Originally from Investment Treaty Arbitration and International Law Volume 16

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I. INTRODUCTION

U.S. bilateral investment treaties (BITs) have been around since the 1980s and the concept of investment protection far longer. The North American Free Trade Agreement (NAFTA)  signed by the United States, Mexico and Canada in 1992 (with entry into force in 1994) embodies many of those same protections and, like BITs, provides for enforcement of such protections through investor-state arbitration. Yet the investor-state cases brought under NAFTA quickly ushered in resistance and handwringing over globalization and its supposed chilling effects on state sovereignty.  For the United States, at least, such worries over the knock-on effects of investor-state dispute settlement (ISDS) have not come to fruition in the intervening 25 years—it has never lost a NAFTA case. And it could be that it never will, as the Agreement between the United States of America, the United Mexican States, and Canada (USMCA)  that replaced NAFTA on July 1, 2020, permits a far narrower scope for ISDS. Moreover, the period to bring legacy claims under NAFTA will soon expire on July 1, 2023. 

As the final days of that landmark agreement wane, two legacy NAFTA cases remain pending against the United States. Neither is a slam dunk for the Claimant investors, but each case presents significant risk to the United States. An innovative case filed by victims of the massive Stanford Ponzi scheme seeks to challenge a lack of timely enforcement by government regulators to prevent fraud on investors. The case over the infamous Keystone XL Pipeline saga threatens the United States with a mega-award of more than $15 billion in damages as a result of the revocation of the pipeline permit on environmental (and, some argue, political) grounds. This paper examines whether a break in the U.S. winning streak in these cases would result in a change to U.S. BIT policy—and concludes that it would not.