Academic journal article Boston College Law Review

Justice for All? Protecting the Public Interest in Investment Treaties

Academic journal article Boston College Law Review

Justice for All? Protecting the Public Interest in Investment Treaties

Article excerpt

Introduction

Few areas of international law are more controversial than international investment law. Debate traditionally rages over international rules-both customary and conventional-on foreign investment. Opponents of such rules often level criticisms against investment treaty arbitration for its lack of impartiality, transparency, and coherence.1 More crucially, the international investment regime is often regarded as an unbalanced system that favors corporate interests.2

Not surprisingly, international investment reform proposals have proliferated among scholars and practitioners. Recent treaty practice has also been the subject of reform efforts.3 The most significant of these efforts concern the dispute settlement mechanism provided by international ininvestment treaties. Recent international investment agreements ("IIAs") and arbitration rules put greater emphasis on the transparency of arbitral proceedings, arbitrators' independence, and arbitral decisions' consistency.4 Additionally, new IIAs feature less vague investment protection standards and seek to reconcile investment protection with a wide range of noninvestment interests, such as environmental protection, human rights, and labor rights.5

Notwithstanding these developments, such treaties still fail to fully address their central flaw: their asymmetric structure, which allows investors to hold both substantive and procedural rights, but the communities affected by such investments to have neither.6 In this Essay, we set out to identify models for reforms that can address this major pitfall. Given the limited scope of this Essay, these three models are only sketched and serve the purpose of identifying new directions for reforms. Future research is necessary to further study the fine points and legal design of each alternative.

Part I of this Essay discusses the features of the investor-state dispute settlement ("ISDS") system that lie at the root of the system's legitimacy crisis.7 Part II explains possible substantive reforms, which require formal obligations for investors and rights to the civil society likely to be affected by the investment operations.8 Part III examines the emergence of Public Alternative Complaint Mechanisms ("PACoMs"), such as Ombudsbodies and National Contact Points as existing practices aimed at ensuring the accountability of international institutions and of the corporation operating transnationally, as well as the protection of rights of affected parties.9 FinalFinally, Part IV provides possible methods to ensure investment-affected people's access to remedies in the investment regime, which include three alternatives: PACoMs as an alternative of investment treaty arbitration; access to investment treaty arbitration for all; and a networked system that combines existing arbitration tools with other grievance mechanisms.10 Overall, this Essay submits that the future treaties should either completely eliminate the ISDS system or undertake a major overhaul of the system. Despite the limits of each alternative, this Essay concludes that any of these proposals would offer a superior alternative to the dramatic deficiencies of the current system.

I. The Legitimacy Crisis of International Arbitration

The ISDS system is one of the distinctive features of the investment treaty-based protection regime.11 IIAs generally contain investment dispute clauses, whereby the contracting states give their prospective consent12 to submit to arbitration any future disputes stemming from an alleged violation of substantive provisions of the IIAs.13 As the number of IIAs containing ISDS clauses increased over time, investment arbitration gained an unprecedented importance in the resolution of investment disputes.14 Nevertheless, investment arbitration soon became a victim of its own success.15 The increasing number of investment disputes exposed the main shortcomings of the most popular arbitration rules.16

This Part illustrates the main criticisms raised against the investment arbitration system. …

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