Investor-state arbitration: From “sleeping beauty” to “lion in the jungle”

Abstract

The growing number of cases highlights benefits and deficiencies of international investment arbitration. Most countries consider the investor-state dispute settlement system a key element of international investment protection, but are reforming selected aspects of the same. In this sense, the new international Agreements introduce procedural innovations and changes in the wording of the substantive provisions looking forward a balanced approach that recognizes the legitimate interests of both host countries and foreign investors. But other governments have taken more radical steps. For example, Latin American countries have proposed the creation of a new investment arbitration center alternatively to ICSID. Australia intends no longer to include dispute resolution clauses allowing investor-state arbitration in future treaties, while South Africa and India are reviewing their external policy about foreign direct investment.