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Spring 2022 Reading Group

Sustainable Development and International Investment Arbitration: Issues, Policies and Challenges

Prerequisites None

Exam Type: No Exam

Two international legal regimes seem to be at war with each other – the international investment arbitration regime that protects foreign investors against certain measures taken by host states and the global and national regime for sustainable development whose goals include the elimination of poverty, mitigation of climate change and promotion of gender equality and universal health and education. This Reading Group will analyze this clash and explore reforms that may bring these two regimes into coherence to achieve a global common.

International investment is an important driver for economic development, providing jobs, bringing in technology and critical capital. Accordingly, most countries compete vigorously with each other to promote foreign investments into their domestic economy. There are now over 3,000 bilateral and multilateral investment treaties among over 100 countries that promote foreign investments by providing certain protections and treatment to foreign investments. The principal protections are national treatment, most favored nation treatment, fair and equitable treatment, minimum international law standards, and non-discriminatory expropriation. Many of these treaties also include investor-state dispute systems (“ISDS”) to resolve disputes between the foreign investors and the host countries through binding arbitrations. The number of ISDS cases is ever increasing.

However, ISDS has come under severe criticisms from various quarters. Critics include populists who claim that ISDS favors big foreign investors over domestic companies, environmentalists who charge that foreign investment is favored over the environment, and human rights activists who see foreign investment trumping human rights. Both foreign investors and host states, as well as legal scholars, are dismayed by conflicting arbitral awards without the right of appeal and by the lack of “legitimacy” of ad hoc private arbitrators deciding public policy issues, impinging on sovereign legislative space.

The reading materials in this Reading Group will identify the goals of sustainable development and explore the nature and consequences of foreign investment in host countries, weigh the policy considerations underlying investment treaties, and analyze arbitral decisions that highlight the conflicting interests between those of the foreign investors and those of the host state and its citizens. We will also study and evaluate the various proposed solutions to these issues that are now recently proffered by various countries, institutions and legal scholars in the field.

Robust interactive discussion. No exam; no paper.

Note: This reading group will meet for six two-hour sessions in March and April.