Mass Procedures as a Form of "Regulatory Arbitration"- Abaclat V. Argentine Republic and the International Investment Regime

By Strong, S. I. | Journal of Corporation Law, Winter 2013 | Go to article overview

Mass Procedures as a Form of "Regulatory Arbitration"- Abaclat V. Argentine Republic and the International Investment Regime


Strong, S. I., Journal of Corporation Law


V. Regulatory Arbitration in the Investment Context

Before considering the extent to which Abaclat v. Argentine Republic constitutes a form of regulatory arbitration, it is necessary to describe briefly the current debate regarding the extent to which the international investment regime constitutes a form of global regulation. (270) Differences of opinion appear to exist at both the practical and theoretical levels.

Practically speaking, there seems to be some disagreement about the extent to which international investment agreements are substantively similar. While commentators universally agree that there is a significant number of instruments concerning international investment, (271) people frame the content of these instruments differently. For example, some observers claim that the various treaties share "a surprising pattern of common features," suggesting that "a common law of investment protection" is in the process of developing. (272) Other experts believe that "there is so much divergence in the standards in bilateral investment treaties that it is premature to conclude that they give rise to any significant rule of international law." (273) While this Article does not focus on issues of substantive concern and therefore will not delve further into this debate, the amount of similarity between the various treaties and international agreements is relevant to this discussion to the extent that such similarities affect (1) determinations about the extent to which international investment law constitutes an independent regulatory regime (274) and (2) considerations regarding the viability of multinational class, mass, or collective proceedings. (275)

Differences of opinion also exist at a theoretical level. Some commentators espouse what has been called the "liberal internationalist" view of investment law, which holds that "investment arbitration should be treated as a unique, internationally-organized strand of the administrative law systems of states" because "[t]he subject matter of investment arbitration is a regulatory dispute arising between the state (acting in a public capacity) and an individual who is subject to the exercise of public authority by the state." (276) This conclusion appears to be supported by the fact that "the regime of investment arbitration [is] established by a sovereign act of the state" as well as by the fact that investment arbitration is "designed to resolve disputes arising from the exercise of public authority." (277)

Under the liberal internationalist view,

   the underlying purpose of international investment law is ... to
   provide a global regulatory environment favourable to
   investors--that "the system of international investment arbitration
   ... has been set up as one of the major new tools in improving good
   governance in the global economy." From this
   perspective, ... international investment law may be characterized
   as public law, serving private interests. It is a development of
   international public law, because it is a universal regime focused
   on regulating the exercise of state powers. But it serves private
   interests, because its principal goal is to liberate investors from
   state regulatory control, and maximize the freedom of global
   capital movements. (278)

The fact that "most regulatory disputes are adjudicated by domestic courts in accordance with domestic law, or by a specialized domestic tribunal subject to supervision by domestic courts," is not problematic for those adhering to the liberal internationalist perspective because "the general consent authorizes the adjudication of regulatory disputes by an international tribunal." (279) Thus, people adopting this view say that the investment regime requires (or shortly will require) "a system of compulsory arbitration against States for all matters relating to international investments, at the initiative of the private actors of international economic relations. …

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