Chapter 11 deals with investor-state arbitration. Specifically, it addresses arbitration under the aegis of investment treaties, investment agreements and investment laws. The Washington (ICSID) Convention deals with the resolution of investment disputes. The chapter discusses the background of the Washington Convention and its jurisdictional requirements. Additionally, the chapter discusses the special features of ICSID arbitrations. It also focuses on background information, substantive rights and enforcing rights in bilateral investment treaties containing arbitration provisions. Finally, the chapter discusses issues of reform with respect to ISDS (Investor State Dispute Resolution) and new approaches to ISDS found in recent multinational investment treaties. The chapter also deals with the overlap of treaty-based rights and contract-based rights, third-party funding, and transparency in international investment arbitration.

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.

This chapter explores forum choice at the international and regional levels, advancing three arguments. First, forum shopping as an arbitrary exercise or an exercise bordering on abuse of rights is rare. Second, parties nearly always have legitimate reasons for their forum choice. Factors impacting forum choice include receiving a favourable decision, the finality of that decision and the prospects for enforcement. As regulators, states should deal with the challenge of overlapping jurisdiction among international courts and tribunals (ICTs) by regulating forum choice explicitly. Third, ICTs have to assess the reasons proffered by the litigating parties, whereby they may consider precedent-setting and long-term repercussions, so as to accept or decline jurisdiction. Forum shopping can raise issues of legitimacy, fairness, cost and integrity. Forum choice, however, is a fundamental obligation of counsel to a client, in order to search for the tribunal or jurisdiction that will best recognize its rights, consistent with the fair administration of justice. Healthy competition between jurisdictions is overall beneficial to the evolution of ICTs.

This chapter focuses on one author of cross-fertilization, the Permanent Court of Arbitration (PCA). The PCA plays various roles in the development of international law. In recent decades the PCA has seen significant procedural cross-fertilization among international institutions, for example with the UNCITRAL Arbitration Rules informing the PCA’s own modern rules of procedure. PCA-administered tribunals have engaged in substantive cross-fertilization, citing ICJ decisions as well as awards issued by PCA- and ICSID-administered tribunals, among others. There are limits to the PCA’s role in cross-pollination and convergence, particularly the principle of party autonomy and and excess of mandate by the tribunal being grounds for an award to be set aside. Party-driven limits to convergence are exemplified in the high degree of variation in transparency among PCA-administered arbitrations, with proceedings ranging from the highly transparent to the fully confidential. Despite these limits, this chapter concludes that both as an actor and as a framework, the PCA serves as a mechanism whereby procedural law and substantive international law are distilled, developed, and diffused.

This chapter seeks to illustrate the construction of ‘entangled legalities’ by investigating the interface of foreign investment norms and human rights. It focuses on social actors’ efforts at shaping the encounter between these norms in sites where their interactions have generated political salience in recent years. Investigating the ‘social life’ of these encounters, the chapter aims to contribute to our understanding of how ‘entangled legalities’ emerge – how and where have they been made and by whom? Drawing upon the framing ideas of this edited volume, the analysis focuses on a plurality of social actors situated in a variety of contexts where bodies of norms and institutions have been brought into contact through practices and discursive statements. Investor–state dispute settlement (ISDS) has remained an important setting where litigants, investment adjudicators and non-governmental organizations have supplied different understandings of the relation between bodies of norms at play shaped by various constraints. However, in contexts beyond ISDS, namely in law-making sites and reform settings, other relevant actors have promoted competing visions of the form of relation between bodies of norms.

Many countries have entered into international treaties that accord substantive protections to foreign investors. Such treaties often include clauses enabling investors to institute arbitral proceedings on the international level against the host state. A number of arbitral centers have been established around the world to manage investor-state disputes. Chief among these is ICSID, which was created in 1965 under the auspices of the World Bank. Many of the controversies that get arbitrated in these forums are governed by public law, since they raise questions about the way state authorities have exercised their governmental powers. The ability of investors to take a state before an international tribunal is a remarkable example of the tendency to give private persons an active role in international adjudication.

The development of renewable energy is an important tool to limit greenhouse gas emissions. How the investor-state arbitration tribunals are dealing with renewable energy investment cases can influence the future growth of the renewable energy sector, creating an impact on our efforts to tackle climate change. This chapter analyses renewable energy investment cases that have arisen in Europe and North America. It considers the valuable experiences from a policy perspective which can be drawn from these cases. These cases involve application of provisions prohibiting expropriation and granting the investor fair and equitable treatment, which involve considerations of government policies. As a capital-sensitive and relatively new industry, the renewable energy sector needs government subsidies to compete with traditional fossil fuel. On the other hand, the renewable energy sector changes swiftly due to the advancement of technology, and states have found it difficult to calculate the precise level of subsidies that gives renewable energy the same level of competitiveness but without making it rely on state subsidies to make a profit. Finally, implications of these cases for climate change are analysed.