The Future of Treaty-based Investment Adjudication: The Trend Towards Eliminating Investor-State Arbitration from Investment Treaties

What will be the future of treaty-based investment adjudication in light of the ongoing backlash against the international investment law regime? Put differently, how exactly the world of international investment protection would look in the absence of investment treaty arbitrations? In an attempt to provide some answers to these pertinent but broad questions, this research analyses the trend towards eliminating investor-State arbitration provisions reflected in various international investment agreements (hereinafter ‘the specified IIAs/treaties’) and utilising only State-State dispute settlement (‘SSDS’) mechanisms. The research first studies how international claims practice evolved over time, and the exact nature of the various types of SSDS mechanisms under the specified treaties. After this description, it then delves into the probable reasons for such a shift towards SSDS mechanisms to examine if this trend is a significant phenomenon and will influence future treaty practice, or will remain an exception to the popular choice of ‘investor-State arbitration’ (with or without future reforms) as a dispute resolution mechanism for treaty-based investment disputes. In particular, it evaluates if the lack of strategic advocacy to support the continuation of investor-State arbitration (in light of the ongoing backlash) combined with the rise in ‘crippling compensation’ awarded by various investment treaty arbitral tribunals could further support this trend towards SSDS mechanisms or not. After the evaluation of the trend’s potential influence on future treaty practice, the research then focuses on highlighting if the trend entails only a ‘procedural shift’ towards SSDS mechanisms, or it also has an impact on the nature of remedies that would be available for different types of claims arising out of the specified treaties. It addresses how ‘conventional public international law remedies’ (particularly ‘restitution’) would be the primary remedy available for the breach of an obligation under the specified treaties, and how ‘compensation’ would be available only for expropriation related disputes, that too as per the ‘treaty standard’ without any possibility of deviation. After clarifying the nature of available remedies, the research will ultimately assess if ‘espousal’ is the only way of initiating claims under the specified treaties, then whether there exists, considering the availability of tools such as ‘dispute funding’, a possibility for State-State dispute settlement mechanisms to emerge as a functional equivalent (from a procedural perspective) of investor-State arbitrations.