The implications of international investment treaties
Gus Van Harten discusses specific cases of investor-to-state arbitration to highlight what are the key problems with international investment treaties. How developing countries are being impacted by investment disputes and what the role is of lawyers and experts in promoting a growing international arbitration industry.
International investment treaties grant foreign investors, who believe their investments have been damaged, the right to directly sue states at international tribunals. The majority turn to the World Bank hosted International Center for Settlement of Investment Disputes (ICSID); 25% take place under the United Nations Commission on International Trade Law (UNCITRAL) rules, with a few cases taken to the Paris-based International Chamber of Commerce (ICC) and the Stockholm Chamber of Commerce (SCC).
What is an example of investor-state dispute?
How are developing countries impacted by investment treaties?
- Developing countries are subjected to significant more claims than US, Canada and Western Europe. In 2010, 51 cases were filed against developing vs 17 against developed countries.
- During the case American Manufacturing v Congo, ICSID decided that Congo violated the treaty, and awarded approximately USD 9 million (plus interest) against the state.
What role do lawyers play in investor-state disputes?
- The same claim was brought against Czech Republic under two different arbitral tribunals: CME v. Czech Republic and Lauder v. Czech Republic. While one Tribubal decided that the Czech Republic did not violated the treaty, the other Tribunal decided that Czech Republic did violated the treaty. “The difference in the two cases' outcomes is a prime example of conflicting decisions in international arbitration”.
- There are international law firms making money from fuelling international investment disputes – with devastating social, environmental and budgetary impacts for sovereign states and ordinary people. To read more, see the briefing “Legalised Profiteering? How corporate lawyers are fuelling an investment arbitration boom” published by TNI and CEO in November 2011.
Is there a conflict of interest with investment experts?
* Gus Van Harten, Associate Professor Osgoode Hall Law School - York University, Canada, is the author of the book, Investment Treaty Arbitration and Public Law (OUP, 2007), where he presents a public law critique of investment treaty arbitration and proposes the establishment of an international investment court to ensure independence and accountability in the international adjudication of regulatory disputes between states and investors. Gus Van Harten's Scholarly Papers are accessible from Social Science Research Network website.