Is arbitral investment case-law on expropriation precedential in a legally relevant sense? Orthodox approaches are marked by agreement on a narrow set of arguments, namely that international law is not a common law and arbitral awards do not have stare decisis power, that jurisprudence is hugely important and tribunals rely on it, and that there must therefore be a sort of de facto system of precedents in operation. In effect, ‘factual importance’ is fashioned into a source of legal authority. However, few arguments are given as to why this transfer from fact to law would occur and they do not provide a foundation for a general legal value for precedents. Yet the weight of arbitral jurisprudence is both too great to ignore and too helpful in discovering what ‘’ means in a pragmatic sense. Precedents are statements about general norms; outside the common law, judge-made law is merely an interpretation of a general norm in a judgment. Not even a constant tradition of decisions can turn such a statement into a norm.

Have International Investment Agreements (IIAs) generated or changed customary law? (1) Scholarship’s optimistic approach to the status of customary international law fails to distinguish the elements of custom-creation from their proofs. (2) IIAs are not instances of expropriation or non-expropriation, hence they cannot serve as state practice. Verbal acts are not practice of the content of that verbal act. (3) IIAs are not opinio iuris because it is unlikely that treaty parties express preferences regarding customary law by concluding a treaty. (4) If treaties are an opt-out from general international law, then IIAs are likely concluded to counter perceptions of custom and a fortiori not custom-building. Therefore, a customary international law on expropriation is unlikely to be shaped significantly by IIAs and even if they did shape it, the resulting norm would be highly unspecific.

The introductory chapter places Statute and Judgment and The Value of the State and the Significance of the Individual of the Individual in the context of Schmitt’s political and constitutional theory. It illustrates how certain key themes emerging in Schmitt’s early legal-theoretical writings – in particular, the problem of the realization of law – drive the development of Schmitt’s political and constitutional theory. The chapter also offers discussion of the intellectual and biographical background to Schmitt’s early legal-theoretical works.

Statute and Judgment offers Schmitt’s theory of adjudication. Schmitt responds to the attack on legal determinacy that is associated with the free law movement (a German precursor to pragmatist and critical approaches to adjudication). While Schmitt adopts the view, as put forward by proponents of the free law movement, that statutory law is inherently indeterminate and must fail to guide judicial decision-taking in particular cases, Statute and Judgment aims to reconstruct legal determinacy on the basis of an analysis of the customs and conventions of legal practice. Schmitt’s attempt to show how legal determinacy is possible prefigures later arguments to the effect that a situation of normality is a condition of the legitimate applicability of legal norms.

Contemporary legal practice wants to apply statute. It regards the ‘will of the legislator’ or the ‘will of statute’ as its controlling standard and it therefore answers the question of the correctness of a decision as follows: a judicial decision is correct in the event that it has been provided for by the legislator in the positive law – if a decision is taken in the way that has been prescribed by the relevant legislative authority, or at least (as one unreflectively adds, as though this were not something altogether different) in the way that this authority would have decided had it anticipated the case at hand.

This chapter introduces the book and situates it in current debates on both expropriation in international investment law and (international) legal theory.

In this chapter, the method of ‘frame-determination’ for IIA expropriation clauses is applied and three limits of the actus reus condition of typical IIA expropriation clauses are identified. (1) On the macro-structural level, concerning the interaction of IIA clauses with the rest of international law, facile references to customary international law are shown to be problematic: ‘’ in IIAs does not refer to a customary norm of certain validity and great specificity. (2) On the micro-structural level, the necessity of treating direct and indirect expropriation as fully equivalent is structurally inherent in typical IIAs. (3) All legality conditions are equal and cannot be doubled in the actus reus of indirect expropriation. The structure of typical IIA clauses does not support the majority of arguments based on ‘police powers’ or on a ‘right to regulate’.

This chapter deconstructs the main argument of orthodox doctrinal scholarship on regulatory expropriation. It argues that the strong impetus of orthodox scholarship to solve problems leads both those favouring strong investor protection and those arguing for a wide state freedom to regulate to see the problem in virtually the same terms and to develop the same solution. The problem identified is that neither of the two extremes is sustainable; the solution is that a balance has to be struck. Yet such a view is ideological, not legal, because it cannot contemplate and must deny a priori the possibility that IIA expropriation clauses are skewed in one direction or that the law does not provide for a balanced, proportional solution. Doctrinal scholarship, however, must analyse the law as it is, not as we may wish it to be.