Originally from Investment Treaty Arbitration and International Law Volume 15

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INTRODUCTION

In recent years, States have modified their model Bilateral Investment Treaties (Model BITs), to reflect new concerns and developments found in the case law in investor-State dispute settlement (ISDS). Since the 1980s several States adopted their own Model BITs, which have been updated with the practice of tribunals in investment arbitration. Between 2015 and 2021, States have incorporated several innovations in their Model BITs, intending to rebalance older provisions and tackle some of the criticism to ISDS. Such innovations have ranged from more detailed explanations of the standards of protection afforded to investors, to additional procedural requirements for investors to access arbitration and a wider regulatory margin for States.

Some have questioned whether newer Model BITs are better or worse. The answer will depend on the specific aspects where the attention is placed. Is it better that older model BITs offered additional advantages as incentives for Foreign Direct Investment (FDI)? Will a narrower protection for foreign investors be considered as a worse form of protection? Or would it be better to have a clear definition of the scope of the States’ regulatory autonomy and provide for duties of investors in the text of the treaty?

This paper argues that older Model BITs, like those concluded in the 1990s, offered advantages, promoting FDI and wider protection for foreign investors resulting in confidence and legal stability in the host State. States are not obliged to enter into BITs and conclude them because they find them useful to provide certain basic assurances to foreign investors.