Reform of Investor-State Dispute Settlement: Lessons from International Uniform Law
This article argues that significant improvements in the quality and consistency of decision-making in investor-state arbitration can be achieved without taking such drastic (and possibly unachievable) steps as creating a global appellate body or standing international investment court, or enacting a new treaty that codifies the substantive obligations of international investment law for all signatory states. The article draws on the experience of the international uniform law movement to suggest realistic and achievable steps that could nevertheless be effective.Although investor-state arbitration and uniform law are not entirely analogous, they do share some important similarities. In particular, they share the same basic goal (to create a fair, even, and predictable playing field for private relationships that cross borders) and the same basic challenge (how to deliver that degree of consistency without the factors that normally stabilize adjudication in national court systems, such as court hierarchies and a shared domestic legal culture).This article is organized around three “questions asked” with respect to investor-state dispute settlement. For each, it describes the “answers” yielded by the experience of the international uniform law movement, and proposes how the insights gained might be put into practice in investor-state arbitration. The first two questions are doctrinal in character: what degree of consistency between investment tribunals should be the goal? and what should be the role of precedent in a decentralized, non-hierarchical interpretive community? On both of these issues, the international uniform law literature provides doctrines that are normatively attractive and that can feasibly be adapted to the international investment law context. The third question is more practical: which non-binding aids to interpretation are most effective in promoting quality and consistency? A wide range of interpretive aids exist for various international uniform law instruments, providing an opportunity to identify best practices. In general, the international uniform law experience shows that substantial improvements in consistency and quality of decision-making can be realized even without the establishment of centralized administrative or appellate bodies or the enactment of new treaty regimes.
THE UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS AND INVESTMENT TREATY ARBITRATION: A LIMITED RELATIONSHIP
Abstract The UNIDROIT Principles of International Commercial Contracts have appeared in a small but steady trickle of investment treaty arbitrations over the last decade. This article considers the use of the Principles by investment tribunals on questions of both domestic law and international law. It suggests that reference to the Principles can play an important legitimating role on questions of domestic law, but that this should not replace reference to the applicable law. On questions of international law, reference to the Principles may be justified by resort to the general principles of law. However, the article contends that there is only a limited role for the UNIDROIT Principles where the primary and secondary rules of investment protection are already found in treaties and custom. In addition, while general principles have historically been drawn from domestic private law, there is increasing recognition that general principles of public law are more relevant to investment arbitration. Given this, arbitrators resolving questions of international law must be cautious in references to the UNIDROIT Principles, a quintessentially private law instrument.
A Hesitant Embrace: The Application of International Law by Canadian Courts
Summary Canadian courts are approaching the task of mediating the relationship between international law and domestic law with newfound energy. Yet, for all their declared openness to international law, courts are still inclined to avoid deciding cases on the basis of international law. This does not mean that international law is given no effect or that its broad relevance is denied. The avoidance strategy is more subtle: even when they invoke or refer to international law, Canadian courts generally do not give international norms concrete legal effect in individual cases. Although international law is brought to bear on a growing range of questions, its potential impact is tempered — and we fear largely eviscerated — because it is merely one factor in the application and interpretation of domestic law. Within the Canadian legal order the question of “bindingness” of international law is closely intertwined with the manner in which it comes to influence the interpretation of domestic law. In the case of norms that are binding on Canada under international law, Canadian courts have an obligation to interpret domestic law in conformity with the relevant international norms, as far as this is possible. By contrast, norms that do not bind Canada internationally (for example, soft law or provisions of treaties not ratified by Canada) can help inform the interpretation of domestic law and, depending on the norm in question and the case at issue, may even be persuasive. Courts may, and in some cases should, draw upon such norms for interpretative purposes, but they are not strictly speaking required to do so. However, especially following the Supreme Court’s decision in Baker, there appears to be a trend towards treating all of international law, whether custom or treaty, binding on Canada or not, implemented or unimplemented, in the same manner — as relevant and perhaps persuasive, but not as determinative, dare we say obligatory. Our concern is that if international law is merely persuasive, it becomes purely optional, and can be ignored at the discretion of the judge. We argue that it is not enough to treat all normative threads in this fashion — over time this approach risks weakening the fabric of the law.