29 Mar ASIL-ITA Conference on the Future of Arbitration Involving States
The first day of the annual meeting of the American Society of International Law began with a morning session on the future of arbitration involving states. This “pre-meeting” event is co-sponsored by the ASIL and the Institute for Transnational Arbitration and was chaired by Professor Catherine Rogers and yours truly. Details are available here. It included great panel presentations from Michael Reisman, Benedict Kingsbury, John Crook, Margrete Stevens, Andrew Guzman, Andrea Menaker, and Anna Joubin-Bret.
Just by way of illustration, UNCTAD’s Anna Joubin-Bret presented UNCTAD’s recent findings on trends in bilateral investment treaties published in February 2007 (not available online). She noted that there are now 2,559 bilateral investment treaties as of January 1, 2007, but that there is incredible variety among BITS. Here are the conclusions from the executive summary of the UNCTAD report:
Most BITS concluded in the last decade have a similar basic structure and content. However, this does not mean that agreements would be more or less identical or that there would not have been any normative developments. On the contrary, by looking into the details of each treaty one can distinguish a broad variety of approaches with regard to individual provisions. Differences exist with regard to the underlying rationale of the BITS, the degree of protection and the number of qualitative innovations.
Most recent BITs follow the traditional approach of establishing binding obligations only with regard to the post-establishment phase. However, the number of agreements also including pre-establishment rights is on the rise. Such BITs have predominantly been concluded by Canada, the United States, and, more recently, Japan.
As a result, a growing number of developing countries actually apply two different BIT models, depending on who their treaty partners are: the “admission clause” model (mostly in BITs with European countries) and the “right of establishment” model (in treaties mainly with Canada and the United States). More than others, developing countries are therefore confronted with the challenge of keeping their BIT universe coherent.
Likewise, there is an emerging trend towards introducing treaty innovations, namely with the objectives of clarifying the scope of the definition of “investment” and the meaning of several key obligations, providing greater transparency in rulemaking, spelling out that investment protection should not be pursued at the expense of other essential public policy concerns, and improving the transparency and predictability of dispute settlement procedures. As in the case of pre-establishment treatment, these innovations have so far been basically limited to BITs concluded by a few countries, including Canada, Colombia, Japan, the Republic of Korea, and the United States. It remains to be seen whether more countries will adopt this approach in the future.
Current BIT practice does not, in general, expressly deal with the development matters beyond the inherent objective of BITs of investment protection. There is a need for further clarification of the interrelationship between existing standards of investor protection and investment promotion, on the one hand, and the best means by which development concerns can be (or should be) expressed in the future evolution of BITs, on the other hand.
On the same panel with Anna Joubin-Bret was Andrew Guzman, who had some interesting (and controversial) suggestions regarding the status of investment protections as a matter of customary international law. Guzman argued that the sheer number of BITs should not be enough to suggest that substantive provisions of BITs reflect customary international law, any more than the far greater number of “country pairs” in the WTO bound tariff schedules reflect customary international law. He also suggested that since countries compete with one another for investment through the robustness of their BIT protections, this undercuts arguments that there is a uniform standard in BITs that rise to the level of custom.
Guzman’s argument is an intriguing one. If bilateral treaties are a game of competition among states for substantive protections, this lack of uniformity between treaties undermines suggestions that the treaties reflect customary international law. My response to Andrew is that there is a fair amount of international case law suggesting that the Hull formula of “prompt, adequate and effective” compensation reflects customary international law, enough so that it does seem to have crystallized as an international norm. Competition for investment between capital-importing countries indeed may result in greater protections than the international minimum standard. But this does not mean there is not a minimum standard.
As a final note, Catherine Rogers and I are happy to report that we will edit a book as a follow-on to this conference, with an excellent group of authors from the conference faculty, together with other international arbitration luminaries such as Johnny Veeder, Christopher Scheuer, Gary Born, Horacio Grigera Naon, Rusty Park, and David Caron. More on that later.
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