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.

Having clarified how capital movements are regulated at the multilateral level and explained how the multilateral framework translates to the bilateral or regional levels through FTAs, we now turn to the third level of regulation made available in an international law context – international investment agreements (IIAs). IIAs are critical to capital movements and capital flows in that they create a specific legal framework with substantive provisions aimed at protecting and promoting cross-border investors and investment. Like the previous chapter, this chapter refers extensively to the four representative comprehensive treaties – CPTPP, USMCA, RCEP and CETA. Where applicable, reference is made to other agreements, and in particular agreements negotiated by developing countries. The main conclusion of the chapter is that modern IIAs contain a wide range of safeguards and limitations which effectively allow host governments to put CFMs into place in circumstances of financial instability and financial duress. Moreover, the chapter also details how arbitral tribunals have narrowly interpreted state obligations and given substantial deference to host states when applying exceptions. That being said, treaties are drafted differently and the language, terms and choices made in drafting a treaty can significantly affect obligations and outcomes.

The analysis in the substantive chapters of the book have led to the following six observations and concluding remarks: (1) the IMF has regulatory authority over capital controls; (2) The WTO is not an impediment to the implementation of CFMs; (3) modern FTAs and IIAs are not an impediment to the implementation of CFMs; (4) Investment Tribunals and WTO Dispute Settlement Panels have interpreted the prudential exception broadly, fairly and reasonably; (5) a CFM taken in accordance with IMF recommendations or guidance is unlikely to conflict with modern trade and investment agreements; and (6) there is a potential convergence between WTO and international investment law. A recurring theme is that the risk of IEL instruments constraining governments has been overstated. The main risk lies not so much in IEL agreements per se but in those agreements that do not incorporate modern drafting techniques which limit or condition State obligations or provide for a wide range of safeguards to ensure that legitimate CFMs do not run afoul of treaty obligations.

This chapter looks at the current attacks on international economic law with respect to trade and investment. It considers the trajectory of these attacks and the consequences of a complete dismantling of this body of international law.

This chapter considers the main forms of investment treaties, exploring some leading examples such as the Energy Charter Treaty, the United States–Mexico–Canada Agreement and the Comprehensive Trans-Pacific Partnership. It also discusses the role of some global organizations in facilitating international investment, notably the World Trade Organization and the World Bank.

This chapter introduces the concept of foreign direct investment, tracing its history and economic justifications. The chapter goes on to explain the sources of international investment law, the most significant of which are treaties.

When an owner of capital invests in their ‘home’ state, this investment is governed by national law. But when an investor exports their capital, a whole extra body of law supplements, and sometimes supplants, these domestic arrangements. This is international investment law (IIL): the vast body of investment agreements; arbitral decisions; and other forms of hard and soft law that protect the rights of foreign investors in ‘host’ states. Flynn and Lawrence critique IIL from a material constitutionalist perspective, revealing an order bound up with the history of imperialist expansion; the inscription of the rights of the investor class as general and international; and a desire to protect capital and markets from state interference. IIL is currently undergoing a ‘constitutional crisis’, but though reforms may improve certain serious flaws, material constitutionalist analysis reveals inherent features that cannot be reformed without fundamental reconfiguration of the material relations between international capital and state constitutional orders.

This chapter assesses international law-based possibilities to hold corporations accountable for their human rights impacts.The negotiations by the UN Human Rights Council on a binding international treaty on BHR is the most significant development in this regard. This chapter takes a detailed look at the idea and prospect of such a binding legal framework. Before doing so, some other potential accountability mechanisms in the realm of international law are assessed – namely, international investment law and international arbitration. The chapter takes a thorough look at international investment agreements and bilateral investment treaties and how these instruments could be improved to account for human rights. It also explores arbitration as an instrument to deal with BHR disputes. Finally, it briefly touches on the idea of a world court of human rights.

Since its first bilateral investment treaty (BIT) with Sweden in 1982, China has signed BITs with more than 130 countries.In the earlier stage, China's BITs mainly follow the template or style as set by western countries.Yet with the development of economic growth, China is more willing to establish its own discourse.The Belt and Road Initiative, and the separate BIT negotiations with the US and the EU, reveal China’s proactive approach to participate in global economic governance.The experience in dealing with the cases filed by foreign investors against China has also enabled China to review its BIT policy and practice.Against this background, this chapter presents a stocktake of China’s practice in international investment law, and tries to find whether China could establish its discourse in this regime.By revealing the approach of utilitarianism and flexibility that underpins China’s BITs negotiations, it concludes that China is not simply copying or adopting in a wholesale manner the treaty texts presented by the EU or the US, but is making the necessary adjustments to craft agreements that take into account its own political system and economic realities.

States, international organizations and private businesses have distinct but complementary duties concerning human rights. States are obligated to respect, protect and fulfill human rights within their jurisdiction. International organizations are obligated to ensure that their activities, suc as financing infrastructure or peacekeeping in conflict zones, conform with (and in some cases protect) human rights. Business actors may not have the same responsibility as states or international organizations. For decades we have seen an increase in the number and in the development of frameworks that encourage economic globalization. We have also observed a similar path in the expansion of the international law frameworks that protect human rights, including indigenous human rights. Despite the growth of the two fields, both have developed separately, almost independently, although the two are fundamental to international law and a reflection of the world, especially after World War II (WWII). Frameworks regulating economic globalization have invariably lacked mechanisms of accountability on human rights.

This chapter assesses whether the EU’s recent empowerment to conclude international investment agreements has made these agreements more development-friendly. Focusing on the EU’s choice of partner countries, substantive protection and treatment provisions as well as procedural provisions on investor-to-state dispute settlement, the chapter finds that the EU’s international investment agreements (IIAs) have indeed become more development-friendly in comparison to the international investment agreements of EU member states. They strengthen state interests vis-à-vis investor interests. The chapter tests whether these policy changes are due to European law obligations applying to EU international investment agreements, increased politicisation of IIA policy-making in the context of EU’s Common Commercial Policy, or the aggregation of diverse member state preferences into a common European approach. It finds that politicisation and aggregation of member state preferences primarily fuelled policy changes while legal obligations played no significant role. From a theoretical perspective, the chapter lends support to rational choice institutionalism, which suggest that institutional changes affect policy substance.

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.

This chapter investigates the overlapping nature of investment governance, in which BITs and PTAs encode common commitments toward the protection and liberalization of investment. It advances the scholarship on regime complexity, in which non-hierarchical and overlapping institutions regulate investment. The study examines common institutional design across PTAs and BITS, while recognizing that the broader investment regime complex includes legal precedents set through dispute settlement at the WTO and ICSID. Utilizing an original data set of investment provisions in PTAs and for BITS data provided by UNCTAD’s International Investment Agreements (IIA) project, the analysis examines how these two international agreements have co-evolved in terms of institutional design in guiding principles, scope, and enforcement. The hypothesis is that these two types of agreements are largely complementary, where PTAs emphasize liberalization of investment in tandem with other trade-related provisions, and BITs emphasize the protection of investments and investor rights. The results of principal component analysis of provisions in PTAs and BITs support the hypothesis of complementarity. Additional analyses also show that investment provisions in PTAs draw heavily from those of BITs, but BITs draw less from PTAs.

After three decades of companionship, investment protection rules and trade agreements are heading for a divorce. Investment chapters have been included in preferential trade and investment agreements (PTIAs) since the late 1980s, but they have recently come under fire. The U.S. administration considers privately enforceable investment protection obligations as an unwanted incentive to offshore American jobs, and the EU Commission seeks to omit them to benefit from the accelerated ratification process reserved for trade agreements that fall under exclusive EU competency. After decades of coexistence, investment protection rules and trade agreements are thus likely to go their separate ways. This chapter empirically evaluates the impact of their thirty-year companionship to assess the implications of their looming split. It finds that investment chapters remain little more than a bilateral investment treaty plugged into a trade agreement. PTIAs and self-standing investment treaties do not vary systematically in investment protection content, and the wider trade agreement context does little to affect the interpretation of investment rules in PTIAs. In spite of their coexistence in the same treaty, there is thus little evidence of cross-fertilization between trade and investment protection rules in PTIAs. This absence of normative convergence suggests that their looming split merely formalizes the continuous normative distinction between trade liberalization and investment protection.