Why Investment Arbitration and Not Domestic Courts? The Origins of the Modern Investment Dispute Resolution System, Criticism, and Future Outlook

Abstract

This chapter reviews the existing criticism of investor-State dispute settlement in relation to the role of domestic courts. In essence, this criticism contends that the IIA investment arbitration regime does not account for situations in which domestic courts offer adequate access to justice and discriminates against domestic investors by granting only (certain) foreign investors a privileged procedural track. In order to place such criticism in a broader context, the study provides an overview of the historical, economic, and political reasons that underpin the creation of the current investment dispute settlement system and discusses whether these motivations still justify the existence of an international system of investment dispute resolution, whether in the form of arbitration or standing adjudicatory bodies.