In my last post I argued that investment law should be reconceived as a system of public law adjudication in order to react to current criticism. The debate over the role of public law in investment arbitration has resounded in other discussions in this forum. It requires understanding arbitration not only as a dispute settlement mechanism, but also as a form of global governance; understanding arbitrators not only as agents of the parties, but also as trustees of the international community; interpreting investment treaties in light of their global implications; and increasing transparency and third-party participation. In other words: Public law rationales should guide the practice of investor-State arbitration.
This framework has important methodological consequences. Under a public law approach to international investment law, parallel problématiques in domestic public law and in other international legal regimes should be studied in order to resolve investor-State disputes in ways that are acceptable to all stakeholders. Comparative public (administrative, constitutional, and international) law, in particular, should become part of the standard methodology of thinking about and interpreting international investment treaties.
Problems with Classical Methods of Treaty Interpretation
Comparative public law is particularly useful because traditional methods of treaty interpretation and reliance on customary international law, while not irrelevant, face significant limits in international investment law. Although numerous inter-State claims commissions existed in the 19th and early 20th centuries, the jurisprudence of these bodies often concerns issues that are different from problems faced by modern regulatory States. Likewise, traditional methods of treaty interpretation often are too vague to guide the application of international investment treaties. In interpreting, for example, fair and equitable treatment provisions, an interpretation of the ordinary meaning may replace the terms “fair and equitable” with similarly vague and empty phrases such as “just,” “even-handed,” “unbiased,” or “legitimate,” but does not succeed in clarifying the standard’s normative content, nor does it indicate what is required of States in specific circumstances. Read the rest of this entry…