IIL

Question 1

Who are disputes usually between?

Answer 1

States and foreign investors

Question 2

How do BITs tend to define investment?

Answer 2

Very typically BITs will contain a very wide definition of investment.

Question 3

What are the three defining features of international investment law?

Answer 3

(1) its decentralized (2) it emerged organically unlike other fields of law which were purposefully designed (3) it’s highly contested but dynamically stable.

Question 4

When did BITs emerge as model treaties?

Answer 4

In Europe in the 1960s

Question 5

Does a regime need high levels of centralization and global control to survive?

Answer 5

No, the decentralized composition of IIL and its self-organizing qualities demonstrate that high levels of centralization and global control are not indispensable for a regime to thrive.

Question 6

Should we centralise international investment law?

Answer 6

No, more formalized centralization can make experimentation and adaptation more difficult.

Question 7

Have BITs lead to increased foreign investment flows?

Answer 7

Pauwelyn has claimed that the evidence linking BITs to actual increases in foreign investment flows is limited or, at least, contested

Question 8

Why would foreign investors want to circumvent domestic courts?

Answer 8

Parties can pick arbitrators, timescales etc. Arbitral procedures are much quicker than court proceedings. Lack of appeal under ICSID.

Question 9

How did Treaty of Westphalia affect how states could protect their citizens abroad?

Answer 9

Rules limited the power of both host and home states to enable variable degrees of private international economic intercourse albeit mostly with an eye to expanding the power and wealth of states rather than protecting the individual rights of aliens

Question 10

AAPL v Sri Lanka

Answer 10

Small tweaks to international investment law can have a big cumulative effect

Question 11

What was early goal of BITs?

Answer 11

According to Pauwelyn, avoiding backsliding of custom was early goal.

Question 12

What does international investment law grant?

Answer 12

Direct treaty rights to private investors against interventions by states, enforced at the international law level through investor-state arbitration.

Question 13

What changed for foreign investment in the 1930s?

Answer 13

Foreign direct investment as we know it today emerged, especially in the mining and oil sectors. To protect investors who made contracts with states, investor-state arbitration was provided for.

Question 14

Why would states agree to BITs?

Answer 14

The rise in foreign investment flows is partly due to international investment arbitration as it gives foreign investors special protection.

Question 15

Which type of treaties emerged after WW2?

Answer 15

Westphalia-style treaties of friendship, commerce and navigation (FCN treaties)

Question 16

Core difference between FCN treaties and early BITs?

Answer 16

early BITs were de facto one-way streets between developed and developing countries while FCN treaties were reciprocal.

Question 17

How has shift to private standing impacted diplomatic protection?

Answer 17

It’s reduced financial and political costs, as while host states must defend arbitration claim they avoid diplomatic, economic and perhaps military pressure from strong states whose nationals believe they have been injured

Question 18

Which investors benefit from shift to private standing?

Answer 18

It enhances protection for investors whose claim the home state would otherwise not have espoused but weakens claims for investors who don’t have resources to file an ICSID claim

Question 19

What are umbrella clauses?

Answer 19

Clauses which elevate contractual claims to treaty status. It is when host states commit by treaty to comply with investor-state contracts

Question 20

What important right to BITs give foreign investors?

Answer 20

Foreign investors are given right to circumvent domestic courts. Foreign investors are given special standards of protection that are not given to local actors.

Question 21

Pre- Treaty of Westphalia, how did countries protect their citizens abroad?

Answer 21

In state of nature, states used force/threat of force to protect their citizens abroad.

Question 22

When did BITs stop being one-way streets?

Answer 22

The late 1980s when South-South BITs emerged, and mid 1990s when investment chapters were included in FTAs between developed countries

Question 23

What is the hybrid of international investment law composed of?

Answer 23

mixing and combining investment contracts, host state law, and international law

Question 24

What is the defining feature of IIL?

Answer 24

private standing to invoke treaty breach

Question 25

What is a Clavo clause?

Answer 25

A clause which reserved disputes to the exclusive jurisdiction of local courts. They were neutralised by AAPL.

Question 26

When can a home state no longer exercise diplomatic protection?

Answer 26

• as soon as consent is given to arbitrate a dispute at ICSID
• in a contract, once its concluded
• under a BIT, once the investor consents to arbitration in its notice of arbitration

Question 27

What is arbitration without privity?

Answer 27

When private investors bring direct claims against host states without a contract between the foreign investor and the state. This now makes up majority of foreign investment disputes.

Question 28

What is commercial-style arbitration?

Answer 28

Party-appointed arbitrators, confidential proceedings, quick and final decisions without appeal, focus on money damages rather than compliance (confirmed by ICSID)

Question 29

How did AAPL further private standing for treaty breaches?

Answer 29

• (1) acts which would be non-arbitrable under many domestic arbitration laws could breach treaties (2) tribunals were now addressing treaty (not contract) breaches (3) Calvo clauses were neutralized.

Question 30

What is the ICSID?

Answer 30

The International Centre for Settlement of Investment Disputes. Most arbitration proceedings are conducted under the aegis of ICSID. It’s an arbitral institution.

Question 31

Why do BITs include dispute settlement mechanisms?

Answer 31

Foreign investors might be disadvantaged by having to use domestic courts. Having a specific dispute settlement mechanism removes arguments over how disputes will be resolved and leads to clarity. International arbitration is impartial and so fair to both parties- if they can resolve disputes amicably, the agreement is less likely to fall apart.

Question 32

What’s AAPL?

Answer 32

AAPL v Sri Lanka, a revolutionary case.