The so-called “backlash” against investment treaty arbitration has assumed considerable prominence in recent years. 2 Criticisms of the current system come from diverse sources and address a wide range of grievances including an alleged lack of transparency, failure to respect the limits of jurisdiction, inconsistency of decisions and a perceived bias in favour of the investor. However, a common thread to many of these criticisms is the belief that tribunals applying investment treaties have gone too far in protecting the investor at the expense of sovereign discretion. The high profile denunciations of the ICSID Convention by Bolivia, Ecuador and, most recently, Venezuela are seen by some as a manifestation of these concerns.
Nowhere has this tension been more pronounced than in relation to regulatory measures purportedly taken in the interests of public welfare, including health and environmental matters. It is perhaps a telling sign of the zeitgeist that a lecture addressing concerns that investment arbitration is intruding on the legitimate policy space of States recently won a prize determined by vote of members of the arbitration community.3
It is necessary and proper that the arbitration community should take these criticisms seriously. Investment treaty arbitrations often concern areas of considerable political, economic and social importance and rightly attract public scrutiny. There is no doubt that valid public concerns are raised by the potential intrusion of tribunals into sensitive areas of policy. On the other hand, the inclination to be alarmist or reactionary should be resisted. The soul-searching should not become neurosis.