Originally from Investment Treaty Arbitration and International Law - Volume 10

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I.    INTRODUCTION

A proper scope of investment treaty arbitration is among critical issues in the contemporary discourse concerning the propriety, utility and viability of the investor-state dispute settlement regime.  The question posed is whether over the past ten years the notions of “investor” and “investment” have expanded in some abusive manner beyond objective intentions discernable in these notions, or whether from a system-wide perspective there has been “a movement in the right direction.”   To address this question, the present paper highlights what now seems to be most relevant in the contributions at the Juris conferences that discussed problems related to interpretation of terms “investment” and “investor”, under applicable treaties and in actual cases.  It then projects these problems onto the future dispute resolution under newer investment treaties, including the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP).

The past ten years of investor-state arbitration can be characterized as a mixture of incremental positive changes and setbacks.  This includes interpretation in actual cases of the terms “investment” and “investor” under the treaties in force, and also the assessment of the results of the drafting seen in the recently released texts or draft texts of relevant multilateral treaties.  Overall, it is not possible to conclude that there has been a system-wide movement “in the right direction”.  Perceived gains from one tribunal’s reasoning and determination are often overshadowed in a decision of another tribunal.  Improvements to some of the provisions in a treaty draft are negated by the same treaty’s another provision, which is not only an improvement but a step backwards.

There are still too many decisions of tribunals endorsing expansive interpretations of the fundamental terms of “investment” and “investor”.  A number of tribunals keep falling back on a doubtful notion that investment treaties are there solely to provide broad legal protection to foreign investors.  Still far too prevalent remains the notion that tribunal’s mission is to ensure that a claim can be heard and resolved on the merits in the forum, and that this is ultimately more important than having due regard for technicalities that call into question whether the claim is qualified for a resolution in the forum.  When it comes to interpretations in actual decisions, there is not enough willingness to recognize the boundaries of the terms “investment” and “investor”, especially where they are not narrowly defined in the text of the treaty.  On the contrary, there is a willingness to allow and validate broad interpretation of these terms.