Specific Options to Strengthen Investor-State Dispute Settlement - ARIA - Vol. 33, No. 3
Chartered Arbitrator, President of the European Court of Arbitration. Strasbourg. He expresses here his own opinion and not the official views of the European Court of Arbitration.
Originally from the American Review of International Arbitration
For some time, there has been a great discussion on the present and future of international investment law. Some of the basic issues of the discussion deserve to be revisited.
I. THE FUNDAMENTAL DIFFERENCE BETWEEN COMMERCIAL AND INVESTMENT ARBITRATION
As a starting point of this discussion, there seems to be a large consensus that the main difference between commercial and investment arbitration is that whereas the former’s applicable substantive law is the law of contract and of tort, in investment arbitration commitments that arise from an international treaty are governed by public international law.
A. Further Major Differences
First, while commercial arbitration is the result of an agreement between the parties, investment disputes are generally the result of a bilateral or multilateral international treaty (“BIT” or “MIT”, respectively) between the State in which an investment is made (the “Host State”) and the State of an investor (the “Home State”). The election of the investor to refer disputes to the arbitration mechanism provided for by the relevant treaty gives rise to an agreement between the Host State and the investor. Investment treaties place the Host State not in front of another State, but in front of a foreign private entity which—directly or through its stakeholders—is not, like a domestic investor, one of its citizens.
B. The Unhappiness Expressed by Some Host States
This position is not always welcome by the Host State since it is accustomed to deal with its citizens from a position of power.