator Integrity and Investor-State Disputes" in Contemporary Issues in International Arbitration and Mediation: The Fordham Papers (2009) (Arthur Rovine, ed. 2010):

This document is currently not available here.

Link to Publisher Site Link to Publisher Site (BU Community Subscription)

Share

COinS