This edition is published at a time of much controversy in the international law on foreign investment. The need for investment treaties is coming to be questioned by economists. Some of them argue that the original premises of greater flows of foreign investment resulting from such treaties or that they lead to economic development are not provable assumptions. If they are correct, the system has been built on wrong premises. The thrust of neo-liberalism that dominated events in the field and shaped the law is on the wane. The low visibility of the subject is no more, as disputes such as cigarette labelling in Australia and Uruguay, the water dispute in Bolivia or the use of nuclear power in Germany have brought high visibility and public concern with the subject. The old view that a foreign investment dispute concerns only the parties to it is now considered archaic as extraneous factors such as environmental considerations, human rights, labour rights, cultural rights, the rights of indigenous peoples and other factors are considered relevant to such disputes. Increasingly, vocal interest groups espouse these interests. The escapades of arbitral adventurism have created public anxiety. The protests against the Transatlantic Trade and Investment Partnership (TTIP) and the Trans Pacific Partnership (TPP) exclusively in developed countries indicate the extent of this public anxiety.
States have responded to these developments in many ways. Some have withdrawn from the system. Others have toyed with the idea of doing away with treaty-based investment arbitration. Most have come up with the so-called ‘balanced’ treaties based on the reconciliation of the two incompatible ideas of investment protection and regulatory space for the state. How this will be worked out is yet to be seen as there have been no cases on the exceptions to liability in the balanced treaties which essentially cater for the preservation of the regulatory space.
The fact is that investment arbitration is a regime that can mutate into new shapes. This is demonstrated by its capacity to create new rules, such as the legitimate expectations rule, when the door of expropriation closes and to create the proportionality rule when the legitimate expectations rule retreats in the face of criticism. Balanced treaties may not provide a cure to the anxieties that have been expressed.
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