Originally from World Arbitration and Mediation Review

A New Framework for International Investment: Changes in the U.S.
Model Bilateral Investment Treaty
by
Henry Weisburg, Daniel Schimmel & Christopher M. Ryan
Sherman & Sterling LLP
The proliferation of bilateral investment treaties (BITs) is one of
the most important developments in international law over the last fifty
years. These treaties facilitate the flow of capital, promote greater
economic cooperation, and create a stable framework for international
investments. Historically, one of the prominent features of BITs has been
the uniformity of their terms. Although there are differences in language
among various BITs, their substantive provisions are essentially
identical.
The United States recently adopted a new model BIT—the “Treaty
Between the Government of the United States of America and the
Government of [Country] Concerning the Encouragement and Reciprocal
Protection of Investment” (the New Model BIT)—which substantially
modifies the scope of protections provided to international investors and
alters the manner in which investment disputes will be resolved. In
October 2004, the United States brought its New Model BIT into effect
when it entered into a bilateral treaty with Uruguay. As the United States
continues to conclude similar treaties with sovereign States, the new
provisions contained in the New Model BIT will have increasing influence
on the manner in which investment disputes are resolved.
The New Model BIT differs from the 1994 model BIT in
numerous respects. This commentary discusses selected issues involving
the dispute resolution mechanism provided for in the New Model BIT,
which is designed to provide greater transparency, openness, and
predictability in the resolution of international investment disputes: (1) the
New Model BIT does not contain a “fork in the road” provision; (2) it sets
forth a limitations period; and (3) it provides for a more open and
transparent arbitration process in which the arbitrators have the right to
consider amicus submissions and the public has access to the hearings, the
parties’ submissions, and the arbitrators’ awards, decisions, and orders.
1. Modifications to the “Fork in the Road” Provision
Bilateral investment treaties represent an exception to the general
principle according to which private parties have no direct recourse
against a sovereign State for violations of international law. Traditionally,
private parties have been dependent upon their government to espouse