Empiricism and International Law: Insights for Investment Treaty Dispute Resolution

[Professor Susan Franck is Associate Professor of Law, Washington & Lee University School of Law. Please find her SSRN author page here.]

First, I want to take the opportunity to thank the editors of the Virginia Journal of International Law and Opinio Juris for an opportunity to discuss my recent essay, Empiricism and International Law: Insights for Investment Treaty Dispute Resolution. I would also like to thank David Zaring in advance for commenting on the essay. I look forward to a thoughtful and provocative discussion.

This essay develops ideas implicit in the work of certain international law, international relations and empirical legal scholars – namely that there are areas of international law deserving of and ripe for empirical analysis. More particularly, the use of empirical methodologies can create new facts, offer different perspectives and promote a more nuanced analysis of international law phenomena.

The potential benefits of such an epistemological approach are easily understood in the context of international investment law and dispute resolution.

The President of Bolivia, Evo Morales, has suggested that the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) is an international organization where no country, except perhaps the US, will ever win. The International Herald Tribune quotes Morales as saying “Governments in Latin America and I think all over the world never win the cases. The transnationals always win”. Although this assertion was used to justify Bolivia’s withdrawal from ICSID, quantitative data flatly contradicts Morales’ allegation.

Meanwhile, a March 2008 story in the Financial Times, referred to investment treaty arbitration awards involving: (1) “hundreds of millions of dollars in compensation,” (2) a claim by Mobil for “billions of dollars,” and (3) Bolivia’s “loss” in a case against Bechtel. Empirical information aids the contextualization of these claims. It is useful to consider that: (1) the average value of awards in one study was in the order of US$10 million, (2) the difference between amounts claimed and awarded was in the order of US$333 million, and (3) Bolivia’s “loss” at the jurisdictional phase actually resulted in a settlement where the investors dropped their claims and were paid nothing. Meanwhile, issues related to international economic law – particularly trade and investment – are becoming a focal point for politicians and the public.

Against this backdrop, this essay does three things to consider the potential integration of empirical methodologies into the analysis of international investment law and dispute resolution.

First, it explores the historical relationship with international law and empirical methods. Acknowledging the re-integration of international relations and international law as well as the increased appreciation for empirical legal studies in domestic law contexts, the essay suggests that the mutual interest in empirical methodologies – broadly defined – could be developed further. For example, this might involve international lawyers drawing upon the methodological debates and insights from the empirical legal scholars and adapting them to analyze international law phenomenon; likewise, empirical legal scholars can gain new areas of research that may provide a useful counterpoint to study of domestic (whether in the U.S. or broad) legal phenomenon.

Second, the essay adopts Professor Korobkin’s definition of empiricism and argues for a broad understanding of empirical methodologies in international investment law. The essay posits that quantitative, qualitative and mixed methods may all be usefully applied to the analysis of investment treaty dispute resolution and encourages debate on how different methodologies might be suitable for different research questions.

Third, the essay argues that the benefits of using empirical methodologies outweigh the costs and suggests five steps for developing an empirically infused research agenda in investment treaty dispute resolution. These steps may include, but not be limited to: (1) building research capacity, (2) obtaining data, (3) designing research methodology, (4) conducting research, analyzing the results, and contextualizing the findings properly, and (5) disseminating the results to stakeholders for consideration.

As befits an essay, it concludes on a note designed to spark conversation as much as it is to articulate a particular position. In particular, the essay argues that while empirical methodologies may not work for every research area or question, the use empirical methodologies can infuse international investment law with information to inform normative choices. Particularly for investment dispute resolution, systematically gathered and properly analyzed empirical data can correct misperceptions about existing dispute resolution processes, permit considered analysis of legal issues affecting the public, and could – for example – facilitate informed decisions about the negotiation and revision of investment treaties.

Particularly in the United States, Latin American countries such as Ecuador and even in Norway, there is a hot political dialogue about the proper terms of investment treaties. The issue is sufficiently compelling that the American Society of International Law’s International Economic Law Interest Group is going to be hosting a conference in November 2008 to discuss the intersection between the political dimensions of the debates about trade and investment. (A previous Opinio Juris post is here, and the call for papers is here.) Given this context, there is particular utility in examining what opportunities there might be to infuse scholarship with empirical methodologies to generate information that can form part of a dialogue to promote a more informed discourse on international investment law.

It is too early to know whether the approach I recommend will provide utility in the long run. There are inevitable challenges and practicalities that will be difficult to ignore that we might discuss here in greater detail. Nevertheless, I do believe that there is tangible, potentially useful research that can be done with relative inconvenience in the short term. These small, foundational projects can form the basis for replicating, developing and converging research in the hopes of ultimately creating a more dynamic and informed tapestry of international investment law. And after all, if we do not at least try, we will never know what might have been.