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Once Bitten, Twice Shy? Investment Disputes, State Sovereignty, and Change in Treaty Design

Published online by Cambridge University Press:  25 September 2019

Alexander Thompson Open the ORCID record for Alexander Thompson [Opens in a new window] ,
Tomer Broude Open the ORCID record for Tomer Broude [Opens in a new window]  and
Yoram Z. Haftel Open the ORCID record for Yoram Z. Haftel [Opens in a new window]
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Abstract

More than 3,000 international investment agreements (IIAs) provide foreign investors with substantive protections in host states and access to binding investor-state dispute settlement (ISDS). In recent years, states increasingly have sought to change their treaty commitments through the practices of renegotiation and termination, so far affecting about 300 IIAs. The received wisdom is that this development reflects a “backlash” against the regime and an attempt by governments to reclaim sovereignty, consistent with broader antiglobalization trends. Using new data on the degree to which IIA provisions restrict state regulatory space (SRS), we provide the first systematic investigation into the effect of ISDS experiences on state decisions to adjust their treaties. The empirical analysis indicates that exposure to investment claims leads either to the renegotiation of IIAs in the direction of greater SRS or to their termination. This effect varies, however, with the nature of involvement in ISDS and with respect to different treaty provisions.

Keywords

International investment agreementsinternational lawinvestor-state dispute settlementinternational political economyinternational institutionsinstitutional designtreaty renegotiation and termination
Type
Research Note
Information
International Organization , Volume 73 , Issue 4 , Fall 2019 , pp. 859 - 880
Copyright
Copyright © The IO Foundation 2019 

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