The emerging system of investment law based on international treaties has

attracted much attention from academics, civil society, policymakers, and

practitioners alike. The system’s basic features are simple to highlight: (a) the

system is based on a network of more than 3,000 international treaties (concluded

mostly at the bilateral level); (b) investment treaties embody a few, open-ended

norms as the relevant legal disciplines imposed on States for the benefit of foreign

investors; and (c) ad hoc international arbitration, modelled along the lines of

commercial arbitration, is the chosen dispute settlement mechanism.

 

The starting point of this article is the realization that it is crucial to properly

understand the core nature of the investment treaty system. As nicely mapped out

by Anthea Roberts, there are several ways according to which one can understand

the investment treaty system, including under public or private international law

paradigms, or under public law, international trade law or international human

rights paradigms.1 At a more fundamental level, it seems that the debate about the

nature of the system revolves around the following two key values: granting

maximum protection to foreign investors and safeguarding host States’ ability to

regulate in the public interest. Characterizing an award, a treaty provision, an

arbitrator, a new policy, or an academic article as “pro-investor” or “pro-State” is

a common, almost instinctive, exercise in the investment community. In their

recent joint Statement on Shared Principles for International Investment, the

European Union (“EU”) and the United States have expressly acknowledged the

challenge facing the investment treaty system (albeit without giving any solution).

They recognized that “governments should provide the highest possible level of

legal certainty and protection against discriminatory, arbitrary, and otherwise

unfair or harmful treatment to all investors and investments in their territories,”

accompanied by the conviction that “governments can fully implement these

principles while still preserving the authority to adopt and maintain measures

necessary to regulate in the public interest to pursue certain public policies.”2

 

In order to move away from the simplistic, binary “pro-investor v. pro-State”

dichotomy and put forward instead a methodology (or mindset) capable of

properly balancing investment protection and the sovereign right to regulate, the