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CYIL 7 ȍ2016Ȏ ABOUT RECENT DEVELOPMENTS IN A FURTHER AIM TO REFORM…
of the global market, the increase of foreign investment flows, economic growth
and human development in capital-exporting as well as capital-importing States.
The investor-State arbitration system allows a private subject (whether an individual
or company) to bring an international claim directly against a sovereign State, in
a significant break from traditional mechanisms that was essentially founded on the
institution of diplomatic protection (or diplomatic espousal).
On the other hand, the IIA regime has also attracted growing critical attention.
Criticism first appeared with the rise of the anti-globalization movements in the
mid-1990s and was fueled by specific events, such as the failure of negotiations for
a Multilateral Agreement on Investment (“MAI”) conducted within the Organisation
for Economic Co-operation and Development (OECD), the initiation of the first
cases against the United States and Canada under the North American Free Trade
Agreement (NAFTA) and, more recently, the negotiations of major transcontinental
FTAs. Overall, the discussion has often focused on a few controversial cases, which
are not necessarily representative of the regime as a whole. What began as a rather
academic or at least discrete controversy has recently gained substantial media
interest and public scrutiny and, in some instances, has spilled over into general
politics. Over the last decade, leading newspapers around the world have turned
their attention to investor-State arbitration with headings speaking of “obscure
tribunals”,4 “secret trade courts”,5 entailing a “real threat to the national interest from
the rich and powerful”.6 Commentators have thus started to speak of a “backlash”
against investment arbitration.7 A few States have either denounced or declared their
intention to denounce the Convention on the Settlement of Investment Disputes
between States and Nationals of Other States (“ICSID Convention”)8 and some
of their IIAs.9 Other States have revised their model agreements, while some have
4 ANTHONY DE PALMA, Nafta’s Powerful Little Secret: Obscure Tribunals Settle Disputes, But Go Too
Far, Critics Say, New York Times, 11 March 2001.
5 New York Times, The Secret Trade Courts, Editorial, 27 September 2004.
6 GEORGE MONBIOT, The Real Threat to the National Interest From the Rich and Powerful, The
Guardian, 15 October 2013.
7 CLAIRE BALCHIN, LIZ KYO-HWA CHUNG, ASHA KAUSHAL & MICHAEL WAIBEL (eds.)
(2010), The Backlash Against Investment Arbitration: Perceptions And Reality, Kluwer Law International;
ASHA KAUSHAL (2009), Revisiting History: How the Past Matters for the Present Backlash Against
the Foreign Investment Regime, Harvard International Law Journal, Vol. 50(2), pp. 491-534; OLIVIA
CHUNG (2007), The Lopsided International Investment Law Regime and Its Effect on the Future of
Investor-State Arbitration, Virginia Journal of International Law, Vol. 47(4), pp. 953976, p. 975.
8 Convention on the Settlement of Investment Disputes between States and Nationals of Other States,
18 March 1965, 575 UNTS 159 / [1991] ATS 23 / 4 ILM 532. The following States have denounced
the ICSID Convention: Bolivia (2007); Ecuador (2009) and Venezuela (2012).
9 The following States have denounced some of their IIAs: Ecuador terminated nine BITs in 2008;
Venezuela terminated one BIT in 2008; Indonesia terminated seventeen BITs since 2014; South Africa
terminated nine BITs since 2012 (source: and others).