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State liability for ‘politically’ motivated conduct in the investment treaty regime

Published online by Cambridge University Press:  27 November 2019

Jonathan Bonnitcha*
University of New South Wales, The Law Building, UNSW, KensingtonNSW 2052, Australia
Zoe Phillips Williams
London School of Economics and Political Science, Houghton Street, London, WC2A 2AE, United Kingdom Email:


In framing investment treaty claims against host states, foreign investors routinely assert that the state’s conduct was ‘politically’ motivated. Arbitral tribunals must then grapple with these allegations. Yet, tribunals lack both a coherent conception of what constitutes politically motivated conduct and a consistent understanding of the relevance, if any, of such motivations for the disposition of an investor’s legal claims. This uncertainty points to an underlying tension within the investment treaty regime between the protection of investors’ interests on the one hand, and the legitimate scope for democratic decision-making and responsive politics on the other.

Using concepts drawn from political science, we develop a new framework to map the variety of conduct that tribunals characterize as ‘political’. Our framework draws attention to different types of influence over government decision-making, as well as differences between government actors responsible for the conduct. We use this framework to show that tribunals have adopted different conceptions of what constitutes illegitimate political influence over government decision-making in factually similar cases. We then evaluate tribunals’ competing approaches in light of normative theories spanning both public law and private law. Engaging with multiple normative theories allows us to examine whether tribunals’ different approaches to politically motivated conduct might reflect diverse underlying normative commitments. We argue, however, that many arbitral tribunals demonstrate a reflexive distrust of domestic political contestation that is difficult to justify within any of the theories that we consider.

© Foundation of the Leiden Journal of International Law 2019 

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The authors would like to thank the anonymous peer reviewer who provided generous and constructive comments on a draft of this article. Participants in a May 2018 workshop in the Investment Law and Policy series, convened by Lauge Poulsen, provided incisive feedback on an earlier draft. Lorenzo Cotula, Caroline Henckels, Jarrod Hepburn, David Schneiderman, and Esme Shirlow subsequently provided detailed comments on the overall argument. David Schneiderman also generously shared a draft of his paper ‘Hayek’s Dream’. Conversations with Julian Arato, Mark Aronson, Janina Boughey, Lisa Burton-Crawford, Michael Crawford, Rosalind Dixon, Rose Vassel, and David Winterton helped clarify various aspects of our public and private law analyses. Natalie Coulton and Jessie Zhang provided excellent research assistance. Jonathan also gratefully acknowledges the support of the UK’s Economic and Social Research Council, which funded earlier research on which this article draws under grant PTA-026-27-2969. The usual disclaimers apply.


1 See, e.g., V. Vadi, Public Health in International Investment Law and Arbitration (2014); Voon, T. and Mitchell, A. D., ‘Implications of International Investment Law for Plain Tobacco Packaging: Lessons from the Hong Kong–Australia BIT’, in Voon, T. et al. (eds.), Public Health and Plain Packaging of Cigarettes: Legal Issues (2012), 137 Google Scholar.

2 See, e.g., K. Tienhaara, The Expropriation of Environmental Governance: Protecting Foreign Investors at the Expense of Public Policy (2011).

3 See, e.g., C. J. Tams, S. W. Schill and R. Hofmann (eds.), International Investment Law and the Global Financial Architecture (2017).

4 Z. Williams, Risky Business or Risky Politics: What Explains Investor-State Disputes? (2016), unpublished PhD dissertation (on file).

5 L. Cotula, ‘Democracy and International Investment Law’, (2017) 30 LJIL 351, at 364.

6 G. Van Harten, Sovereign Choices and Sovereign Constraints: Judicial Restraint in Investment Treaty Arbitration (2013); Williams, supra note 4; L. Cotula and M. Schröder, ‘Community Perspectives in Investor-State Arbitration’, (2017) IIED Land, Investment and Rights series, available at

7 Bilcon v. Canada, PCA Case No. 2009-04, Reply Memorial of the Investors, 21 December 2011, para. 556. Similarly, Pac Rim v. El Salvador, ICSID Case No. ARB/09/12, Claimant’s Memorial on the Merits and Quantum, 29 March 2013, para. 359: ‘As with Claimant’s other environmental permit applications, Pac Rim again concluded that the process was being impeded by political machinations and not technical concerns regarding the applications.’

8 E.g., Van Harten, supra note 6, Ch. 3; E. Shirlow, Judging at the Interface: Towards a Theory of Deference in the International Adjudication of Private Property Disputes (2018), unpublished PhD dissertation (on file).

9 Mayeda, G., ‘Investing in Development: The Role of Democracy and Accountability in International Investment Law’, (2009) 46 Alberta Law Review 1009 CrossRefGoogle Scholar; Schneiderman, D., ‘Investing in Democracy? Political Process and International Investment Law’, (2010) 60 University of Toronto Law Journal 909 CrossRefGoogle Scholar; Schneiderman, D., ‘Against Constitutional Excess: Tocquevillian Reflections on International Investment Law’, (2018) 85 University of Chicago Law Review 585 Google Scholar.

10 Van Harten, supra note 6. For example, arbitral review of legislative action squarely raises questions of democratic accountability, whereas arbitral review of the action of specialized executive agencies raises questions of relative expertise.

11 E.g., EFILA, A Response to the Criticism against ISDS (2015) available at, at 13, para. 2.6.

12 E.g., D. Schneiderman, ‘Hayek’s Dream: International Investment Law and the Denigration of Politics’, (2018) unpublished manuscript (on file).

13 On the concept and method of overlapping consensus see Rawls, J., ‘The Idea of an Overlapping Consensus’, (1987) 7 Oxford Journal of Legal Studies 1 CrossRefGoogle Scholar. On the application of this method in a legal context see Sunstein, C. R., ‘Incompletely Theorized Agreements’, (1994) 108 Harvard Law Review 1733 CrossRefGoogle Scholar.

14 Seminally, G. Van Harten Investment Treaty Arbitration and Public Law (2007). This view is now widely accepted, e.g., S. Schill (ed.), International Investment Law and Comparative Public Law (2010); European Commission, ‘The Identification and Consideration of Concerns as Regards Investor to State Dispute Settlement’, 20 November 2017, available at

15 Roberts, A., ‘Clash of Paradigms: Actors and Analogies Shaping the Investment Treaty System’, (2012) 106 American Journal of International Law 45 Google Scholar; Maupin, J., ‘Public and Private in International Investment Law: An Integrated Systems Approach’, (2014) 54 Virginia Journal of International Law 367 Google Scholar; Mills, A., ‘Antinomies of Public and Private at the Foundations of International Investment Law and Arbitration’, (2011) 14 Journal of International Economic Law 469 CrossRefGoogle Scholar.

16 D. Gaukrodger and K. Gordon, ‘Investor-State Dispute Settlement: A Scoping Paper for the Investment Policy Community’, OECD, 31 December 2013, available at

17 J. A. Fontoura Costa, ‘Comparing WTO Panelists and ICSID Arbitrators: The Creation of International Legal Fields’, (2011) 1(4) Oñati SocioLegal Series 17; M. Waibel and Y. Wu, ‘Are Arbitrators Political? Evidence from International Investment Arbitration’, (2017) unpublished manuscript (on file); Pauwelyn, J., ‘The Rule of Law Without the Rule of Lawyers? Why Investment Arbitrators are from Mars, Trade Adjudicators from Venus’, (2015) 109 American Journal of International Law 761 CrossRefGoogle Scholar, at 773.

18 Burke-White, W. W. and von Staden, A., ‘Private Litigation in a public Law Sphere: The Standard of Review in Investor-State Arbitrations’, (2010) 35 Yale Journal of International Law 283 Google Scholar, at 288; Roberts, supra note 15, at 65–7, 77; Maupin, supra note 15, at 413; Howse, R., ‘Designing a Multilateral Investment Court: Issues and Options’, (2017) 36 Yearbook of European Law 209 CrossRefGoogle Scholar, at 212. For criticism of this assumption see Arato, J., ‘The Logic of Contract in the World of Investment Treaties’, (2016) 58 William & Mary Law Review 351 Google Scholar, at 402; Arato, J., ‘The Private Law Critique of International Investment Law’, (2019) 113(1) American Journal of International Law CrossRefGoogle Scholar.

19 Maupin, supra note 15, at 397–9.

20 Yukos v. Russia, PCA Case No. AA 227, Final Award, 18 July 2014, para. 132.

21 Tecmed v. Mexico, ICSID Case No. ARB(AF)/00/02, Award, 29 May 2003, paras. 42, 127–8.

22 AES v. Hungary, ICSID Case No. ARB/07/22, Award, 23 September 2010, para. 9.1.7.

23 Urbaser v. Argentina, ICSID Case No. ARB/07/26, Award, 8 December 2016, para. 864; Bilcon v. Canada, PCA Case No. 2009-04, Reply Memorial of the Investors, 21 December 2011, para. 2; Stati v. Kazakhstan, SCC Case No. V 116/2010, Award, 19 December 2013, para. 906; Karkey v. Pakistan, ICSID Case No. ARB/13/1, Award, 22 August 2017, para. 208; Vivendi v. Argentina (II), ICSID Case No. ARB/03/19, Award, 9 April 2015, para. 5.6.3; Pac Rim v. El Salvador, ICSID Case No. ARB/09/12, Claimant’s Memorial on the Merits and Quantum, 29 March 2013, para 381; von Pezold v. Zimbabwe, ICSID Case No. ARB/10/15, Award, 28 July 2015, paras. 163, 503.

24 Vandevelde, K. J., ‘A Unified Theory of Fair and Equitable Treatment’, (2010) 43 International Law and Politics 43 Google Scholar, at 59.

25 Van Harten’s conception of ‘politically-motivated abuse’ is particularly interesting, because it is deployed in the context of his wider criticism of arbitral tribunals’ tendency to regard state action that responds to the concerns of constituencies other than foreign investors as illegitimate. Although we are sympathetic to Van Harten’s wider criticism, he does not explain how tribunals should distinguish between the politically-motivated abuse that he regards as illegitimate and other forms of legitimate politically responsive conduct. Van Harten, supra note 6, at 72.

26 Van Harten, supra note 6, ann. C; Caddel, J. and Jensen, N. M., ‘Which Host Country Government Actors are Most Involved in Disputes with Foreign Investors?’, (2014) 120 Columbia FDI Perspectives Google Scholar; Williams supra note 4; Sweet, A. S., Chung, M. Y. and Saltzman, A., ‘Arbitral Lawmaking and State Power: An Empirical Analysis of Investor-State Arbitration’, (2017) 8 Journal of International Dispute Settlement 579 CrossRefGoogle Scholar, at 587.

27 Gilens, M. and Page, B. I., ‘Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens’, (2014) 12 Perspectives on Politics 564 CrossRefGoogle Scholar, at 564; E. E. Schattschneider, The Semisovereign People: A Realist’s View of Democracy in America (1960), 25.

28 Schattschneider, ibid., at 25.


29 Ibid., quoted in L. Graziano, Lobbying, Pluralism and Democracy (2001), 163.

30 Gilens and Page, supra note 27, at 566.

31 Graziano, supra note 29, at 161.

32 Tecmed v. Mexico, ICSID Case No. ARB(AF)/00/02, Award, 29 May 2003, para. 160.

33 Ibid., para. 173

34 Ibid., para. 99.

35 Ibid., para. 42.

36 Ibid., para. 43.

37 N. Richler, ‘Rock Bottom: With the seas nearly barren, should Digby Neck, Nova Scotia, settle for selling the earth?’, The Walrus, 12 December 2007, available at

38 Bilcon v. Canada, PCA Case No. 2009-04, Reply Memorial of the Investors, 21 December 2011.

39 Ibid., para. 23.

40 S.D. Myers v. Canada, Partial Award, 13 November 2000, paras. 122, 168.

41 Ibid., para. 123.

42 Ibid., para. 179.

43 Ibid., para. 172.

44 Ibid., paras. 162, 179.

45 Ibid., para. 189.

46 Tokios Tokelés v. Ukraine, ICSID Case No. ARB/02/18, Award, 27 July 2006, para. 3.

47 Ibid., para. 137.

48 ILC, Articles on Responsibility of States for Internationally Wrongful Acts, UN Doc. A/56/10 (2001), at Art. 4: ‘The conduct of any State organ shall be considered an act of that State under international law, whether the organ exercises legislative, executive, judicial or any other functions.’

49 This conception of the state is normally dated to Montesquieu’s 1748 The Spirit of Laws. It is reflected in the structure of the US Constitution. It has proven enormously influential in other states.

50 These considerations are also reflected to a limited extent in doctrines internal to the investment treaty regime. For example, the doctrine of denial of justice applies only to review of judicial and administrative adjudicatory proceedings.

51 Williams, supra note 4; Caddell and Jensen, supra note 26.

52 Biwater v. Tanzania, ICSID Case No. ARB/05/22, Award, 24 July 2008, paras. 207, 219.

53 Williams, supra note 4.

54 Glamis Gold v. USA, Award, 8 June 2009, para. 175.

55 Ibid., para. 177.

56 Ibid., Memorial of Glamis Gold, 5 May 2006, para. 541.

57 Williams, supra note 4.

58 Al Warraq v. Indonesia, Final Award, 15 December 2014, paras. 98–102.

59 Ibid., para. 189.

60 Yukos v. Russia, supra note 20.

61 Bilcon v. Canada, PCA Case No. 2009-04, Award on Jurisdiction and Liability, 17 March 2015, para. 573.

62 Ibid., paras. 598–9.

63 For example, the dissenting arbitrator in Bilcon raised concerns that the tribunal’s review of the JRP’s decision in a single instance would have serious implications for the integrity of the legislative scheme for environmental assessment – Bilcon v. Canada, PCA Case No. 2009-04, Dissenting Opinion of Professor Donald McRae, 10 March 2015, paras. 48–9.

64 In the interests of brevity, we have limited case discussion to those that involve either executive action or state conduct that responds to broad interest group pressure. Therefore, not all sectors of the framework are populated.

65 Our primary search strategy relied on the full text search function of arbitral awards in the Investor-State Law Guide database, using the search term ‘politic’ in combination with the nouns ‘motivate’, ‘influence’, ‘consideration’, and ‘reason’. We layered these results over our existing codebook, which codes every known investment treaty dispute across a range of variables, including the source of the measure. We complemented these primary searches with a secondary review of the academic literature, and with our own knowledge of investment treaty disputes.

66 Similarly, Van Harten, supra note 6, at 75. In this section, we do not discuss every case in which a tribunal has held that the influence of broad interest groups over executive conduct constituted or contributed to a breach of an investment treaty. Other examples include Metalclad v. Mexico, ICSID Case No. ARB(AF)/97/1, Award, 30 August 200, para. 92; Vivendi v. Argentina (II), ICSID Case No ARB/97/3, Award, 20 August 2007, para. 7.4.22; Azurix v. Argentina, ICSID Case No ARB/01/12, Award, 14 July 2006, para. 378.

67 In an unpublished paper, Schneiderman, supra note 12, argues that in some cases tribunals hold states liable for failing to act in the way a private firm would have acted. His argument provides a compelling account of a handful of disputes arising from situations in which the host state is in a contractual relationship with the host state – notably, Biwater v. Tanzania. Although Schneiderman does not purport to explain other decisions we identify as falling within the first approach, his insight prompts the question of whether tribunals’ wider distrust of politically motivated conduct might stem from an unarticulated view that state conduct is illegitimate to the extent it departs from an ideal of private commercial conduct. However, many of the cases we identify as falling within the first approach, such as Tecmed v. Mexico, arise from the state’s exercise of regulatory powers and it is difficult to see how such a standard could be operationalized. In such cases, tribunals do not explicitly refer to the standard of normal commercial conduct as a benchmark for evaluating the state’s conduct nor do we perceive the influence of this distinction implicitly in the tribunals’ criticism of the state’s conduct. We think the juxtaposition of ‘political’ decision-making to an imagined ideal of rational, technocratic decision-making provides a more compelling explanation for these decisions.

68 Tecmed v. Mexico, supra note 32, para. 127.

69 Ibid., para. 149.

70 Bilcon v. Canada, supra note 61, paras. 505, 604. Cf. Bilcon v. Canada, Dissent, supra note 63, para. 49.

71 Bear Creek Mining v. Peru, ICSID Case No. ARB/14/21, Award, 30 November 2017, para. 560.

72 Ibid., para. 401.

73 Ibid., para. 408.

74 Ibid., para. 412.

75 Schneiderman, D., ‘Legitimacy and Reflexivity in International Investment Arbitration: A New Self-Restraint?’, (2011) 1(4) Oñati Socio-Legal Series 1 Google Scholar.

76 On strategic judicial decision-making in light of concerns about institutional legitimacy, see generally L. Epstein and J. Knight, The Choices Justices Make (1998). For an application to investment treaty arbitration see Schneiderman, D., ‘Judicial Politics and International Investment Arbitration: Seeking an Explanation for Conflicting Outcomes’, (2010) 30 Northwestern Journal of International Law & Business 383 Google Scholar.

77 Impregilo v. Argentina (I), ICSID Case No. ARB/07/17, Award, 21 June 2011, para. 21.

78 Ibid., para. 201.

79 Ibid., para. 209.

80 Ibid., para. 329: ‘The position of the Province is reflected in a letter of July 23, 2002 … that adjustments in favor of [the investor] should not be made, as this would have negative effects for the customers whose economic interests required protection.’

81 Ibid., paras. 316–31.

82 E.g., Schill, S. W., ‘Fair and Equitable Treatment, the Rule of Law, and Comparative Public Law’, in Schill, S. W. (ed.), International Investment Law and Comparative Public Law (2010), 151 CrossRefGoogle Scholar, at 160; Vandevelde, supra note 24, at 54; R. Kläger, ‘Fair and Equitable Treatment’ in International Investment Law (2011), 150.

83 Electrabel v. Hungary, ICSID Case No. ARB/07/19, Decision on Jurisdiction, Applicable Law and Liability, 30 November 2012, at Part VI – Page 11.

84 Ibid., Part VIII – Page 2, para. 8.8.

85 Ibid.

86 Ibid., Part VIII – Page 7, para. 8.23.

87 Forsyth, C., ‘Of Fig Leaves and Fairy Tales: The Ultra Vires Doctrine, The Sovereignty of Parliament and Judicial Review’, (1996) 55 Cambridge Law Journal 122 CrossRefGoogle Scholar, at 123; L. Burton-Crawford, The Rule of Law and the Australian Constitution (2017), 104; R. v. Lord President of the Privy Council ex parte Page [1992] AC 682, per Lord Browne-Wilkinson, ‘The fundamental principle [of judicial review of executive action] is that the courts will intervene to ensure that the powers of public decision-making bodies are exercised lawfully.’

88 A. V. Dicey, Introduction to the Study of the Law of the Constitution (1965), 411.

89 Craig, P., ‘Ultra Vires and the Foundations of Judicial Review’, (1998) 57 Cambridge Law Journal 63, at 66CrossRefGoogle Scholar; P. Cane, Administrative Law (2011), 36.

90 Elliott, M., ‘The Ultra Vires Doctrine in a Constitutional Setting: Still the Central Principle of Administrative Law’, (1999) 58 Cambridge Law Journal 129, at 157CrossRefGoogle Scholar. Similarly, M. Aronson and M. Groves Judicial Review of Administrative Action and Government Liability (2013), 1.

91 NEAT Domestic Trading Pty Ltd v. AWB Ltd (2003) 216 CLR 277, 288 per Gleeson CJ.

92 J. Auburn et al., Judicial Review: Principles and Procedures (2013), paras. 16.01–16.21; Aronson and Groves, supra note 90, at paras. 5.470–5.580.

93 Cane, supra note 89, at 178.

94 Aronson and Groves, supra note 90, at para. 5.470

95 We are grateful to Mark Aronson for discussions clarifying this point.

96 Tecmed v. Mexico, supra note 21, at para. 127.

97 Ibid., paras. 98–102.

98 Ibid., paras. 119–20.

99 Sweet, A. S. and Matthews, J., ‘Proportionality Balancing and Global Constitutionalism’, (2008) 47 Columbia Journal of Transnational Law 72 Google Scholar.

100 The seminal account is R. Alexy, A Theory of Constitutional Rights (2002).

101 Sweet and Matthews, supra note 99, at 97.

102 J. Matthews, ‘Proportionality Review in Administrative Law’, in S. Rose-Ackerman, P. L. Lindseth and B. Emerson (eds.), Comparative Administrative Law (2017), 405.

103 A. Barak, Proportionality: Constitutional Rights and their Limitations (2012).

104 Ibid.

105 K. Möller, The Global Model of Constitutional Rights (2012), 182.

106 E.g., Barak, supra note 103, at 301.

107 Kumm, M., ‘Political Liberalism and the Structure of Rights: On The Place And Limits of the Proportionality Requirement’, in Pavlakos, G. (ed.), Law, Rights and Discourse: The Legal Philosophy of Robert Alexy (2007), 131 Google Scholar.

108 Jackson, V. C., ‘Constitutional Law in an Age of Proportionality’, (2015) 124 Yale Law Journal 3094, at 3112Google Scholar.

109 C. Henckels, Proportionality and Deference in Investor-State Arbitration: Balancing Investment Protection and Regulatory Autonomy (2015), 129.

110 Lucy, W., ‘What’s Private About Private Law?’, in Robertson, A. and Wu, T. H. (eds.), The Goals of Private Law (2009), 47, at 75Google Scholar.

111 E. J. Weinrib, The Idea of Private Law (2012), 104.

112 Weinrib, E. J., ‘Corrective Justice in a Nutshell’, (2002) 52 University of Toronto Law Journal 349, 355CrossRefGoogle Scholar.

113 Weinrib, supra note 104, at 121. Although investment treaties do not generally deal with duties of foreign investors, they specify the obligations that apply equally to all state parties to the treaty. As such, they must reconcile the protection of the interests of each state with the freedom of action of the others.

114 Weinrib, supra note 104, at 131. Similarly, A. Ripstein, ‘Reply: Relations of Right and Private Wrongs’, (2018) 9 Jurisprudence 614, at 620.

115 Cane, P., ‘Corrective Justice and Correlativity in Private Law’, (1996) 16 Oxford Journal of Legal Studies 471, at 473CrossRefGoogle Scholar.

116 R. Rabin, ‘Law for Law’s Sake’, (1996) 105 Yale Law Journal 2261, at 2265.

117 Shiffrin, S. V., ‘The Divergence of Contract and Promise’, (2007) 120 Harvard Law Review 708, at 714Google Scholar.

118 C. Fried, Contract as Promise: A Theory of Contractual Obligations (2015), 16.

119 Fried, C., ‘The Ambitions of Contract as Promise ’, in Klass, G., Letsas, G. and Saprai, P. (eds.), Philosophical Foundations of Contract Law (2014), 12, at 34Google Scholar.

120 Barnett, R. E., ‘A Consent Theory of Contract’, (1986) 86 Columbia Law Review 269, at 303–9CrossRefGoogle Scholar; Raz, J., ‘Review: Promises in Morality and Law’, (1982) 95 Harvard Law Review 916, at 933CrossRefGoogle Scholar.

121 Fried, supra note 118, at 30.

122 Ibid., at 88 (emphasis in original).

123 Similarly, Arato (2016), supra note 18.

124 R. Nozick, Anarchy, State and Utopia (1974), 151.

125 R. Epstein, Takings: Private Property and the Power of Eminent Domain (1985), 293.

126 Ibid., at 100.

127 J. Bonnitcha, Substantive Protection under Investment Treaties: A Legal and Economic Analysis (2014), 92.

128 Robertson, A., ‘Constraints on Policy-Based Reasoning in Private Law’, in Robertson, A. and Wu, T. H. (eds.), The Goals of Private Law (2009), 261, at 261Google Scholar.

129 R. Posner, Economic Analysis of Law (2007), 13. To be sure, Posner has endorsed some of the principles outlined above – for example, the principle of corrective justice as an organizing principle for the law governing interpersonal harms. However, this endorsement rests on the argument that the principle is the best way to promote economic efficiency in a particular context. Posner, R. A., ‘The Concept of Corrective Justice in Recent Theories of Tort Law’, (1981) 10 Journal of Legal Studies 187, at 201CrossRefGoogle Scholar.

130 This is the ‘fault rule’ discussed in Cooter, R., ‘Unity in Tort, Contract and Property: The Model of Precaution’, (1985) 73 California Law Review 1, at 28CrossRefGoogle Scholar. For an application to the law governing compensation for interference with private property by the state see Miceli, T. J. and Segerson, K., ‘Regulatory Takings: When Should Compensation be Paid?’, (1994) 23 Journal of Legal Studies 749 CrossRefGoogle Scholar.

131 For discussion of this rule in the context of contractual liability see Cooter, (1985), ibid., at 28. For discussion on the law governing compensation for interference with private property by the state see Blume, L., Rubinfeld, D. L. and Shapiro, P., ‘The Taking of Land: When Should Compensation be Paid?’, (1984) 99 Quarterly Journal of Economics 71 CrossRefGoogle Scholar.


132 Stigler, G. J., ‘The Theory of Economic Regulation’, (1971) 2 Bell Journal of Economics and Management Science 3, at 13CrossRefGoogle Scholar; Yackee, J. W. and Yackee, S. W., ‘A Bias Towards Business? Assessing Interest Group Influence on the U.S. Bureacracy’, (2006) 68 Journal of Politics 128 CrossRefGoogle Scholar.

133 For discussion in the context of investment treaties see Bonnitcha, J. and Aisbett, E., ‘An Economic Analysis of the Substantive Protections Provided by Investment Treaties’, in Sauvant, K. (ed.), Yearbook on International Investment Law and Policy 2012 (2013), 681, at 685Google Scholar.

134 Caddel and Jensen, supra note 26; C. Tietje and F. Baetens, ‘The Impact of Investor-State-Dispute Settlement (ISDS) in the Transatlantic Trade and Investment Partnership’, Study Prepared for: Minister for Foreign Trade and Development Cooperation, Ministry of Foreign Affairs, The Netherlands, 24 June 2014, available at, at 46.

135 Many theories of democracy see responsive government as a necessary characteristic of democracy. See, e.g., Cotula, supra note 5, at 364 arguing that an ‘action-based’ conception of democracy requires an openness of government decision-making to contestation by organized citizens.

136 E.g., Roberts, supra note 15.

137 This is an ex post effect, discussed in Bonnitcha, supra note 127, at 84. See also L. Sachs and L. Johnson, ‘Investment Treaties, Investor-State Dispute Settlement and Inequality: How International Rules and Institutions Can Exacerbate Domestic Disparities’, (2017), Working Paper No. 306 of the Initiative for Policy Dialogue, available at

138 Mnookin, R. H. and Kornhauser, L., ‘Bargaining in the Shadow of the Law: The Case of Divorce’, (1979) 88 Yale Law Journal 950 CrossRefGoogle Scholar; Koskenniemi, M., ‘It’s not the Cases, It’s the System’, (2017) 18 Journal of World Investment and Trade 343 CrossRefGoogle Scholar. To date, there has been little empirical work on the extent to which the existence of an investment treaty influences the terms of settlement in foreign investment disputes.

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