Stephan W Schill, The Multilateralization of International Investment Law (Cambridge University Press, 2009), ISBN 978-0-521-76236-6, 451 pages
The emergence of international investment law has been one of the more striking developments in the international legal order in the past decade, and it has become one of the most dynamic and vibrant fields of public international law. The first bilateral investment treaty ('BIT') was signed between Germany and Pakistan in 1959, and the United Nations Conference on Trade and Development ('UNCTAD') has reported that, as at the end of 2011, there were 2833 BITs in existence, (1) in addition to a growing number of regional multilateral treaties, such as the North American Free Trade Agreement (2) and the Enery Charter Treaty. (3) Over a relatively short space of time, there have been rapid developments in both the interpretation and application by arbitral tribunals of the substantive obligations on states under these treaties, and the treaty-making practices of states. UNCTAD also reports (4) that there have been over 450 known claims under BITs and multilateral investment treaties, with most claims being referred to international arbitration under the auspices of the International Centre for Settlement of Investment Disputes or the UNITRAL Arbitration Rules. (5)
The book under review is entitled The Multilateralization of International Investment Lim The background to this contribution by Stephan Sella Senior Research Fellow at the Max Planck Institute for Comparative Public Law and International Law at the University of Heidelberg, is that there are two principal features of the investment treaty regime which might be thought to result in the 'fragmentation' of international investment law (p 11), or at least a lack of conformity in how such treaties are interpreted and applied. The first of these is that the overwhelming majority of investment treaties are BITs, rather than multilateral treaties, and only apply as between the two States Parties to the treaty. This gives rise to the possibility that investment treaties might be formulated differently and impose different obligations on the States Parties. The second feature is that disputes under investment treaties are typically determined by ad hoc arbitral tribunals, which are only constituted to deal with individual disputes, and from which there is only limited recourse (for instance, by way of annulment), which could result in substantial inconsistency in the interpretation and application of investment treaties.
Against this backdrop, Schill's monograph provides a fascinating analysis of how the international investment regime is, in practice, deeply multilateral, rather than bilateral, in nature. As he explains:
[I]nvestment treaties in their entirety function largely similar to a
genuine multilateral system and serve a constitutional function for
the global economy by establishing institutions that enable economic
actors to unfold their activities and structure economic exchange in
the add of foreign investment (p xiv).
He notes that 'what one can observe is a convergence, rather than a divergence, in structure, scope and content of existing investment treaties' (p 11). Schill observes that this convergence is 'surprising' in light of the historic 'failure' of multilateral investment treaties, as well as the greater flexibility offered by bilateralism 'in tailoring international obligations to the specific relationship between the two States' (p 11). Yet the conclusion of bilateral treaties has arguably had 'the effect of resulting in a system that possesses very similar, if not the same, essential features as a multilateral system' (p 16), consisting of 'generally applicable rules and principles, just as if these rules were enshrined in a formal multilateral treaty' (pp 16-17).
Schill's claim as to the multilateral nature of international investment law is twofold. …