Advanced

Is the critique against the current system of Investment Treaty Arbitration legitimate? A study focusing on the financial crisis in Argentina

Tornakull, Cornelia LU (2012) JURM02 20122
Department of Law
Abstract (Swedish)
Detta examensarbete behandlar olika aspekter av internationell investeringsrätt. Bilaterala eller regionala investeringsavtal tillsammans med internationell sedvanerätt reglerar mestadels rättsområdet. Sedvanerätten är inte harmoniserad på området vilket gör den osäker för investerare. För att främja investeringar och göra investeringar säkrare började länder förhandla bilaterala investeringsavtal, BITs, i slutet av 1950-talet. Genom BITs har det blivit möjligt för investerare att väcka talan direkt mot en stat för avtalsbrott. Tvisten kommer i många fall att avgöras genom skiljedom, t.ex. av ICSID. Skiljedom av annan institution än ICSID kommer sannolikt att vara konfidentiell.

Det har riktats en hel del kritik mot... (More)
Detta examensarbete behandlar olika aspekter av internationell investeringsrätt. Bilaterala eller regionala investeringsavtal tillsammans med internationell sedvanerätt reglerar mestadels rättsområdet. Sedvanerätten är inte harmoniserad på området vilket gör den osäker för investerare. För att främja investeringar och göra investeringar säkrare började länder förhandla bilaterala investeringsavtal, BITs, i slutet av 1950-talet. Genom BITs har det blivit möjligt för investerare att väcka talan direkt mot en stat för avtalsbrott. Tvisten kommer i många fall att avgöras genom skiljedom, t.ex. av ICSID. Skiljedom av annan institution än ICSID kommer sannolikt att vara konfidentiell.

Det har riktats en hel del kritik mot skiljedomsförfarandet i investeringsavtalen. Gus Van Harten är en av de mest kritiserande författarna. Han hävdar att domstolar, inte skiljedomare, ska lösa tvister som kan påverka allmänheten. Skiljedomsförfarandet i BIT uppfyller inte grundläggande funktioner för tvistlösning, eftersom den brister i ansvarstagande, öppenhet, samstämmighet och oberoende enligt van Harten. Sättet att lösa investeringstvister genom skiljedom är olikt något annat system inom internationell rätt mycket på grund av att systemet ger privata aktörer mycket makt. Van Harten hävdar vidare att det finns en partiskhet till förmån för investerarna. Detta på grund av skiljemännens brist på ämbetsinnehav, vilket gör dem beroende av framtida fall. Då det enbart är investeraren som kan stämma värdlandet dömer skiljedomare till fördel för investeraren för att säkra framtida uppdrag. Han säger också att systemet kan innebära påfrestningar på ekonomin i värdländerna på grund av systemets höga skadestånd och starka verkställbarhet. Systemet möjliggör även för forum shopping enligt van Harten.

Det finns många författare och jurister som är positiva till systemet som hävdar att van Harten saknar bevis för vad han påstår. De menar att det fungerar bra, åtminstone om man jämför med det tidigare systemet med diplomatiskt skydd. Vid användning av diplomatiskt skydd är investerarna beroende av hemlandet för att väcka talan mot ett värdland om detta begår brott mot det bilaterala investeringsavtalet. Partiskheten till förmån för investerare som van Harten påstår visas inte genom existerande skiljedomar enligt hans kritiker.

För att kunna utvärdera vems argument som är korrekt har en fallstudie av det land med flest skiljedomar emot sig, Argentina, genomförts. Studien visar att van Harten har rätt i mycket av sin kritik, det han påstår är dock överdrivet. Systemet med skiljedomar inom investeringsrätten är fortfarande ungt och utvecklas ständigt. Det har många brister, men är bättre än de förra. Systemet fungerar för bra för att ersättas med ett nytt, ett byte skulle riskera en minskning av utländska investeringar då skyddet skulle vara osäkert. (Less)
Abstract
This thesis deals with various aspects of international investment law. Bilateral or regional investment treaties together with international customary law mostly govern international investment law. The area of customary law is not harmonized leaving it uncertain and unsafe for investors. Countries therefore started to negotiate bilateral investment treaties, BITs, in the late 1950´s as a way of promoting investments and making them more secure.Through the BITs it has become possible for investors to directly file a claim against the government of a host state for a breach of a BIT. The dispute will in many cases be settled though arbitration, e.g. by ICSID. Arbitration through any other institute than ICSID will most likely be... (More)
This thesis deals with various aspects of international investment law. Bilateral or regional investment treaties together with international customary law mostly govern international investment law. The area of customary law is not harmonized leaving it uncertain and unsafe for investors. Countries therefore started to negotiate bilateral investment treaties, BITs, in the late 1950´s as a way of promoting investments and making them more secure.Through the BITs it has become possible for investors to directly file a claim against the government of a host state for a breach of a BIT. The dispute will in many cases be settled though arbitration, e.g. by ICSID. Arbitration through any other institute than ICSID will most likely be confidential.

There has been a lot of critique against the system of investment treaty arbitration. Gus van Harten is one of the most criticising authors within the area of law. He claims that courts, not arbitrators, should solve regulatory disputes that may affect the public. The arbitration process under BITs cannot fulfil core features of dispute settlement since it lacks in accountability, openness, coherence and independence. The way of settling disputes through investment treaty arbitration is unlike any other system of international law, since it gives a private actor a lot of power. Van Harten further claims that there is a bias in favour of the investors. This due to the arbitrator’s lack of tenure, which makes them dependent on prospective claims, claims that only the investors can bring. He also means that the system can put a strain on the host state economies due to its high awards and strong enforceability. It is also open for forum shopping according to van Harten.

There are many authors and legal practitioners that are in favour of the system. Some of them claim that van Harten is lacking evidence for what he is claiming. They mean that the system functions well, at least if you compare it to the previous system of diplomatic protection. When using diplomatic protection the investors where dependent on the home state to raise a claim against a host state for committing misconduct against the investor. The claimed bias in favour of investor by van Harten does not show in arbitral awards according to his critics.

To be able to evaluate whose arguments are the correct ones a case study on the country involved in most investment treaty arbitration, Argentina was conducted. The study shows that van Harten has got a point in a lot of his critique; however what he claims is exaggerated. The system of investment treaty arbitration is still young and developing with numerous flaws. Nonetheless it is better then the last one, and functions too well to be removed. Removing it would risk a decrease in foreign investments due to an uncertainty regarding the protection. (Less)
Please use this url to cite or link to this publication:
author
Tornakull, Cornelia LU
supervisor
organization
course
JURM02 20122
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Investment law, Investment treaty arbitration
language
English
id
3350126
date added to LUP
2013-01-31 08:38:44
date last changed
2013-01-31 08:38:44
@misc{3350126,
  abstract     = {This thesis deals with various aspects of international investment law. Bilateral or regional investment treaties together with international customary law mostly govern international investment law. The area of customary law is not harmonized leaving it uncertain and unsafe for investors. Countries therefore started to negotiate bilateral investment treaties, BITs, in the late 1950´s as a way of promoting investments and making them more secure.Through the BITs it has become possible for investors to directly file a claim against the government of a host state for a breach of a BIT. The dispute will in many cases be settled though arbitration, e.g. by ICSID. Arbitration through any other institute than ICSID will most likely be confidential. 

There has been a lot of critique against the system of investment treaty arbitration. Gus van Harten is one of the most criticising authors within the area of law. He claims that courts, not arbitrators, should solve regulatory disputes that may affect the public. The arbitration process under BITs cannot fulfil core features of dispute settlement since it lacks in accountability, openness, coherence and independence. The way of settling disputes through investment treaty arbitration is unlike any other system of international law, since it gives a private actor a lot of power. Van Harten further claims that there is a bias in favour of the investors. This due to the arbitrator’s lack of tenure, which makes them dependent on prospective claims, claims that only the investors can bring. He also means that the system can put a strain on the host state economies due to its high awards and strong enforceability. It is also open for forum shopping according to van Harten. 

There are many authors and legal practitioners that are in favour of the system. Some of them claim that van Harten is lacking evidence for what he is claiming. They mean that the system functions well, at least if you compare it to the previous system of diplomatic protection. When using diplomatic protection the investors where dependent on the home state to raise a claim against a host state for committing misconduct against the investor. The claimed bias in favour of investor by van Harten does not show in arbitral awards according to his critics. 

To be able to evaluate whose arguments are the correct ones a case study on the country involved in most investment treaty arbitration, Argentina was conducted. The study shows that van Harten has got a point in a lot of his critique; however what he claims is exaggerated. The system of investment treaty arbitration is still young and developing with numerous flaws. Nonetheless it is better then the last one, and functions too well to be removed. Removing it would risk a decrease in foreign investments due to an uncertainty regarding the protection.},
  author       = {Tornakull, Cornelia},
  keyword      = {Investment law,Investment treaty arbitration},
  language     = {eng},
  note         = {Student Paper},
  title        = {Is the critique against the current system of Investment Treaty Arbitration legitimate? A study focusing on the financial crisis in Argentina},
  year         = {2012},
}