Interaction and Conflict of Treaties in Investment Arbitration

All too often, a State’s obligation to protect the health and safety of its citizens is hampered by the rights of foreign investors under investment treaties, usually enshrined in arbitration clauses. States compete for foreign investment with the perception that it will accelerate their economic development. However, the realisation of this goal is increasingly eroded by disputes that pit the host States’ sovereign duty to regulate businesses in the public interest against foreign companies’ treaty rights to protect their investments. Moreover, international investment law often conflicts inescapably with human rights law, environmental law, and EU law, all of which are also primarily premised on treaties. Great normative ambivalence ensues, posing serious challenges to the legitimacy and utility of the investor-State arbitral system. Approaching these challenges from the perspective of treaty conflicts, this book is the first to focus on the interaction between international investment law and other systems of international law. In the process the author takes a giant step towards determining a hierarchy of conflicting treaty norms and establishing a legitimacy threshold for the investor-State arbitral system. The book raises every relevant salient issue, including the following: – flexibility in the amount of compensation payable to foreign investors; – implications of including non-investment provisions in investment treaties; – efficacy of the Vienna Convention on the Law of Treaties rules on treaty interpretation; – legal bases for the interaction of investment and non-investment treaties; and – the ECJ on EC Treaty/TFEU investment treaty conflicts. Offering interpretive methodologies, remedial mechanisms, and legally and practically plausible paradigms that investor-State tribunals can use in their adjudicative techniques, the author argues that the solution to the legitimacy crisis of the investor-State arbitral system lies in the taking up and resolution of the issue of treaty conflicts by the tribunals themselves. With its value-oriented reasoning, this book not only effectively addresses issues pertaining to the system’s legitimacy but also develops concrete substantive rules of international investment law that are coherent with other parallel systems existing within international law. It will be of inestimable value to investment arbitrators, cross-border investors, States parties to investment treaties, foreign investment policy makers, and parties concerned with a variety of legal areas, including arbitration, human rights, environmental law, and international trade.