Book Review: Substantive Law in Investment Treaty Arbitration - ARIA Vol. 24, No. 1, 2013
Originally from American Review of International Arbitration - ARIA
The question of applicable law is one of the most difficult and under-theorized in international investment arbitration. Arbitrators in investment disputes are faced with multiple potentially applicable laws – the investment treaty itself, customary international law, general principles of law, and municipal law are the most common sources – yet how these laws intersect, and when and where each takes priority, is less than clear. In many awards the relationship between laws that could be applicable to a dispute is subject to the discernment or divination of the reader. Monique Sasson took on the difficult task of formulating a theory to govern the relationship between municipal and international law in the area of investment arbitration. Using the venerable principle of renvoi, she has formulated a rigorous and coherent approach to the intersection of municipal law and international law.
Ms. Sasson’s introduction establishes the underlying problematique – municipal law plays an inevitable role in international investment law because that law “does not regulate the right it protects.” Matters such as contracts, property rights, and shareholders’ rights are not regulated under international law; whether or not there is a protected right in any given situation requires a renvoi to municipal law. International law may provide a standard of protection, such as the obligation to afford fair and equitable treatment or the obligation not to engage in illegal expropriation. Yet whether there is an expropriable property right will depend on municipal law. Thus, in the Barcelona Traction case the question was whether Spain owed any obligation to Belgium such that Belgium could bring a diplomatic protection claim. The answer to that question depended on whether Belgian nationals suffered an injury to a right, as opposed to injury to an interest – a question dependent on municipal law. One of the many delights of the book is Ms. Sasson’s thorough analysis of the Barcelona Traction case, including many of the separate opinions.