From Delegation to Prescription

한·일 및 한·중·일 투자협정의 투자자-국가 분쟁해결제도 연구：국내법원판결에 관한 판정례를 중심으로 (A Study on Investor-State Dispute Settlement System of the Korea-Japan and the Korea-China-Japan Investment Treaty: Denial of Justice in Cases)

Statess Reassertion of Control Over International Investment Law - (Re)Defining Fair and Equitable Treatmentt and Indirect Expropriationn

International investment arbitration is heterogeneous. At its core, it represents the settlement of international investment disputes between foreign investors and host States by arbitration. However, as there are different ways to institute arbitral proceedings, the structural and substantive aspects of international investment arbitration are colored by the mode of commencement of arbitration. An early iteration of international investment arbitration was the submission of investment claims to Mixed Claims Commissions. These had been established by a series of bilateral conventions concluded between the mid-1800s and the early 1900s in order to adjudicate disputes between the nationals of a party State to the convention and the other party State. The types of disputes that fell within the jurisdiction of a Commission were specified in the conventions and varied, depending upon which convention was invoked. This form of international investment arbitration never achieved great prominence because of the small number of investment claims heard but they were a useful source of early jurisprudence and the basic form has continued to be employed in various guises, most notably in the case of the subsequent Iran-US Claims Tribunal. In the early 21st century, however, the two dominant iterations of international investment arbitration are contractually based investment arbitration and treaty-based investment arbitration. In investment contract arbitration, the legal basis for the arbitration is an arbitration clause in a contract which is binding on all contracting parties. In investment treaty arbitration, however, the legal basis for arbitration is a binding offer in a treaty clause by a host State to arbitrate with all protected investors, which any protected investor is then free to accept or reject. For this reason, the latter has been referred to, sometimes derisively, as “arbitration without privity,” a phrase coined by Jan Paulsson. There is also a third category of consent to investment arbitration by acceptance of a unilateral offer of a State through domestic investment laws. Having said that, many investment treaties also record an agreement between the Contracting States to arbitrate disputes arising from the interpretation or application of the treaty. In sum, investment treaty arbitration encompasses investor-State arbitration, which may have a variety of legal bases, and also State-to-State arbitration.

The article is dedicated to analyzing the issue of determining the boundary of the legitimacy of state measures in regulating and controlling foreign investments within national jurisdiction, in accordance with national laws and regulations, and in line with national objectives and priorities. Additionally, this article reviews key regulatory trends in the international legal sphere concerning the protection of foreign investments. Through the analysis, the content of the main issues in international investment law has been clarified, including the protection of foreign investments and the differentiation (legal classification) of state actions that constitute indirect expropriation, discrimination, unfair treatment, or other violations of international obligations under international investment agreements. Such actions create the right to challenge them through international arbitrations, potentially leading to compensation obligations. On the other hand, state measures taken within their right to regulate in the public interest are not subject to compensation. Moreover, previously published theoretical insights regarding the interaction between the legal regime of foreign investment (international investment treatment) and the state guarantees for the protection of foreign investments have been importantly refined. Relevant examples are provided concerning both these guarantees and the key approaches to forming a regulatory framework for the domestic regulation of foreign investments, including their admission and restrictions. The first approach assumes that special regulations apply to foreign investors, partially overlapping with those established for national investors. In developing countries in Africa, Latin America, and Asia, special foreign investment laws typically exist, which may include separate laws or investment codes. The second approach is more characteristic of countries with developed economies. Under this approach, legislators do not establish special laws governing foreign investments but introduce significant restrictions. Such restrictions usually apply to specific industries or sectors in which foreign participation may be entirely prohibited or limited. Additionally, investment activities may require obtaining special permits, and states may implement special screening mechanisms. But the key research finding is that national law establishes the legal framework for creating the general legal regime of foreign investment, which is realized, among other things, through the sub-institution of state guarantees for the protection of foreign investments. This sub-institution may and may not be even directly linked to the actual implementation of foreign investments, but always exists in national legislations. It is also worth noting that the prevailing trend is the continuous development of national foreign investment legislation to implement policies that contribute to global economic growth and the overall welfare of the population. An empirical legal indicator of this trend is the gradual disappearance of differences between legal regimes for national and foreign investors, facilitated by the introduction of legal mechanisms for foreign investor access. Key words: international investment law, international investments, investment treatment, bilateral/multilateral investment treaties, international investment arbitration, state guarantees for the protection of foreign investments.

This chapter discusses the role of civil society in international investment arbitration. Much of the civil society focus on international arbitration has been on the investor–state dispute settlement (ISDS) process included in many international investment agreements. However, the historical role of commercial arbitration as the progenitor of investment treaty arbitration and the procedural and structural links between ISDS and commercial arbitration are important for the discussions on civil society engagement. Civil society recognized early on the problems of using a commercial arbitration model for investment arbitration, which involves public law matters, and concluded that this created a misappropriation of a tool that up to that time had only been used for private commercial purposes or very well-defined state-to-state purposes. The crossing of these purposes and actors to create public law arbitration between investors and states is what created this sense of misappropriation and led to a spotlight being shone on the regime by civil society. The chapter then looks back at the beginnings of civil society engagement with international arbitration through the experience with investment treaties, including the advancement of transparency and the ability to submit amicus curiae briefs.

Empirical Findings on International Arbitration: An Overview

Today there are more than 2,500 bilateral investment treaties (BITs) around the world. Most of these investment protection treaties offer foreign investors a direct cause of action to claim damages against host-states before international arbitral tribunals. This procedure, together with the requirement of compensation in indirect expropriations and the fair and equitable treatment standard, have transformed the way we think about state liability in international law. We live in the BIT generation, a world where BITs define the scope and conditions according to which states are economically accountable for the consequences of regulatory change and administrative action. Investment arbitration in the BIT generation carries new functions which pose unprecedented normative challenges, such as the arbitral bodies established to resolve investor/state disputes defining the relationship between property rights and the public interest. They also review state action for arbitrariness, and define the proper tests under which that review should proceed. State Liability in Investment Treaty Arbitration is an interdisciplinary work, aimed at academics and practitioners, which focuses on five key dimensions of BIT arbitration. First, it analyses the past practice of state responsibility for injuries to aliens, placing the BIT generation in historical perspective. Second, it develops a descriptive law-and-economics model that explains the proliferation of BITs, and why they are all worded so similarly. Third, it addresses the legitimacy deficits of this new form of dispute settlement, weighing its potential advantages and democratic shortfalls. Fourth, it gives a comparative overview of the universal tension between property rights and the public interest, and the problems and challenges associated with liability grounded in illegal and arbitrary state action. Finally, it presents a detailed legal study of the current state of BIT jurisprudence regarding indirect expropriations and the fair and equitable treatment clause.

Encyclopedia entry on fair and equitable treatment. Fair and equitable treatment is a legal term of art well known in the field of foreign investment protection. It is a rule of considerable practical importance in dispute settlement on the basis of investment treaties. Judging from publicly available awards, this is the obligation that investment treaty tribunals are most likely to find to have been breached. However, despite its pedigree and importance, the textual formulation of ‘fair and equitable treatment’ is not an example of excessive clarity regarding the legal criteria to be applied to resolving particular disputes. International law has addressed this challenge in two ways: by identifying particular elements (‘standards’) of fair and equitable treatment through jurisprudence constante of decisions in international investment arbitration; and by recent treaty-making that elaborates elements that are present (and sometimes also not present) as part of fair and equitable treatment.

Illegal Investments in International Arbitration

Investment arbitration, with its unique demands for transparency due to the public interest, is an especially promising arena for AI technologies. This transparency push and the judicialization of processes make investment arbitration increasingly amenable to technological innovations. However, the full potential of artificial intelligence (AI) in streamlining international investment arbitration case management remains largely untapped. The key to unlocking this potential lies in digitalization of data and procedures, and inter-institutional collaboration to share data. The literature regarding the use of technology in international arbitration mainly focuses on AI and its potential use in international arbitration in the future. While much of this literature speculates about the future, a holistic understanding of the present state of technology in international investment arbitration is crucial. This article spotlights the advancements achievable in case management in international investment arbitration using today’s available technologies. The current state of AI technology is primed for handling straightforward procedural tasks. Yet, these modest tasks occupy significant bandwidth in the agendas of arbitral institutions and tribunals. Once comprehensive digitalization is achieved, and AI technologies are integrated into international investment arbitration case management adeptly, that will be a significant step towards more expeditious and cost-effective arbitration procedures.

This chapter focuses on the impact of sanctions on international arbitration which can be provided for in contracts which have been targeted by the sanctions, or in international investment agreements. There are indeed many aspects to this interaction, both legal and practical. On a general jurisprudential level, economic sanctions highlight various complexities within the arbitral process, viz. the operation and interaction of various laws and legal systems (the lex arbitri and law governing the arbitration agreement, the substantive law of the contract and the law of the enforcing jurisdiction as well as overriding international law principles). These various laws may be in play throughout the process, to be applied not only by tribunals themselves during the course of proceedings, but also potentially by courts deciding or reviewing questions of jurisdiction and public policy (whether at the seat or in the enforcing jurisdiction). On a more practical level the increase in relatively recent sanctions regimes has led to growing discussion about the implications of these regimes for arbitrators and arbitral institutions.This chapter will discuss these two questions in two separate sections. The first section discusses the arbitrability of the dispute, the impact of sanctions on the jurisdiction of an arbitral tribunal, and the impact of sanctions on the enforcement of the arbitral award. The second section tackles the influence of sanctions on the conduct of arbitration proceedings. This chapter covers international arbitration in general, making no distinction between international commercial arbitration and international investment arbitration, the questions arising in both areas being of a similar nature, unless otherwise mentioned. This chapter however does not engage with the question of the effect of sanctions on the performance of contractual or other obligations which may have been affected by the imposed sanctions which is discussed elsewhere in this volume. Similarly, this chapter does not engage with the conformity of sanctions with international economic and trade law, notably in the context of the World Trade Organization, which is covered by Andrew Mitchell in his chapter in this volume.

This study explores the implementation of the concepts of control by the host state and protection for foreign investment by analyzing the dispute between Oleovest Pte. Ltd. and the Government of Indonesia, alongside a comparative analysis of the 2005 and 2018 Indonesia–Singapore Bilateral Investment Treaties (BITs). The core focus lies in the legal and policy tension between the state’s sovereign right to regulate its domestic affairs for public interest and its obligation to provide legal protection and guarantees to foreign investors. This tension is especially significant in investment treaty arbitration, where claims of unfair treatment or indirect expropriation must be balanced against the host state's regulatory authority. The Oleovest case exemplifies this dynamic, with allegations of breaches of fair and equitable treatment (FET) and indirect expropriation raised by the investor, while Indonesia asserts its right to regulate in pursuit of national development and public welfare. The changes between the 2005 and 2018 BITs reflect Indonesia’s evolving approach to balancing investor protection with regulatory autonomy, shifting from broad protections toward clearer exceptions that emphasize the host state’s right to regulate. This study underscores the importance of developing clearer legal frameworks that support both foreign investor confidence and state sovereignty, ensuring that investment treaties remain fair, balanced, and aligned with sustainable development goals.

This article considers the role of national courts in investment treaty arbitrations between an investor and a host-State. While the ICSID arbitration regime provides for an a-national approach, the choice of alternative arbitral institutions or rules in an investment treaty could bring into issue the role of the courts of the place of arbitration. It is suggested that the involvement of a sovereign State as a party to such arbitration proceedings raises issues of state immunity not encountered in international commercial arbitrations. While an agreement in an investment treaty to arbitrate an investor-state dispute confers jurisdiction on an arbitral tribunal to determine the dispute, there is presently no global consensus that such an agreement alone amounts to a waiver of immunity of the host-State from the jurisdiction of other national Courts. Absent such waiver of jurisdiction, the court of the place of arbitration would lack legitimacy to exercise any ‘supervisory’ jurisdiction over the host-State party to ensure compliance under its domestic legislation. The authors suggest that national legislatures should consider this when reviewing applicable domestic laws on international arbitration and state immunity. Treaty negotiators should be aware as well of such limitations. State immunity, waiver of immunity, investment arbitration agreement, investor-State dispute, international arbitration, immunity from jurisdiction, court of the seat, supervisory jurisdiction

This paper analyses Colombia’s experiences with international arbitration in disputes with foreign investors. Three periods of roughly 30 years were chosen: a) diplomatic protection of great powers’ expatriates in Latin America (Colombia) in the era of Imperialist rivalry: the last decades of the nineteenth century and the early years of the twentieth. This protection (sometimes with naval interventions) was meant to uphold a minimum standard of treatment for foreigners and gave rise to the Calvo doctrine as its counter-current protecting Latin American economic sovereignty; b) interregnum between the 1960s and 1980s: Calvo (prevalent in Latin America) reincarnated in an economic emancipation drive by postcolonial countries at the United Nations. Yet, the doctrine suffered a setback in the World Bank where the Icsid Convention was adopted despite a collective No vote by Latin American members on an earlier draft in Tokyo; c) investor-state arbitration under international investment agreements: expansion and retreat, from 1990 to present. Expansion of such agreements and emergence of a kind of arbitral case-law occurred between the early 1990s (when the Latin American mainstream abandoned Calvo) and the late 2000s. Counter-currents appeared since the early 2000, including treaty clarifications, public policy carve-outs, and withdrawals of Latin American, North American and European states. This periodization allows for comparing Colombia’s international investment arbitration consents, relevant awards, treaties, legislation and constitutional case-law over time.

This chapter covers the importance of the work on non-discrimination in international investment treaty arbitration. It explains that case law of investment treaty arbitral tribunals on non-discrimination obligations contained in investment treaties demonstrated that there is no jurisprudence constante about key legal questions. Moreover, non-discrimination obligations in international investment treaty arbitration fall within the ‘disparate treatment’ paradigm. Thus, disparate treatment and disparate impact are considered as main paradigms of discrimination demonstrated by non-discrimination legislation and case law in the US, EU, and international human rights law. The chapter looks into a comprehensive and systematic analytical and normative framework of the most complex areas of international investment law.