Strength in Obscurity: The Resilience of International Investment Law

ABSTRACT:

Hundreds of distinct treaties now protect foreign investors from confiscation or inequitable treatment by countries where they operate. In the 19th Century, great powers deployed gun boats to enforce such norms against weak states outside Europe. That practice was abandoned in the 20th Century, as revolutionary regimes denied that foreign states had any right to claim reparations for injuries to private investors. Since the end of the Cold War, however, most nations have agreed to accept international arbitration of claims when submitted directly by foreign firms. Hundreds of such claims have been adjudicated in this way with compensation awards regularly reaching into tens of millions of dollars. No master treaty or international institution controls the process but a loose knit scheme of parallel treaties has generated a remarkably adaptive and resilient body of international law. Investor-state dispute settlement (ISDS) is one of the most successful innovations of contemporary international law. It may be more effective for operating outside more prominent international forums where international disputes are often inflamed by larger political conflicts.