This chapter, which should be read in conjunction with Chapter 10, addresses the second of two principal criteria for a dispute to enter the scope of submission to investment treaty arbitration – the existence of a protected investor. Whether an investor qualifies for treaty protection depends on its nationality. Essentially, only investors who are nationals of the other or another Contracting State to an investment treaty are eligible to seek treaty protection from a Contracting State. Arbitral tribunals are thus tasked with verifying if an investor is in possession of the nationality that it claims to have. Section 1 outlines the centrality of a determination on an investor’s nationality to its status as a protected investor, and the implications of the premium placed on nationality. Section 2 explores in greater detail the process of determining the nationality of individual investors, while Section 3 is devoted to the nationality of corporate investors. Section 4 touches on the emerging phenomenon of ‘divisible’ investors, whereby duplicate claims are launched against a host State by an investor through or in conjunction with close affiliates bearing different nationalities. The result is parallel or multiple proceedings.

This chapter, which should be read in conjunction with Chapter 11, addresses the first of two principal criteria for a dispute to enter the scope of submission to investment treaty arbitration – the existence of a protected investment. Whether an investment qualifies for treaty protection depends on the definition of a protected investment. This definition can be drawn from the terms of the applicable investment treaty (subjective) and/or from the typical features of investment projects (objective). Section 1 explores the rationale for relying solely on treaty terms to define protected investments. Section 2 considers the basis for and attempts to impart an objective definition, located outside the boundaries of the applicable treaty, to protected investments. Section 3 demonstrates how tribunals eschew voting for subjectivity or objectivity by examining both the treaty and non-treaty definitions of protected investments, eventually arriving at a dual meaning.

This concluding chapter discusses the current backlash against investment arbitration and investment treaties. Section 1 discusses the backlash to investment arbitration under Chapter 11 of the NAFTA in the early 2000s, and the consequent ‘rebalancing’ of the US Prototype BIT of 1994 in 2004. The chapter goes on to discuss how the backlash grew, beginning in 2007, from Bolivia’s, Ecuador’s and Venezuela’s terminations of their participation in the ICSID Convention and other similar terminations worldwide, to various countries’ efforts to ‘rebalance’ (i.e. rewrite) their own BITs and other investment agreements. Section 2 highlights some of the latest treaty clauses which have emerged from this worldwide rebalancing effort, focusing on some of the most important substantive clauses, namely FET and expropriation clauses, particularly in connection with the controversy over the continued ability of host States to enact environmental, health and other public welfare measures. The chapter then turns to current procedural innovations and proposals for reform, such as the proposal for an appellate mechanism. Section 3 concludes this chapter with the European Union’s current proposal to replace investment arbitration altogether with a ‘Multilateral Investment Court’. Today, the system for settling investment disputes through investment arbitration faces proposals for its improvement, as well as for its demise, or at least its diminution as the principal mode of investment dispute settlement. Yet here is a field which has always seen such shifts in sentiment, and little of what has been said in this book will likely be irrelevant in understanding what the future brings.

This chapter addresses two obligations commonly included in investment protection treaties and drafted in a contingent manner: national treatment and most-favoured-nation (MFN) treatment. The topic is addressed in four parts: Sections 1 and 2 deal with national treatment, and Sections 3 and 4 deal with most-favoured-nation treatment. Section 1 sets the scene, outlining how national treatment may be expressed in various primary obligations of investment protection law. Section 2 analyses various legal issues that arise in the application of national treatment, dealing in turn with the accepted categories of ‘like circumstances’ and ‘distinctions with treatment’, as well as the less settled issue of ‘justification’. Sections 3 and 4 deal with the MFN treatment obligation, and also consider its application to primary obligations and to rules of international dispute settlement.

This chapter charts the rise of treaties as key instruments of foreign investment protection. In this chapter, the term investment treaties refers to bilateral or multilateral treaties that address investment protection exclusively, as well as chapters in free trade agreements that highlight investment protection as one of several trade-related concerns. There are currently more than 3,000 investment treaties in existence, weaving almost every country in the world into a vast, complex web of overlapping treaties. Today, foreign investment that is not subject to investment treaty protection is the exception to the norm. Section 1 situates the emergence of investment treaties in their proper historical, political and economic context. Section 2 discusses the period of rapid growth in the number of investment treaties, the ensuing surge in the invocation of investment treaties by foreign investors against host States and the consequences of the turn to investment treaty protection. Section 3 demonstrates how investment treaties, as well as the regime they fostered, are currently undergoing a period of resistance and change.

This chapter discusses the enforcement of awards and challenges to enforcement. It distinguishes between ICSID and other kinds of arbitral awards. Section 1 deals with the basic regime for set aside, enforcement and challenges to the enforcement of an international arbitral award, before introducing the ICSID regime, which applies specifically to ICSID awards. Section 2 discusses the case of non-ICSID arbitration in greater detail, while Section 3 discusses in greater depth the special case of ICSID arbitration, where enforcement and annulment of the award are matters governed solely under the ICSID Convention. Section 4 then deals with foreign state immunity. Notwithstanding the exceptions to foreign State immunity which allow the enforcement of investment arbitration awards, foreign sovereign assets continue to enjoy a broad immunity from execution and attachment. It might matter not at all that the immunity of the Respondent host State has already been lifted from suit and even enforcement, either in the non-ICSID situation by way of a ‘commercial exception’ typically found under various national rules, or in the case of an ICSID arbitration under the terms of the ICSID Convention. Immunity from execution and attachment is therefore the ‘last refuge’ of the host State. In practical terms, attachment of foreign sovereign assets will depend upon how favourable the rules are in the particular domestic jurisdiction, and this is discussed in Section 5.

Investment treaty arbitration derives from the consent of the host State, given under a treaty, to submit itself to arbitration in the event of a dispute with a foreign investor. Today, such treaty-based arbitration is the most prominent aspect of international investment arbitration, but it is only one aspect or form of it. Arbitration itself is only one of several means of settling investment disputes between foreign investors and host States. In the past, international investment disputes were resolved diplomatically by the ‘home’ State of the investor taking up its grievance against a foreign ‘host’ State, thereby making that grievance the home State’s own. Such a claim might be pursued purely through diplomatic means, but throughout the nineteenth century and persisting well into the twentieth century there were several examples of the settlement of investment disputes through ‘mixed’ claims commissions. These were commissions of an international character which in time were supplemented by national claims commissions. Diplomatic espousal and mixed commissions operated in tandem. Where the commission failed, as it sometimes did, there were diplomatic negotiations leading to ‘lump sum’ settlements. Section 1 discusses these earlier forms of international investment dispute settlement. Section 2 goes on to discuss the unsettled period following the Second World War from 1945 to the 1970s, during which the standards of protection, particularly the standard of compensation, as well as the means of settlement – whether that ought to be in domestic courts or by way of international arbitration – were controversial. In response to controversy and uncertainty, there was an effort to transform the standards of protection into contractual terms, and to introduce contractual agreements to arbitrate any disputes. The attempt to ‘contractualise’ international investment protection became an attempt to elevate the contracts themselves onto the international plane, such that the contractual commitments to standards of protection and arbitration would themselves have the force of international law. That is the subject of Section 3. Section 4 deals with the rise, subsequently, of treaty-based protection and treaty-based arbitration in place of the role which contract had played. From this emerged today’s ubiquitous bilateral investment treaties (BITs) and the sort of investment treaty arbitration for which they provide. Section 5 discusses related modern institutions: the International Centre for the Settlement of Investment Disputes (ICSID), as well as the inter-State adjudication of investment disputes before the International Court of Justice (ICJ). Section 6 rounds off this opening chapter with a brief introduction to the modern sources of international law usually relied upon by international investment tribunals.

This chapter covers another preliminary issue that arises for consideration in investment arbitration. It can be read in conjunction with Chapter 6, which deals with applicable laws. Section 1 examines how the burden of proof is allocated in investor–State disputes, while Section 2 examines how the standard of proof is articulated and applied by investment arbitration tribunals.

This chapter addresses preliminary objections that may be made to consideration of an investment arbitration claim on its merits. The topic is addressed in five parts. Section 1 introduces the concepts of ‘jurisdiction’ and ‘admissibility’. Section 2 discusses the practical relevance of that distinction. Section 3 sets out the procedural framework for dealing with issues of jurisdiction and admissibility. Section 4 addresses, somewhat briefly, those objections to jurisdiction and admissibility that have been most important in arbitral practice. Section 5 concludes the chapter with a deeper examination of one particular objection: an objection relating to parallel proceedings.

This chapter discusses the evolution and basis of investment arbitration against the backdrop of other means of investment dispute settlement. The introduction revisits the varieties of investment dispute settlement, of which investment arbitration is only one. Section 1 goes on to explain the notion of ‘arbitration without privity’. It is that which makes non-contractually-based investment arbitration, such as treaty-based investment arbitration, distinctive. According to this idea, a claim may be brought by an investor even absent a contractual relationship between the investor and the host State. Section 2 continues this discussion by exploring the different ways in which consent to arbitration may be expressed, and the requirement that such consent should be expressed in writing. Section 3 deals with varieties of treaty clauses which provide for investment treaty arbitration, namely fork-in-the-road clauses, as well as other procedural preconditions. We continue with Section 4, which discusses the complication of contractual forum selection clauses which may exist alongside a claimant’s option to choose investment arbitration – for example, contractual clauses which may choose a different means from arbitration altogether, such as those which evince the selection of a domestic court system. Finally, for the sake of completeness, Section 5 discusses inter-State (as opposed to investor–State) investment dispute settlement, with a hopefully useful summary at the end of that section. Section 6 offers – as a practical matter – a brief discussion of some of the factors which may affect the choice between ICSID and non-ICSID arbitration. It does not seek to replace more detailed comparisons in other parts of this book, but is simply intended at this juncture to draw the issue to the reader’s mind.