VJIL Symposium: Introducing Stephan W. Schill’s “Enhancing International Investment Law’s Legitimacy”
[Stephan W. Schill is a Senior Research Fellow at the Max Planck Institute for Comparative Public Law and International Law.]
This post is part of the Virginia Journal of International Law Symposium, Volume 52, Issues 1 and 2. Other posts in this series can be found in the related posts below.
I am grateful for the opportunity to present, on Opinio Juris, my Virginia Journal of International Law Article – “Enhancing International Investment Law’s Legitimacy: Conceptual and Methodological Foundations of a New Public Law Approach.” It is connected to a book project I edited and published with Oxford University Press in 2010 on International Investment Law and Comparative Public Law. The Article, as well as the book, proposes a new conceptual and methodological approach: to think about international investment law and investor-state arbitration as a public law discipline and to draw on the methods, concepts, and insights of comparative public law in responding to the concerns increasingly often raised about investment law.
Often couched as a “legitimacy crisis,” these concerns predominantly stem from the perception that investment law and investor-state arbitration threaten domestic public law values, including democracy and the rule of law, because party-appointed arbitrators, not democratically-legitimated courts, review government acts and actively craft the substantive standards of investment protection. In my Article, I acknowledge the validity of the concerns raised but suggest system-internal responses that safeguard the considerable advantages of the current system of investment protection over both domestic solutions and an interstate system of dispute settlement like under the WTO.
In my Article, I suggest that, short of radical institutional reforms, much of the criticism of investment law can be countered by a paradigm shift within the mainstream of international investment law. First, those involved in investment arbitration should break with the predominant self-understanding that we operate here in a sub-discipline of international commercial law and arbitration where responsiveness to the will of individual parties to arbitrations is key. Instead, we have to realize and recognize the considerable governance impact the field has on state-market relations and government behavior more generally. This requires accepting the public law nature of the system, which also explains why questions of legitimacy and calls for more transparency and accountability abound.
Second, the key actors in investor-state arbitration should open up toward learning from other public law systems and governance regimes both at the domestic and the international level in order to align international investment law with generally-accepted public law values. Arbitrators and counsel, but also scholars in the field, should use comparative public law analysis and consider how different domestic administrative and constitutional laws, as well as supranational and international governance regimes, such as the WTO, human rights law, or the EU, deal with problems similar to those dealt with in investment arbitrations. Such a approach should help to link international investment law to general principles of public law and support increased recourse to public law thinking, including proportionality analysis, public law standards of review, public law requirements of reasons-giving, among others.
Overall, I suggest that we should explore how public law analysis can help rethink rather than, as suggested by some critics, kill international investment law and investor-state arbitration. Internalizing this public law thinking in investment treaty arbitration, as is by now increasingly accepted by investment tribunals, would not only show that international investment law is less of a threat to domestic public law than often perceived, but that it strives for the same fundamental objectives, that is controlling and legitimating the exercise of public authority in a global economy.