Chapter 4 examines the wave of cases before international courts and tribunals (ICTs) against the most innovative tobacco control measures, focusing in particular on Philip Morris v Uruguay (ICSID) and Australia – Plain Packaging (WTO). It contends that the alleged ineffectiveness of the tobacco control measures was one of the key arguments of the claimants, who supported their claims by submitting a hefty amount of evidence. These evidentiary challenges presented novel and demanding tasks for adjudicators of ICTs. Against this backdrop, this chapter first analyses the nature and features of the evidentiary challenges to tobacco control measures (Section 4.2). Second, it reviews how the ICTs have assessed them, zooming in on the interpretation of flexibilities and the use of different sources of evidence (Section 4.3). The picture that emerges from this chapter is that of unnecessary, manufactured complexity. Shifting the discussions on tobacco control measures from the WHO/FCTC to trade and investment ICTs, the tobacco industry has effectively managed to masterfully use international law to its own advantage. It has reframed the debate, all while starting expensive and lengthy judicial proceedings that have taken almost a decade to be concluded.

Chapter 11 deals with investor-state arbitration. Specifically, it addresses arbitration under the aegis of investment treaties, investment agreements and investment laws. The Washington (ICSID) Convention deals with the resolution of investment disputes. The chapter discusses the background of the Washington Convention and its jurisdictional requirements. Additionally, the chapter discusses the special features of ICSID arbitrations. It also focuses on background information, substantive rights and enforcing rights in bilateral investment treaties containing arbitration provisions. Finally, the chapter discusses issues of reform with respect to ISDS (Investor State Dispute Resolution) and new approaches to ISDS found in recent multinational investment treaties. The chapter also deals with the overlap of treaty-based rights and contract-based rights, third-party funding, and transparency in international investment arbitration.

The chapter examines the nature and the main characteristics of arbitral institutions and describes the main features of institutional arbitration. It then illustrates several categories of institutions, distinguishing them on the basis of various criteria. The chapter further describes the functions performed by arbitral institutions with respect to the specific cases submitted to them, their contribution to the making of arbitration law and their role in promoting the knowledge and culture of arbitration. The chapter further examines the notion of "mandatory institutional rules", i.e. rules that institutions do not accept derogations from, and illustrates the conditions for institutions' liability vis à vis the parties and the scope of their immunity in relation to acts and omissions in the performance of their functions under the rules The author concludes that, despite the importance of the functions carried out by institutions, their role does not entail any involvement in adjudicating disputes. The impact of institutions’ decisions on the outcome of cases is indirect, limited to procedural issues or limited to recommendations to arbitrators.

Drawing on the examples of the ICC and ICSID, this chapter shows how international arbitration has successively embraced a ‘relation-based’ and then a ‘rule-based’ model of governance. Initially, the systems of dispute resolution promoted by the ICC and ICSID displayed the features of the relation-based model. The ICC and ICSID sought to promote self-governance by pooling information concerning traders. A related goal was to encourage repeat business by creating an equitable method of dispute settlement that relied, to a large extent, on the participation of its users. The second step came, however, when self-governance failed to sustain cooperation, leading both the ICC and ICSID to promote a rule-based model of governance where third party-arbitrators and arbitral institutions gained increasing powers over the disputing parties. As a final step, arbitral tribunals evolved towards a fully judicialised system of dispute resolution, causing them to increasingly resemble national courts.

The next battleground involves the admissibility of sovereign bond claims in investment treaty arbitration, which emerges as a complicated issue particularly when a large group of bondholders bring a case as a bundle against the debtor sovereign. To attain an appropriate balance between bondholder protection and respect for orderly debt restructuring, this study has conceptualised investment arbitration proceedings as a supplemental leverage available for bondholders as a group by which a stay of arbitral proceedings is imposed and lifted amid the fair progress of sovereign debt restructuring processes.

The jurisdiction of arbitral tribunals to entertain sovereign bond disputes, which is primarily governed by the definition of investment as provided in applicable investment treaties, is the first stage at which such an appropriate balance is to be explored. This study has found that both the inclusion and exclusion of sovereign bonds as a protected investment reflect the policy decisions of contracting parties, and the ‘negotiated restructuring’ exception may embody a possible balance between bondholder protection and respect for negotiated debt restructuring. In the absence of an explicit reference to sovereign bond instruments, interpretative yardsticks, such as contribution, risk and territoriality as identified either in investment treaties or in the ICSID Convention may afford a balanced consideration taking into account of both the modern development of financial markets and policy decisions regarding the extent to which treaty protection should be provided.

Finally, the checks and balances of sovereign debt restructuring by investment tribunals are also implemented as a matter of the interpretation of the substantive provisions. Given that investment arbitral jurisprudence has incorporated the doctrine of margin of appreciation, the study has concluded that a deferential review of policy decision-making by debtor sovereigns is available and appropriate for arbitral tribunals. Concretely, the arbitral jurisprudence on the provisions providing standards of protection and defence on merits may afford a balancing exercise that enables safeguarding the legitimate policy of debt restructuring without sacrificing bondholder protection.

In recent years, the backlash against the negotiations of a Transatlantic Trade and Investment Partnership (TTIP) between the European Union (EU) and the United States, the conclusion of the Canada-EU Comprehensive Economic and Trade Agreement (CETA), including the proposal on a multilateral investment court, the conclusion of the negotiations of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the United States’ formal withdrawal from the Agreement have given new momentum to the public discussion between treaty protection to foreign investors vis-à-vis the States’ sovereign right to design and implement regulation to achieve economic development.

Recent developments in investment arbitration have reaffirmed that corporations are not only recipients of rights under bilateral investment treaties, but also subjects of international law and can thus bear at least some human rights obligations under international law. Moreover, in a growing number of cases such as Philipp Morris, civil society intervened as third party by relying heavily on human rights arguments, thus enabling affected communities to voice their interests. The present contribution thus investigates the multiple roles of human rights in investment law and arbitration. It argues that human rights play an important role for state parties, foreign investors, and affected communities alike. They are not only conflicting and complementary to investment treaties, but can both expand and restrict the scope of jurisdiction of investment tribunals. For states, investors, and third parties alike human rights can be used as a sword or a shield in international investment law and arbitration. The different roles human rights play in investment law and arbitration very much depend on the underlying concept of human rights.

This chapter considers how Indonesia's policies in relation to investment treaty drafting have changed over time and the extent to which these changes may have been driven by concerns to protect regulatory space.Despite having signed a relatively large number of treaties relative to other Asian States and being an important destination for foreign direct investment, Indonesia has faced few claims and has never been ordered to compensate an investor for violations of an investment treaty.It is also observed that the volume of laws and regulations on the books in Indonesia has increased dramatically since the beginning of the new millennium, with little evidence that the threat of investment treaty claims has affected the extraordinary growth of legislation and regulation comprising Indonesia's "legal jungle".Indonesia has nevertheless sought to modernise its investment treaties, including to add provisions clarifying or limiting the scope of the fair and equitable treatment standard and the circumstances in which a regulatory measure may amount to indirect expropriation.The chapter also briefly considers what Indonesia's treaty practice reveals about its position in relation to reform of Investor-State Dispute Settlement, including its efforts to promote the use of conciliation.

Many countries have entered into international treaties that accord substantive protections to foreign investors. Such treaties often include clauses enabling investors to institute arbitral proceedings on the international level against the host state. A number of arbitral centers have been established around the world to manage investor-state disputes. Chief among these is ICSID, which was created in 1965 under the auspices of the World Bank. Many of the controversies that get arbitrated in these forums are governed by public law, since they raise questions about the way state authorities have exercised their governmental powers. The ability of investors to take a state before an international tribunal is a remarkable example of the tendency to give private persons an active role in international adjudication.

International investment law and arbitration has a long history dating back to the nineteenth century. It has since developed and adapted following the political and societal forces at work both domestically and internationally. The balance between the interests of developing States and developed States and, more fundamentally, between public and private interests have played a key role in this process. It can be seen that the balance struck between these interests at different periods of time explains to a large extent the evolutive features of this field of law. This holds true with regards to the set of rules governing both the relations of foreign investors with the States in which they invest and the settlement of the disputes between them.

To make sense of this evolution and for the purpose of contextualising the analysis of international investment law and arbitration provided in the textbook, Chapter 1 distinguishes between three key stages in its history and analyses the respective societal context and legal features pertaining to each. These stages are: (1) the origin of international investment law and arbitration; (2) its emergence as a proper field of international law; and (3) the rise and then crisis this field of law has known since the 1990s.

The Politis/Lauterpacht project foundered both on academic rejection and (above all) the jealousy of states with regard to their sovereignty. The pragmatic alternative was first described by Kiss in a remarkable doctoral thesis in 1953, prefaced by five incisive words by Bastid, his supervisor: ‘it [abuse of right] should not be taken literally’. In this more modest conception, the prevention of abuse of right (which no one will dispute as an abstract proposition) is recognized as a general policy goal, requiring the hard work of negotiating contextually meaningful criteria as lex specialis. This reasonable retrenchment is informed by the understanding that avoiding abuse of rights on the international plane requires the accommodation of concurrent rights which may naturally generate competing claims. This process does not call for the assignment of moral blame, and cannot succeed as intuitive projections of the phrase ‘abuse of right’.

In the latter half of the twentieth century, there was no tacit or express global agreement to reduce or eliminate dual nationality. In fact, dual nationality has proliferated since the 1970s. While the erosion of coverture globally has, for the most part, eliminated the problems faced by married women with regard to their nationality, little other progress has been made on the subject. In the postwar world, the international legal system shifted away from nationality and protection by states – embracing instead an individualist paradigm. As Eduard Benes said, ``The protection of minorities in the future should consist primarily in the defense of human democratic rights.’’ And so, alongside the Charter of the United Nations was born the Universal Declaration of Human Rights. René Cassin, one of the drafters of the Universal Declaration, like Benes, was dubious and, at times, scornful of the minorities regime. The Universal Declaration as a set of legal norms and principles, thus, should be read in the context of the rejection of group-based rights systems – particularly those dependent upon nationality as a legal status. In its place emerged a system of individualized international rights.

Chapter 4 looks at how Latin America has experienced both the negative effects of the international investment law system and tensions when trying to protect Indigenous peoples’ rights while simultaneously trying to attract foreign investment. Enrique Prieto-Ríos and Daniel Rivas-Ramírez present some prominent investment arbitration cases involving Latin American countries and the rights of Indigenous peoples. They conclude that Indigenous peoples in Latin America are invisible to investment arbitration tribunals because international investment arbitration is a self-contained system that does not look beyond international economic law to Indigenous rights or, more generally, human rights. Current negotiations among Canada, New Zealand and the Pacific Alliance offer an opportunity to consider including a chapter for Indigenous people. The addition of New Zealand and Canada as associate members means that they will have to address the rights of Indigenous peoples in some manner for domestic political reasons.

In Chapter 7, we focus on the domain of foreign direct investment (FDI). We claim that states often refrain from sharing sensitive economic information, even though it can be important to adjudicating investment disputes. We demonstrate that properly designed IOs, such as the International Centre for Settlement of Investment Disputes (ICSID), can ameliorate this problem by receiving and protecting sensitive information. We assess our hypotheses using new data on specific pieces of information shared – along with information withheld – from this institution. Specifically, we pair a measure of redactions in publicly released panel reports with qualitative case evidence. We show that key reforms designed to safeguard sensitive information increased the provision of this information and boosted FDI, especially in areas where sensitive information is particularly common. We conclude the chapter by discussing how solving this pervasive issue puts international investment institutions in tension with the normative goals of transparency and accountability.