The Articles on State Responsibility for Internationally Wrongful Acts (‘ARSIWA’) constitute an experiment in international law-making. Unlike other successful projects of the International Law Commission (‘ILC’), such as its work on the law of treaties and diplomatic and consular relations, the ARSIWA have not yet led to the adoption of a multilateral treaty. Yet, their text is cited commonly as the authoritative statement of the law on state responsibility with investment tribunals being by far their most frequent users. This well-recorded paradox calls for a reflection on the ways in which investment tribunals make use of the ARSIWA. This chapter examines the methods which investment tribunals explicitly or implicitly employ when using the ARSIWA in order to determine the content of rules of general international law on state responsibility. The chapter then proceeds to critically assess these findings from two perspectives: the overarching aims of the law of state responsibility and the doctrine of sources of international law. The chapter synthesises these empirical and doctrinal insights into a proposal for a common framework for the use of ARSIWA.

Despite the undeniable ‘treatification’ of international investment law, that should not lead one to the erroneous assumption that, as a direct consequence of this, other sources of law and custom in particular, become gradually and increasingly more irrelevant in this particular filed of international law. Contrarily, customary rules remain of fundamental importance in what has been called ‘the age of treatification of international investment law’. Furthermore, custom, both in its primary rule and secondary rule incarnation, potentially will even further grow in its importance to international investment law and arbitration, considering the seemingly increasing trend of what may be dubbed if not a ‘de-treatification’ then at least a decrease in the number of treaties (or treaty ratifications) relating to international investment law. Even with the justified criticisms about false narratives and the creation of custom being a reflection of prior and current power structures, the study of custom and its function across all stages of its life-cycle has a lot to yield. Both these criticisms and the general academic inquiries into the lacunae of custom (at the identification as well as the interpretation/content-determination stages) contribute to the gradual refinement of our understanding of how custom works, how it is used, what gaps it has and how it can adapt to modern challenges and new circumstances.

The Precautionary Principle has primarily found a place within the international environmental law regime, and to some extent, the international human rights regime. It is also, arguably, considered to be a principle of customary international law. While the international investment law regime has traditionally resisted (and still does) incorporating principles from other regimes, a few innovative International Investment Agreements (IIA) have gone against the grain and expressly incorporated principles of international environmental and human rights law. This chapter draws upon a clause in the Nigeria-Morocco Bilateral Investment Treaty (BIT) of 2016 which mandates that both the investor and the host state shall apply the precautionary principle to their investments. It will enquire whether the precautionary principle has achieved that normative status of customary international law which allows it to be binding on host states by virtue of inclusion in a BIT. Second, it will enquire whether the precautionary principle can be binding on foreign investors as non-state actors.

This chapter argues that the systemic integration of customary international law in the interpretation of investment treaties should equip vulnerable polities with principled arguments for why a high degree of deference is warranted in their adoption of regulatory measures to address the health, economic and social dimensions of chronic crises. The chapter reviews the recent demand for governments to protect their right to regulate by imposing a moratorium on investment treaty claims. This critical discourse has overlooked the deeper roots of the State’s presumptive right to regulate without compensation, an expression of its territorial sovereignty under customary international law. Evident across landmark decisions such as the Oscar Chinn Case, the Iron Rhine Arbitration and Philip Morris v. Uruguay, the regulatory dimension of territorial sovereignty both preceded and endured the mid-century debate over the standard of compensation for nationalisation and the subsequent rise of investment arbitration. In contemporary practice, the customary rule that there is no State responsibility for reasonable regulation may be integrated through arbitral practice to ensure each claimant bears the burden to prove that regulatory measures were unreasonable, discriminatory, or adopted in bad faith.

This chapter focuses on some of the Third World Approaches to International Law (TWAIL)s criticism of investment law and the CIL rules contained therein, and proposes an engagement with this criticism at the stage of interpretation. Based on an examination of the interpretation of the customary minimum standard of treatment, it argues that interpretation plays two roles in relation to CIL – a constructive and an evolutive role. In light of these two roles, interpretative arguments may be deployed strategically so as to flag problematic rationales in the rules and argue for their re-interpretation. In particular, I propose three interpretive strategies which may achieve this goal, which are differentially suited to the different actors who may wish to deploy them. These strategies are limited by the actors who deploy them, the forum where they are deployed, as well as the rules of procedure in which the dispute takes place. Nevertheless, they present an opportunity for a constructive TWAIL engagement with international investment law which does not summarily dismiss the existing system.

This chapter commences by analyzing the relevance the Permanent Court of International Justice’s judgment in the Chorzów Factory case and the prevailing position that it reflects customary international law on the remedies available for treaty breaches. The analysis then focuses on why references to remedies other than compensation (available under customary international law) are rare in investor-state arbitrations and whether there is a place for restitution and/or declaratory awards in international investment law. If claimants choose to seek restitution, tribunals are empowered to make such an award, unless this is explicitly excluded by the underlying treaty or is practically impossible (or at least inadequate) on the facts of the particular case. The ‘Spanish saga’ cases on renewable energy confirm this approach. Satisfaction, a third type of remedy available under customary international law, a declaratory award, is considered as a ‘paper victory’ which, in practice, is tantamount to losing a case. The final part of this chapter analyzes various issues related to compensation itself, in practice the most important remedy in international investment law.

The chapter scrutinizes the recourse to legal witnesses on points of international law through the lens of the specific texture of customary international law. Part I will present and comparatively assess the abundance of the recourse in investment arbitration to expert witnesses on issues of international law; part II will then proceed to a theoretical analysis which will set, according to a formalist approach of that source of law, and test the hypothesis that international law witnesses in investment arbitration could well be justified when they deal with customary international law. It will conclude that, at most, customary norms may have been the Trojan horse of the recourse to international law experts in investment arbitration since international law witnesses are seldom relied on for the purposes of ascertaining the contents of customary international law. Once the relationship between customary law and expert witnesses will be discarded, Part III will examine an alternative justification which has more to do with the sociology of investment law and with its constant search for legitimacy, than with any formal analysis of the sources of international law.

When determining compensation as a form of reparation for the breach of a bilateral investment treaty, investment tribunals generally rely on the judgment of the Permanent Court of International Justice in the Factory at Chorzów case, and Article 36 of the International Law Commission’s Articles on Responsibility of States for Internationally Wrongful Acts, as reflective of customary international law. Progressively, however, investment tribunals have developed a doctrine of ‘equitable considerations’ as a legal proposition capable of affecting the quantification of damages in ways not envisaged in the Factory at Chorzów case. This development is not uncomplicated. While equity may serve as a useful tool in the hands of arbitrators to provide a balanced legal reasoning and arrive at a more acceptable legal outcome, an unprincipled application of equity may have serious repercussions on the integrity of the arbitral award and undermine the legitimacy of the tribunal. Thus, this chapter seeks to provide an analytical framework for the operation of equitable considerations in the context of compensation in investor-State arbitration.

The chapter is based on a survey of state practice of CIL identification in connection with execution and annulment proceedings. The chapter proceeds in three main parts. Part I examines the nature of state practice in the form of judicial decisions, addressing, among others, the question of whether and to what extent a decision by a domestic court may be seen separately or concurrently as constitutive of practice, in the terms of ICJ Statute Article 38(1)(b), and/or as a subsidiary means, within the meaning of ICJ Statute Article 38(1)(d). Part II provides an overview of selected features of the surveyed body of state practice. This overview shows how domestic courts and states parties to execution and annulment proceedings before those courts approach CIL identification and rely on ICJ Statute Article 38(1)(a)-(c) to ascertain whether a certain source does constitute one of the sources of law recognised in those subparagraphs of ICJ Statute Article 38. Part III investigates the significance of the surveyed state practice, with a particular focus on some of the wider implications this state practice might have with respect to broader debates on CIL identification and the sources of international law, and shows a bi-directional interaction between general international law and international investment law.

This chapter examines the transformation of the concept of the ‘Minimum Standard of Treatment’ (MST) throughout the 20th century: its emergence, its subsequent decline and finally its recent ‘resurrection’. States now perceive the MST as ineffective in providing basic legal protection to foreign investors doing business abroad. It is in this historical context that these States began frenetically signing bilateral treaties for the promotion and protection of investments (‘BITs’) that provided clearer rules on investment protection. The vast majority of these BITs do not contain any reference to the MST. Instead, they include ‘Fair and Equitable Treatment’ (‘FET’) standard clauses. This chapter examines why States began using this expression instead of the MST. Many tribunals (notably in the context of NAFTA) interpreted FET clauses as providing investors with more extensive rights than the MST. This chapter examines States’ reaction to these awards and how the MST has been used by them to limit investors’ rights under FET clauses. In this respect, the most interesting and innovative FET clause is certainly Article 8.10 of the CETA which contains a closed list of elements which are considered by the Parties to embody the standard.

Do States owe a duty to compensate material loss to investors, when the loss is caused by acts covered by the defence of necessity? This is a difficult question, which has troubled international lawyers (as well as domestic law theorists and moral philosophers) for a long time. Investment tribunals too have been faced with this question. Indeed, the Articles on State Responsibility allow for the possibility that such compensation might be due. But they do not specify in which circumstances the duty arises. Unsurprisingly, investment tribunals have given this question widely different answers. Perhaps even more surprisingly, they have rarely queried the positive law status of this duty: they have, for the most part, foregone assessing evidence of customary law (or general principles) for this duty. Tribunals have either derives be duty by implication from the rule of necessity, denied its existence, or taken an agnostic stance. However, when the evidence is properly assessed, it is clear that much as such a duty would be desirable, it is not yet recognised as a matter of general customary law.

This chapter explores the availability of the customary defence of countermeasures to investment disputes brought before investor-state arbitral tribunals. It scrutinises the tribunals’ reasoning and the parties’ arguments in the cases of Archer Daniels Midland, Corn Products International and Cargill. It discusses their approach to the customary requirements for a lawful countermeasure and to the limits of their own jurisdiction ratione materiae and ratione personae. The chapter aims to discern firstly, whether CIL or the text of current investment treaties precludes responding states from invoking the defence of countermeasures in the context of an investment dispute. In this context, the chapter also offers some insights into the approach of arbitral tribunals to the customary requirements for the successful invocation of countermeasures. Secondly, it discusses whether the subject-matter and personal jurisdiction of arbitral tribunals precludes the tribunals from examining and applying the defence of countermeasures. The chapter argues that CIL does not preclude the applicability of countermeasures to investment disputes. It further argues that current investment treaties do not exclude, explicitly or implicitly, the defence of countermeasures.

This chapter will focus on two issues discussed broadly by investment tribunals: rules on conflicts of treaty norms (Article 30 of the VCLT and corresponding CIL) and rules relating to subsequent agreements in relation to the interpretation of treaties (Article 31(3)(a) of the VCLT and corresponding CIL). With respect to the conflicts of treaty norms - a coherent line of tribunals decisions concerning relations between international investment agreements and EU treaties is introduced, which narrowly interpret the issue of ‘the same subject matter’. Regarding the rules on subsequent agreements several observations are made. First, the ease with which arbitral tribunals reject interpretations formulated by States through subsequent agreements is striking. Second, tribunals have set out detailed requirements for the formulation of a declaration, without explaining the source for these requirements. Third, there is a considerable difference between tribunals referring to joint interpretations of State Parties, as envisaged by the treaty as binding (such as with NAFTA), and the tribunal assessing such interpretations through the lens of the VCLT or corresponding customary rules.

The Chorzow Factory case serves as a means for tribunals and academics to make different kinds of assertions regarding the application of customary international law (CIL) and the principle of full reparation. Internationally, both tribunals and academics argue that this case is CIL, and that it serves as evidence for the principle of full reparation at the moment of assessing the damage in a case. Against this background, this chapter demonstrates that the aforementioned affirmations are not exact and that have been taken out of context by some parts of academia and tribunals themselves. Firstly, the Chorzow ruling does not cite the legal sources that, without doubt, would allow them to affirm the formerly made statements. Secondly, the ruling did not categorically say that CIL had been used as a source, as has been said by many investment arbitral awards. Thirdly, the context in which the decision was awarded is overlooked. In light of the former, it will be shown that most of the decisions of the Permanent Court of International Justice (PCIJ) were made by way of general statements, without citing the direct sources that established such rules.

The scholarship on sources of international law has not satisfactorily answered these questions: are sources regulated by any ‘rules’? Are ‘rules on sources’ part of international law? What is the source of ‘rules on sources’? The standard answer to these questions is that sources are regulated by state practice reflected in Article 38(1) of the Statute of the International Court of Justice. This position, albeit professing to be practice-based, does not account for the existence of ‘rules on sources’, nor for their legality and source-based character. Other practice-based positions have also proven insufficient: some, postulating the legality of rules on sources, fail to address their source-based nature; others, affirming both the legality and source-based character of rules on sources, and invoking custom as source thereof, fail to substantiate their claims, which are merely asserted or based on decisions of early arbitral tribunals, thus assuming custom to be judge-made (a ‘custom in foro’). This chapter examines the suitability of custom as source of rules on sources and proposes a shift away from custom in foro towards customary international law proper, established by state practice invoking ICJ Statute Article 38(1) outside ICJ proceedings, major instances of which it surveys.