Evaluating social benefits and costs of investment treaties: Depoliticization of investment disputes

Abstract

The growth in the number of investment treaties and investment treaty arbitrations has led to a lively debate about the benefits, justification, and problems of this special form of protection for foreign investors. This paper makes the positive case for understanding international investment law as an instrument for the depoliticization of conflicts that at times had led to fierce confrontations between home and host States of investors. Depoliticization means the transfer of such conflicts from the political arena of diplomatic protection to a judicial forum with objective, previously agreed standards and a pre-formulated dispute settlement process. First, this article addresses the goals of investment arbitration in this context. Second, it discusses the means provided for in the ICSID Convention and in investment protection treaties in their various forms to achieve these goals. Furthermore, it analyses how different investment protection instruments achieve different degrees of depoliticization. Third, it discusses whether investment treaties have been successful in providing judicial means to prevent investor-State conflicts developing into inter-State conflicts, which are dominated by power politics.