Investment treaties are instruments of economic governance at the centre of policy debates and the practice of international arbitration. After the Second World War, many States agreed to minimum standards of conduct towards foreign investors to promote capital inflows. Today, the standards contained in nearly 3,000 bilateral treaties (or chapters in trade agreements) serve to delimit a State’s rights in the economic domain from its responsibility to make reparation for losses suffered by investors, usually in the form of compensation. These treaties typically include each State’s consent to arbitration on the notice of any protected investor, known as investment treaty arbitration or investor-State dispute settlement (ISDS). With around 1,500 cases, investment treaty arbitration has become an important vehicle for the evolution of public international law. At the same time, diverse voices have protested the alleged chilling effect of large compensation awards on public interest regulation, not least amid the renewable energy transition.   

This course evaluates the many roles played by investment treaties and their arbitration in protecting foreign investment, shaping public policy, supporting economic development, and influencing international law. We begin by highlighting some of the historical, political and economic forces that drove newly independent States to adopt treaties that combined standards of sovereign conduct with a standing offer for private individuals to access arbitration. Next, we discuss the application of treaties by tribunals, focusing on the scope of their jurisdiction and the interpretation of standards such as fair and equitable treatment, non-discrimination, and compensation for expropriation. Then we examine the defence arguments of host States, techniques of arbitral deference towards policy judgements, and the enforceable remedies available to successful claimants. Finally, we consider the arguments for and against ISDS, reform proposals for substantive treaties and arbitral procedure, and future options for the settlement of foreign investment disputes.