Reforming international investment law and investor-state arbitration is a widespread concern. This is nowhere more manifest than in the heated debates (in Germany and elsewhere) about the EU-Canada Comprehensive Economic and Trade Agreement (CETA) and the Transatlantic Trade and Investment Partnership (TTIP). Should there be investor-state arbitration between economies with well-functioning legal systems? Do we need an appellate mechanism to control arbitral tribunals? Who should serve as arbitrator and what ethical standards govern? And how should the substantive standards of investment protection be formulated in order to safeguard policy space for host states? These are some of the questions debated. At the same time, reforming international investment law is not only on the agendas of contracting parties, it also plays an important role for international organizations, such as the United Nations Conference on Trade and Development (UNCTAD), the Organisation for Economic Co-operation and Development (OECD), or the Southern African Development Community (SADC).
The Need for a Normative Framework for Investment Law Reform
The reform proposals that result from these various initiatives reflect the political pressure international investment law is facing; they also put pressure on states to remedy the discontents with the current system (see my earlier post on EJIL: Talk!). At the same time, the large number of reform proposals currently floated risk fragmenting investment law even further. This can be counterproductive if the aim is to arrive at an investment law regime that is both balanced and predictable. Furthermore, reform proposals themselves reflect underlying political and ideological preferences that may not be globally shared. What is needed therefore is a debate about these preferences and their impact on investment law reform. In other words: we need a broader debate about the normative framework for investment law reform.
As I argue in my Editorial of the latest Special Issue of the Journal of World Investment and Trade (entitled ‘Towards Better BITs? – Making International Investment Law Responsive to Sustainable Development Objectives’), this framework should not be seen only as a matter of (potentially short-lived and changing) economic policies that differ from one country to another. Instead, we should develop a framework for investment law reform on the basis of more fundamental principles, in particular if we are looking for ‘systemic reform’ that makes international investment law acceptable to all states. This requires – as Karl Sauvant and Federico Ortino rightly point out in a recent study – consensus-building processes about underlying assumptions and objectives for investment law reform. Read the rest of this entry…