In the last 25 years the number of investor-state arbitrations has increased
dramatically. One of the most striking characteristics of the hundreds of resulting

awards is their frequent reliance on the decisions of earlier tribunals to identify

rules of international law applicable to foreign investment disputes. This practice

has spawned an extensive critical commentary as to whether an international

tribunal is permitted or, conversely, obligated to rely on such precedents as

authority for its rulings.1 Several of the tribunals themselves have prefaced their

citations with theoretical musings on this issue.2

 

 

So prevalent is the citation of arbitral precedents in recent awards that it has

become impossible to discuss the rules of public international law applicable to

the treatment of foreign investments – what is sometimes called “international

investment law”3 – except by reference to the terms of the awards. The number

and complexity of such awards can, moreover, only be expected to increase, and

future tribunals will undoubtedly continue to refer to the rulings of their

predecessors as a principal source for rules of international law to apply to

investor-state disputes. This article considers why investor-state tribunals cite the

decisions of their predecessors so frequently and the implications of this practice

for the development of international investment law.

 

 

 

A. Citation of Precedents by International Arbitral Tribunals: A Long-Standing

 

Citation of precedents from earlier tribunals in support of arbitral awards

concerning the treatment of foreign nationals and foreign investment is not new.

In the 19th and early 20th centuries, dozens of international arbitration tribunals

ruled on state claims based on alleged mistreatment of their nationals, most often to

evaluate, under the rubrics of “denial of justice” or failure to observe a “minimum

standard of treatment,”4 a host state’s injury to individual foreign nationals or

interference with foreign-owned property or investments. These early tribunals often

cited the decisions of their predecessors in support of their own rulings.5