Transnational Public Policy as an International Practice in Investment Arbitration

Abstract

International investment arbitration tribunals have used the doctrine of transnational public policy to prevent claimants whose investments are tainted with illegality from obtaining redress. Whereas tribunals generally have the authority to apply transnational public policy when deciding a claim, they have often assumed rather than demonstrated the obligation for foreign investors to comply with the doctrine. This article proposes an interdisciplinary account that draws upon 'international practices' in International Relations theory to understand the normative pull toward this obligation. It does so by shedding light on tribunals' general lack of consideration for a proper legal basis to impose an obligation on foreign investors to comply with transnational public policy. It then suggests that the normativity of the doctrine primarily rests on a practice that is reproduced and reinforced by tribunals themselves. Understanding transnational public policy as an international practice ultimately illustrates the role of tribunals to reform international investment law.