Judicial economy and moving bars in international investment arbitration
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Judicial economy and moving bars in international investment arbitration Leslie Johns 1 & Calvin Thrall 2 & Rachel L. Wellhausen 2 # Springer Science+Business Media, LLC, part of Springer Nature 2019
Abstract Historically, international investment law has centered on protecting foreign investors from direct expropriation, but much of modern law includes legal standards that allow investors to win compensation for other kinds of investor-state disputes. A prominent criticism among scholars and policy advocates is that modern legal protections allow investors to pursue increasing numbers of frivolous, low-merit cases. We contend that this claim overlooks the impact of judicial economy and changing legal standards: since foreign investors only need to prove a main legal violation to secure compensation, arbitrators can and do rule only on those standards that are most easily proven, in particular, contemporary legal protections. As a result, measures based on legal claims and rulings cannot provide definitive evidence of merit, and fears about trends in frivolous litigation under international investment law may be overstated. Keywords Investor state dispute settlement . International investment arbitration . International law . International investment agreements . Judicial economy
Electronic supplementary material The online version of this article (https://doi.org/10.1007/s11558-01909364-y) contains supplementary material, which is available to authorized users.
* Rachel L. Wellhausen [email protected] Leslie Johns [email protected] Calvin Thrall [email protected]
1
UCLA, Los Angeles, CA, USA
2
University of Texas at Austin, Austin, TX, USA
Johns L. et al.
1 Introduction In 2016, hundreds of thousands turned out in Germany to protest the Transatlantic Trade and Investment Partnership (TTIP) that was then under negotiation. One divisive issue was international investment arbitration, which The Guardian newspaper summarized as “plans for a special court to hear cases by companies against governments over breaches of regulatory issues.”1 In fact, since the 1990s, thousands of international investment agreements (IIAs) have established a de facto international investment regime whereby foreign investors sue sovereign host states over property rights violations, in ad hoc tribunals via Investor-State Dispute Settlement (ISDS). Modern international investment law and ISDS developed as a means to encourage investment in countries with weak legal systems, allowing foreign investors to avoid potential political bias in domestic courts by using international arbitration instead. Critics wonder why foreign investors in developed democracies with strong rule of law should have access to ISDS, especially when domestic companies in those countries only have access to the domestic legal system. Critics are further concerned about the scope of claims about property rights violations that foreign investors can bring in ISDS. The historical impetus for treatybased investment protection was to stop developing co
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