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.

International economic law is an umbrella term with no fixed meaning. At its broadest, it covers all aspects of economic relations between states, including regulation of the conduct of individuals, corporations and international organisations. A narrower meaning is ‘the segment of public international law directly governing – rather than merely affecting – economic relations between States or international organizations’. The field also embraces governance arrangements, such as the World Bank, International Monetary Fund, and World Trade Organization, as well as the many UN and regional bodies that advance economic development. As space does not permit a discussion of all these aspects, this chapter focuses on two important areas: international trade law and international investment law. International trade law is the body of law, mainly treaty based, that governs the terms on which states permit the trade in goods and services across their borders.

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.