International Review of Law - 3 - Special Issue on International investment agreements, September 2017

The lack of participation and engagement by Least Developed Countries (LDCs) in the World Trade Organization (WTO) in general, and in their use of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) in particular, has been a continuing problem facing the WTO, tainting not only the organization as a whole but also the DSU, its crown jewel. This article considers—from a commercial viewpoint—the many issues and barriers preventing LDCs from using the DSU, including capacity issues, costs, private sector involvement, and others. The article also considers specific provisional measures that are widely available and recognised within the national legal regime; have been adopted internationally by a plethora of divergent judicial, quasi-judicial, and arbitral fora; and are recommended by the WTO—but which are, significantly, missing from the DSU itself. The paper concludes that the addition of provisional measures to the DSU toolkit will enhance the effectiveness of the DSU by removing key structural obstacles that have prevented LDCs from exercising their right to prosecute trade disputes with other WTO members.

Beyond trade facilitation, transparency norms in the WTO legal context are, implicitly and explicitly, aimed at addressing problems in the domestic administrative laws of its members. Through the lens of global governance, this article attempts to shed more light on the power of transparency norms enshrined in multilateral trading agreements under the aegis of the WTO. In this global ruled-based system, transparency has become sufficiently powerful to be a multifunctional instrument for promoting the rule of law, good governance, and democracy.

Financial crises often compel indebted countries to restructure their external public debt in order to ease their economic burden. Since this is usually quite disadvantageous to the creditors, they consequently sometimes begin “holdout” litigation so as to obtain the face value of their original bonds with interest. In this context, investor-state arbitration has been seen as an attractive alternative to litigation for creditors because the recognition and enforcement of arbitral awards is far more effective than those of foreign judgments. Yet such a holdout strategy would undermine an orderly process of debt workout because a successful holdout by some creditors will necessarily bring other creditors to take the same step to obtain remedies. The question therefore is, how is it possible to strike a proper balance between the protection of creditors and the macroeconomics policy leeway needed by defaulting states. One solution to prevent such holdout arbitration is to arrange for the coverage of sovereign debts in international investment agreements. This article analyses the development of such arrangements in investment treaties with special reference to provisions dealing with a “negotiated restructuring” of public debt, and it concludes that a proper balance between public and private interests as expected by contracting parties is struck by such agreements.

This article explores the tendency of investment tribunals to resort to teleological interpretation and to the protection and promotion of foreign investments as a standard goal of investment treaties. It further explores how this tendency relates to the rule of interpretation envisaged in Articles 31–33 of the Vienna Convention on the Law of Treaties considering that the convention rule requires that text, context, and purpose are to be equally assessed when searching for the meaning of a treaty provision. The article's particular focus is on whether investment tribunals have begun to create specific rules for interpreting investment treaties that favor one of the elements of interpretation over the others, namely, the purpose of the treaty. This method of teleological interpretation is set against the general background of investment arbitration, the Vienna Convention on the Law of Treaties, and cases where investment tribunals' reliance on the preamble of the applicable treaty was decisive for the final outcome of the case. These cases, which revolved around the goal to protect and promote foreign investments and teleological interpretation, lend support to the proposition that there has been a departure from the general rule. However, they equally show the unreliability of telos in a treaty: purposes may be different, even conflicting, and their clear meaning can easily escape interpreters. Despite a growing number of cases where the purpose of a treaty comes to the forefront of legal reasoning, the functional correlation between the purpose of a treaty and the legitimacy of a claim still remains unclear.

Through the lens of state-of-the-art text-as-data techniques, this article examines the bilateral investment treaty (BIT) practice of the member states of the Gulf Cooperation Council (GCC). The analysis unveils two critical trends. First, GCC states are global champions of investment protection. In terms of protective features, their agreements are at par with the United States or Canada. In contrast to the latter, however, GCC states typically do not accompany their protective commitments with flexibility carve-outs. This has major implications for their investment policy. While GCC investors abroad enjoy unrivaled protection, the GCC states are also more exposed to investment claims than any other region. Second, notwithstanding similarities in their investment policy and partial convergence in treaty design, GCC states have yet to cultivate a uniform practice when it comes to investment treaty-making to speak with one voice in future negotiations with the European Union or the United States.