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Unpublished Paper
In Defense of the International Treaty Arbitration System
ExpressO (2008)
  • Daniel S Meyers, New York University
Abstract
The past two decades have witnessed an explosion of bilateral and multilateral investment treaties, and of arbitration claims brought by private individuals and entities against sovereign States pursuant to such treaties. Indeed, it is fair to characterize the investment treaty arbitration system (the "ITA system") as one of the most rapidly-developing phenomena in international law. And, as occurs in response to every significant development in international law (or law more generally), the recent maturation of the ITA system has been met with a chorus of scholarly criticism and calls for reform. While such critiques can be integral to the healthy development of any new legal advancement, the sheer volume of the indictments of the structure and function of the ITA system can lead a casual observer to overlook the value of that system and the concerns in response to which the system emerged. There is thus not only the danger that valuable recommendations for improvement will be lost in the sea of overzealous indictments, but also that an ultimately beneficial system will be destroyed in a "death by 1,000 paper cuts." Accordingly, it is necessary to closely scrutinize each scholarly objection to the ITA system in order to, on the one hand, belie unwarranted denunciations, and, on the other, identify those calls for improvements that are justified (even when the improvements justified are relatively modest, and yet, are mischaracterized by their authors as vital to the defensibility and/or survival of the system). This article examines the scholarly critique of the ITA system by Dr. Gus Van Harten in Investment Treaty Arbitration and Public Law. Van Harten's indictment of the ITA system proceeds on three basic premises. First, insofar as governmental regulations are often the target of claims brought in investment treaty arbitrations, the ITA system is fundamentally a system of "public law adjudication." Second, any system of public law adjudication must satisfy four basic requirements: accountability, openness, coherence and independence. Finally, the structure and function of the ITA system fails to satisfy each of these four requirements. In particular, Van Harten argues that the ITA system fails to meet the standard of independence because arbitrators within the system are ultimately "merchants of adjudicative services [who] have a financial stake in furthering the system's appeal to claimants and, as a result, the system is tainted by an apprehension of bias in favour of allowing claims and awarding damages against governments." Therefore, Van Harten reasons, the ITA system is an untenable system of public law adjudication. To his credit, Van Harten does not explicitly call for the abandonment of the ITA system. Rather, he characterizes his argument as only "incorporate[ing] an edge of criticism of the system." Thus, he advocates maintaining the current system, but with two fundamental alterations: (1) increased domestic scrutiny of arbitral awards issued from within the system; and (2) the creation of a permanent international investment court to adjudicate ITA claims. Despite the fact that Van Harten characterizes his criticism of the ITA system as tempered, the conviction with which he impugns both the structure and function of the system – and the passion with which he champions his proposed changes – demonstrates that Investment Treaty Arbitration and Public Law is much more than an "edge of criticism." Rather, readers are left with the distinct impression that, ultimately, Van Harten believes that the current structure of the ITA system is indefensible, and thus, in the absence of his proposed reforms, the system should be abandoned altogether. This article argues that while certain aspects of Van Harten's critique of the ITA system are warranted, his conclusions – both explicit and implicit – are overdramatic. The ITA system is by no means perfect. A modest infusion of accountability, openness, coherence and independence would be welcomed. And Van Harten's proposed changes could provide such an infusion. But, the need for such improvements is not so great that without them, the system should be dismantled. Moreover, the improvements can be accomplished gradually and from within the current structure of the system. Therefore, Van Harten's critique falls into that category of objections that warrant relatively modest improvements, and yet, are mischaracterized by their authors as vital to the defensibility and/or survival of the system. Part II of this article examines the history of the ITA system and the concerns that led to its emergence and development. Part III presents Van Harten's indictment of the ITA system, the three premises upon which his indictment relies, and the changes that he advocates to remedy the system's supposed shortcomings. Part IV more closely scrutinizes Van Harten's argument, identifies areas that Van Harten overstates his case, and contends that, even without Van Harten's proposed changes, the ITA system is not so lacking in accountability, openness, coherence or independence as to warrant fundamentally changing the system or deserting it altogether. Finally, Part V concludes that while Van Harten's criticisms should be taken seriously by anyone seeking to push the ITA system to realize its full potential, those criticisms may be accounted for from within the current structure of the system.
Keywords
  • international arbitration,
  • commercial arbitration,
  • treaty arbitration,
  • investment law,
  • investment disputes,
  • investment treaties,
  • international law
Disciplines
Publication Date
July 8, 2008
Citation Information
Daniel S Meyers. "In Defense of the International Treaty Arbitration System" ExpressO (2008)
Available at: http://works.bepress.com/daniel_meyers/2/