Originally from Investor-State Arbitration--Lessons for Asia

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It is perhaps restating the obvious to say that public international law plays an important role in investment arbitration. When states and state entities are involved in arbitrations, public international law, by definition, plays a role. The importance of it will of course vary depending on the facts of the individual case. When, for example, expropriation and/or expropriatory measures are the focus of a dispute, the rules and principles of international law relating to the protection of foreign investment will automatically play a central role. Likewise, in arbitrations based on treaties – e.g. bilateral investment protection treaties (BITS) or other investment treaties – the rules and principles of international law relating to the interpretation of treaties will often be decisive. In this context, the Vienna Convention on the Law of Treaties is of primary importance.

There is yet another aspect of public international law which is crucially important in investment arbitration, viz., the law of state responsibility. It is generally accepted that the rules on state responsibility form part of customary international law. The law of state responsibility is, to a large part, reflected in the work of the International Law Commission (ILC) of the United Nations. At its fifty-third session in 2001, the ILC adopted its final version of the ILC Articles on Responsibility of states for Internationally Wrongful Acts (hereinafter the “ILC Articles”).1 Commentators seem to agree that this is currently the most authoritative document on the law of state responsibility. The ILC Articles are intended to cover all aspects of state responsibility under international law. Not all aspects thereof are, however, of immediate importance to investment arbitration.