Abstract
Is the past of investor-state dispute settlement (‘ISDS’) also its future? This is the question at the heart of Rodrigo Polanco’s new monograph The Return of the Home State to Investor-State Disputes: Bringing Back Diplomatic Protection? (Cambridge University Press 2019). The current dispute settlement regime, providing access for investors to institutional arbitral proceedings before an international tribunal based on international treaty norms, is a fairly recent phenomenon. The International Centre for Settlement of Investment Disputes (ICSID) Convention, providing the main procedural framework, entered into force in 1966, whereas the first investment treaty award was only decided in 1990, and ISDS only took off in the late 1990s or early 2000s. Before this, the protection of investments abroad was a matter for the investor’s home state, with diplomatic protection as the adequate legal mechanism for such intervention with the host state. Under the Vattelian paradigm the investor’s dispute with the host state, under international law, constituted actually a dispute between the home and the host state: violating the interest of investors of the home state meant violating the home state’s rights. Conversely, as its own rights were at issue (and not the investor’s), it was within the home state’s exclusive discretion whether or not to take up the matter with the host state. This is what ISDS fundamentally changed: The dispute became a matter between the investor and the host state, with the investor enjoying authority over the decision whether or not to pursue its (international treaty) rights on the international level before an international tribunal—and with the home state mostly out of the picture, not at least due to Article 27 of the ICSID Convention. Polanco’s book confronts us with the question whether we are about to enter an age—or have already reached it—in which diplomatic protection and the home state’s influence on the investment dispute again play a more prominent role.
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Notes
- 1.
Cf. Asian Agricultural Products Ltd. v. Republic of Sri Lanka, ICSID Case No. ARB/87/3, Final Award of 27 June 1990.
- 2.
See UNCTAD World Investment Report 2019, p. 103, figure III.9.
- 3.
See Kulick (2018), pp. 41 et seq.
- 4.
Cf. de Vattel (1758), pp. 295 et seq.
- 5.
Cf. Kulick (2018).
- 6.
Article 27 ICSID Convention reads:
(1) No Contracting State shall give diplomatic protection, or bring an international claim, in respect of a dispute which one of its nationals and another Contracting State shall have consented to submit or shall have submitted to arbitration under this Convention, unless such other Contracting State shall have failed to abide by and comply with the award rendered in such dispute.
(2) Diplomatic protection, for the purposes of paragraph (1), shall not include informal diplomatic exchanges for the sole purpose of facilitating a settlement of the dispute.
- 7.
Cf. Waibel et al. (2010).
- 8.
See Miles (2013), pp. 123 et seq.
- 9.
Cf. Euler et al. (2015).
- 10.
Cf. Franck (2019).
- 11.
Cf. e.g. Kumm (2015), www.esil-sedi.eu/node/944 (last accessed 19 February 2020), p. 3.
- 12.
- 13.
See UNCTAD World Investment Report 2019, pp. 4, 5 and 7. See also Kulick (2017b), pp. 3, 14.
- 14.
Cf. Kulick (2017a).
- 15.
Alvarez (2011).
- 16.
Citing Kulick (2017b).
- 17.
Cf. Kulick (2017b).
- 18.
Cf. US Model BITs 1984 and 2004, see https://www.law.nyu.edu/sites/default/files/ECM_PRO_066871.pdf (last accessed 19 February 2020).
- 19.
Cf. Shan and Gallagher (2009), pp. 109 et seq.
- 20.
Cf. People’s Republic of China, State Council Website, http://english.www.gov.cn/beltAndRoad/ (last accessed 19 February 2020).
- 21.
See UNCTAD World Investment Report 2019, p. 4, figure I.3, pp. 5 and 7, figure I.6, with 2018 marking the U.S. as the largest capital importer (US$252 billion, far ahead of second place China with US$139 billion) and a sharp decline of its capital exports (US$ −200 billion).
- 22.
Cf. US Model BIT 2012, https://ustr.gov/sites/default/files/BIT%20text%20for%20ACIEP%20Meeting.pdf (last accessed 19 February 2020). On the recent Chinese BIT policy see Moynihan (2017), https://www.chathamhouse.org/publication/chinas-evolving-approach-international-dispute-settlement (last accessed 19 February 2020), p. 8. Recently concluded Chinese BITs with OBOR states and beyond contain robust investor-state dispute settlement clauses, see e.g. Article 12 of the China-Uzbekistan BIT of 2011 and Article 13 of the China-Tanzania BIT of 2014.
- 23.
See UNCITRAL Working Group III: Investor-State Dispute Settlement Reform, https://uncitral.un.org/en/working_groups/3/investor-state (last accessed 19 February 2020).
- 24.
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Kulick, A. (2020). Rodrigo Polanco, The Return of the Home State to Investor-State Disputes: Bringing Back Diplomatic Protection?. In: Bungenberg, M., Krajewski, M., Tams, C.J., Terhechte, J.P., Ziegler, A.R. (eds) European Yearbook of International Economic Law 2020. European Yearbook of International Economic Law, vol 11. Springer, Cham. https://doi.org/10.1007/8165_2020_59
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