Investment Treaty Arbitration:

Introduction to the Course

Getting to know each other
1. Introduce yourself: your name, where you come from etc.
2. What did you study before joining the course?
3. Have you had any experience with investment law or with arbitration in
general?
4. What do you expect to gain from this course?

My email address:
Outline for Session 1

How is this course delivered?

What are the objectives of this course?
Where can you find the reading and other learning materials and how to use
them?
How and when will you be assessed? How will we prepare for it?
What are we going to cover in the next 6 weeks (course overview)?
What is this course about?
Introductory lecture: What is investment treaty arbitration and where does it
come from?
Delivery of the course
•Block delivery over 6 weeks
•Face to face teaching
•Objectives of the course
•Interaction and active participation: be prepared, pay attention and don’t be
afraid to take part or ask questions
•Reading and learning materials: core text and guided learning materials
(articles, book chapters, blog posts, policy papers, legal instruments and case
law)
 Assessment
Assignment Length Weight Deadline Task How to pass?

Assessment 1 Research 2,500 40% Friday 18th Demonstrate the • Identify and describe the main
essay words August 2023, knowledge of relevant principles of investment law;
by 10 am legal sources, case law • Demonstrate understanding of
and literature related to the economic and political
the particular concept of influences that affect ITA.
investment law

Assessment 2 Case study 3,500 60% Friday 8th Apply relevant legal • Critically apply relevant
words September instruments and your international conventions and/or
2023, by 10 knowledge of instruments to a given scenario to
am investment treaty produce a legally-sound
arbitration to a set of assessment of the case.
facts and provide legal • Demonstrate evidence of
advice independent analysis of primary
sources and research from
secondary sources
What is this course all
about?
 Foreign Investment and Its Protection
What is “Investment”?
Foreign investment as a “catalyst for
economic growth”
Major component of the world
economy: in 2019 global foreign
direct investment reached US$1.39
trillion (source: UNCTAD Investments
Trend Monitor, January 2020)
Types of investment: from major
infrastructure projects to financial
investments
Cross-border investments give rise to
numerous legal, ethical and policy-
related questions and issues
 A typical case scenario
France-Argentina
investment agreement

Investor Host State

HQ Subsidiary
Some Key Issues
•What legal remedies are available to investor?
•What is the legal basis for bringing a case against the State?
•Where can the investor bring the case?
•What are the legal rights and obligations of the investor/State?
•What is the applicable law?
•What are the applicable rules of procedure?

Spoiler: Investment treaty arbitration as the main procedural remedy available

to the foreign investor = direct actions against the host State.
Course Overview
Next: The Investment Treaty Phenomenon

 The History of International Investment Law:

 The Rise: From gunboat diplomacy to BITs and investment treaty arbitration
 The Decline (?): Backlash against investment treaty arbitration

 The Sources of International Investment Law:

 Contemporary foreign investment treaties (BITs, ICSID Convention, NAFTA/UMSCA, EU
investment treaties)
 Customary international law
 General principles of law (Art 38 (1)(c) Statute of International Court of Justice)
 Unilateral statements
 National legislation
 Case law
The History of Investment Law &
Investment Treaty Arbitration

“
“Gunboat diplomacy”: governments acting on
behalf of individuals or corporations by sending a
small contingent of warships to moor off the coast
of the offending State until the reparation was
secured
Example: Venezuela’s default on sovereign debt in
1902
Steps leading to the prohibition of gunboat
diplomacy
1868 Calvo Doctrine: jurisdiction in international investment disputes lies with the country in
which the investment is located;
National legalism: domestic courts as final adjudicators.
Adopted by the First International Conference of American States (1889):
“Foreigners are entitled to enjoy all the civil rights enjoyed by the natives and they shall be
accorded all the benefits of said rights in all that is essential as well as in the form or procedure,
and the legal remedies incident thereto, absolutely in like manner as said natives. A nation has
not, nor recognises in favour to foreigner, any other obligations or responsibilities than those
which in favour of the natives are established in like cases by the constitution and the laws”.
Doctrine incorporated into the ‘treaty of friendship, commerce and navigation’ (FCN treaty)
between Italy and Colombia (1894).
Right of diplomatic protection
1907 Hague Convention on the Peaceful Resolution of International Disputes:
espousal of claim; horizontal inter-State procedure

Arbitral Tribunal

Can you see a

problem with this
Investor concept?
“He [investor] has no remedy of his own, and the state to which he belongs may be unwilling to
take up his case for reasons which have nothing to do with its merits; and even if it is willing to
do so, there may be interminable delays before, if ever, the defendant state can be induced to
let the matter go to arbitration. Delay, besides being unjust to the Claimant, creates difficulties in
securing satisfactory evidence, and also often leads to the original claim being exaggerated
beyond all recognition. It has been suggested that a solution might be found by allowing
individuals access in their own right to some form of international tribunal for the purpose, and if
proper safeguards against merely frivolous or vexatious claims could be devised, that is a
possible reform which deserves to be considered. For the time being, however, the prospect of
states accepting such a change is not very great.” (James L Brierly, 1963)
The Birth of Investment
Treaty Arbitration
Signing of the ICSID Convention at World Bank,
ICSID (Washington Convention) Washington D.C. in 1965
 Creation of a new arbitral forum for resolution
of disputes between investors and States by
including an arbitration clause in their treaties
 Direct recourse open to foreign investors:

Arbitral
Tribunal

Investor
The rise of investment treaty
arbitration: the BIT phenomenon
1959 (1962 in force): first bilateral investment treaty (BIT) between Pakistan and Germany
1967 OECD Draft Convention on the Protection of Foreign Property
“Promotion and protection of investments”
First “diagonal clause” in Switzerland-Sri Lanka BIT (1981)
First case brought by an investor under a BIT decided in 1990 (Asian Agricultural Products Ltd v
Democratic Socialist Republic of Sri Lanka, ICSID Case No. ARB/87/3)
Multilateral regional treaties followed suit: NAFTA (North American Free Trade Agreement),
ASEAN Treaty (Association of Southeast Asian Nations),CAFTA-DR (Dominican Republic-Central
American FTA)
Numbers of ITA cases and investment
treaties
Backlash against ITA
“Their meetings are secret. Their members are
generally unknown. The decisions they reach
need not be fully disclosed. Yet the way a small
number of international tribunals handles
disputes between investors and foreign
governments has led to national laws being
revoked, justice systems questioned and
environmental regulations challenged.”
(Anthony DePalma, Nafta’s Powerful Little Secret: Obscure
Tribunals Settle Disputes, but Go Too Far, Critics Say, New
York Times, March 11, 2001)
TTIP (Transatlantic Trade and Investment
Partnership)

• ISDS (investor-State dispute settlement = investor-State arbitration) among the most contested
• Negotiations failed in 2016
Where is Investment Treaty Arbitration
now?
Reforms of foreign investment protection:
Changing: transparency, independence and
impartiality of arbitrators, third party funding,
etc.
Abandoning: back to national courts?
Replacing with something different?
Investment Court System (ICS), CETA
Redrafting the treaties: limiting the scope of
jurisdiction for ITA (e.g. USMCA)
EU: terminating all intra-EU BITs
Summary
•Key information about the course
•History of investment law and ITA:
Late 19th and early 20th century: Gunboat diplomacy and the Calvo doctrine
1907 Hague Convention: horizontal clause, arbitration
1965 ICSID Convention: diagonal clause – investors can directly sue the host State!
Bilateral Treaty boom in the 80s and 90s
First ITA cases in 90s
Backlash against investor-state dispute settlement: TTIP controversy and ongoing
Different reforms on negotiation tables at the moment
Next session
 International investment law and Public International Law: Links
The Sources of International Investment Law:
 Contemporary foreign investment treaties (BITs, ICSID Convention, NAFTA/UMSCA, EU
investment treaties)
 Customary international law
 General principles of law (Art 38 (1)(c) Statute of International Court of Justice)
 Unilateral statements
 National legislation
 Case law

Contents and scope of investment treaties

Interpretation of investment treaties