The International Investment Regime and Investor – State Dispute Settlement: States Bear the Primary Responsibility for Legitimacy

Abstract

Its starting point is the global debate on the legitimacy of the treaty-based regime for the promotion and protection of international investment and investor-State dispute settlement (ISDS). The article considers that the debate will promote constructive change if it is informed by States and it informs States. It addresses key issues in the debate: transparency in the negotiation of investment agreements and in the conduct ISDS proceedings; protecting the scope for regulatory action by States; the obligation on States to provide fair and equitable treatment to investors and investments; the challenges posed by the ‘first generation’ of bilateral investment agreements; and the utility of establishing ISDS appellate mechanisms. The article contends that States can and should act to strengthen the international investment regime. The article concludes that States, as the creators of the regime, ultimately bear the primary responsibility for its legitimacy.

Keywords: International Investment Regime, Investor-State Dispute Settlement, First Generation BIT, TTIP, ISDS Appellate Mechanism, Police Powers Doctrine, Fair and Equitable Treatment, State's Right to Regulate, UNCTAD World Investment Report, Bilcon, UNCITRAL Rules on Transparency, ICSID

JEL Classification: K33