Constitutional theory in democratic countries has traditionally postulated the existence of a sovereign people endowed with the authority to enact a constitution. An influential view going back to Sieyès claims that the constituent power of the people is legally unlimited. The ability of the people to enact a constitution is supposed to be fully disconnected from positive law. This notion, however, is seriously flawed. The idea that a legally omnipotent people, working its will at the constitutional stage, is the fountain of positive law makes no sense. Although the idea can be used rhetorically in some justificatory contexts to support valuable institutional arrangements, it also raises a number of pragmatic concerns. All things considered, our theoretical and political discussions would be more fruitful if we certified the death of that concept.

Throughout this book, we have explored various modalities of arbitration in a number of legal domains. Important differences have been noted. We have studied forms of arbitration involving disputes of a horizontal nature (private-law arbitration and state-to-state arbitration) and other forms that relate to controversies of a vertical character (investor-state arbitration). We have also paid attention to the presence or absence of courts in the background endowed with compulsory jurisdiction. While arbitrators dealing with domestic private law or international investment law do not operate in isolation, since local courts are otherwise empowered to handle cases, no such situation arises in the international sphere when states are in dispute. International adjudication, we have noted, retains an arbitral foundation, as no court can exercise jurisdiction unless its authority flows from the consent of the contending states.

In the field of international investment law, arbitrators need to produce a consistent body of case law to specify the broad principles typically embodied in the treaties. The fact that most arbitral awards state reasons and are published helps generate a culture of precedent. Arbitrators, moreover, are aware of the need for their decisions to form a coherent body of jurisprudence. The arbitral arrangements, however, are not structured in such a way that consistency is likely to be achieved. In any event, to the extent that arbitrators play a role in the lawmaking process, certain mechanisms must be available for the democratic branches to check the outcomes of arbitration. The chapter discusses these issues, and takes the question whether it would be desirable to set up a global court of a permanent kind to deal with investment controversies.

When states are involved in a dispute in the international sphere, they can take different paths to resolve it in a peaceful way. Among other things, they can resort to arbitration or they can send the case to an international court. Arbitration played an important part in the early stages of international law, before permanent courts were created in the twentieth century. International adjudication, however, retains its arbitral foundation, since the consent of the contending states is always necessary for a court to have jurisdiction to settle a dispute. The chapter criticizes the consent theory and the conception of state sovereignty that has impeded the formation of courts endowed with compulsory jurisdiction. The international legal order is constitutionally defective when it comes to its adjudicative structures.

In a liberal political regime, individuals are accorded a basic right to private autonomy. Individuals are assumed to be the best judges of their own interests in most contexts, under appropriate conditions of rationality. They can thus enter into legal relationships with others and shape the content of those relationships in the form of specific rights and obligations. Private autonomy supports the recognition of the right to arbitration. Private parties should be entitled to opt for arbitration to settle controversies involving their own interests. Arbitration, moreover, offers potential advantages over litigation in court, having to do with specialization and expertise, procedural flexibility, speed, privacy and confidentiality. Arbitration is grounded in private autonomy, not on utilitarian considerations. The right to arbitration is not absolute, of course. The state is authorized to place restrictions on it, in the name of public interests and values. But the state bears a burden of justification.

The right to arbitration has a liberal foundation. Whether the Constitution should guarantee arbitration as a right, however, is a separate question, which is likely to be answered differently in diverse constitutional traditions. A comparative examination of the United States, Europe, and Latin America on the constitutional status of arbitration is instructive in this regard. Contrasting conceptions about the scope of the constitutional domain of rights, about the intensity of judicial review of legislation, and about the potential effect of constitutional rights in the private sphere, lead to disparate conclusions about the constitutional status of arbitration. There is nevertheless a general argument in favor of constitutionalization: arbitration can be better protected against unduly restrictive legislation, if arbitration is rooted in the Constitution. The government is forced to justify its restrictive norms in a judicial forum.

This book studies arbitration from a constitutional perspective. Its scope is broad, for it explores the most important modalities of arbitration. Part One focuses on arbitration in private law. Any constitutional inquiry into arbitration must begin at the national level. We need to discuss whether Constitutions should protect the right to arbitration, and what kinds of justifications the state may advance in defence of the restrictions it places on the arbitral process. Part Two centers on investor-state arbitration, which has generated much controversy in recent years. Critics contend that this form of arbitration privileges foreign investors in unacceptable ways. Local investors are discriminated against and the ability of governments to regulate matters in the public interest is unduly curtailed, critics argue. Part Three looks at state-to-state arbitration, which has historically played a key part in the evolution of international law. The establishment of international courts in the twentieth century did not help transcend the arbitral foundations of adjudication, however. The jurisdiction of international courts always stems from the consent of the parties. This limitation should raise concerns from a constitutional point of view.

Arbitration is widely used in the international commercial arena. When contracting parties come from different countries, arbitration is often selected to adjust contractual disputes. One of the reasons for this preference has to do with the adoption in 1958 of the New York Convention, which effectively secures the enforcement of arbitral agreements and awards. Another reason is that arbitration enables the parties to create a neutral forum, detached from local courts, for transborder controversies to get adjudicated in an impartial manner. The argument that courts may be biased against ousiders raises interesting issues about the best ways to guarantee impartiality in a world where nationality seems to matter. International commercial arbitration also poses questions concerning the role of arbitrators in the lawmaking process. Are arbitrators generating a body of transnational law that is autonomous from democratically-enacted national legislation?

State-to-state arbitration offers some potential advantages as a dispute-resolution mechanism. These advantages are similar to those arbitration displays in other settings, having to do with specialization, procedural flexibility, speed, and confidentiality. The chapter examines some of the strengths and weaknesses of state-to-state arbitration. It also discusses the arbitrability of peremptory norms of international law (ius cogens), the interaction between arbitrators and the International Court of Justice in the lawmaking process, and the extent to which arbitration is likely to be avoided as a procedure to settle disputes among member states of a supranational organization.

The investment legal regime is part of a broad landscape that encompasses various institutional arrangements and branches of the law. In some parts of the world, for example, supranational organizations have been created. The European Union is a prominent illustration. May member states of the European Union conclude investment treaties among themselves? International law, moreover, includes branches dealing with issues that have implications for investment law, such as human rights law. The chapter explores the ways in which investment law should cohere with the rest of international law, both vertically and horizontally, and how arbitrators should see their role in this fragmented legal environment.

Investment treaties grant foreign investors certain protections, which they can invoke before international arbitral tribunals. Those treaties do not apply to local investors. This different treatment raises constitutional objections based on the principle of equality. Courts in various jurisdictions have had to deal with this challenge when ruling on the constitutionality of investment treaties. The different treatment that derives from the current investment regime is sometimes defended on the instrumental ground that it helps attract external capital, which is beneficial for the economy of the host state. Another theory, in contrast, argues that investment treaties are necessary to counteract the potential vulnerability of foreigners. The chapter develops an equality-based theory that constitutional courts could use in their decisions, and explores the doctrinal legal consequences that should follow from it.

The right to arbitration is not absolute. The state is entitled to place restrictions on the arbitral process. This chapter discusses some important norms regarding impartiality, fairness, discrimination, substantive norms, reason-giving, and judicial review of awards. An important issue concerns the need for the state to ensure the reliability of arbitration when mandatory law is at stake or when consumer and employment controversies are arbitrated. A related problem arises when arbitrators confront legislation that is arguably inconsistent with the Constitution or with supranational law (such as European Union law). What should arbitrators when they believe the applicable legislation is not in conformity with higher law?