The case for host state claims in investment arbitration

Abstract

Investment arbitration has flourished as a result of claims brought by foreign investors against host States, whilst host States claims against foreign investors have remained infrequent anomalies. This essay argues, nonetheless, that facilitating host State claims would impart unprecedented stability to the system of investment arbitration. Not only would this encourage host States to act as claimants more often, but it would also bolster host State confidence in investment arbitration by instilling a reinvigorated sense of equality, in keeping with the original vision of the ICSID Convention's drafters. Three proposals are advanced to bring this thesis to fruition, to wit: re-establishing privity with respect to the arbitration agreement, conferring substantive treaty rights on host States, and construing treaty and contract jurisdiction in a way that enables host State claims on a par with investor claims.