¹ See United Nations Conference on Trade and Development (UNCTAD), Latest Developments in Investor-State Dispute Settlement, IIA Issues Note No. 1, 1–2 (2011), available at: http://www.unctad.org/en/docs/webdiaeia20113_en.pdf (recording an aggregate of 390 treaty-based investment disputes by the end of 2010).Google Scholar

² See UNCTAD, World Investment Report 2010 – Investing in a Low-Carbon Economy, 81 (2010), available at: http://www.unctad.org/en/docs/wir2010_en.pdf (recording an aggregate of 2750 BITs by the end of 2009 as well as 295 investment agreements other than BITs). On the development of international investment law, see Kenneth J. Vandevelde, A Brief History of International Investment Agreements, 12 UC Davis Journal of International Law and Policy 157 (2005).Google Scholar

³ North-American Free Trade Agreement (NAFTA), signed 17 December 1992, entered into force 1 January 1994, 32 International Legal Materials (ILM) 289, 605 (1993).Google Scholar

⁴ Energy Charter Treaty (ECT), Annex I to the Final Act of the European Energy Charter Conference, 17 December 1994, 34 ILM 373 (1995).Google Scholar

⁵ For the content of investment treaties, see, e.g., Campbell McLachlan, Laurence Shore & Matthew Weiniger, International Investment Arbitration - Substantive Principles (2007); Dolzer, Rudolf & Schreuer, Christoph, Principles of International Investment Law (2008); Newcombe, Andrew & Paradell, Lluís, Law and Practice of Investment Treaties - Standards of Treatment (2009).Google Scholar

⁶ See Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, 18 March 1965, UNTS, Vol. 575, 159. Investment treaty arbitration, however, may also take place under other procedural rules, most importantly the United Nations Conference on International Trade Law (UNCITRAL) Arbitration Rules. See Dolzer & Schreuer (note 5), 222-229.Google Scholar

⁷ See Brower, Charles H., The Functions and Limits of Arbitration and Judicial Settlement under Private and Public International Law, 18 Duke Journal of Comparative and International Law 259, 265 (2008).Google Scholar

⁸ See discussion infra, section B.I-IV.Google Scholar

⁹ See Schill, Stephan W., Private Enforcement of International Investment Law: Why We Need Investor Standing in BIT Dispute Settlement, in: The Backlash against Investment Arbitration, 29 (Michael Waibel, Asha Kaushal, Kyo-Hwa Liz Chung & Claire Balchin eds, 2010).Google Scholar

¹⁰ See Franck, Susan D., International Arbitrators: Civil Servants? Sub Rosa Advocates? Men of Affairs?: The Role of International Arbitrators, 12 ILSA Journal of International and Comparative Law 499, 503 (2006).Google Scholar

¹¹ See, e.g., Técnicas Medioambientales Tecmed S.A. v. United Mexican States, ICSID Case No. ARB(AF)/00/2, Award of 29 May 2003 (all arbitral awards are available, unless otherwise stated, on the Investment Treaty Arbitration website at http://ita.law.uvic.ca or the Investment Claims website at http://www.investmentclaims.com). Google Scholar

¹² See, e.g., CMS Gas Transmission Co. v. Argentine Republic, ICSID Case No. ARB/01/8, Award of 12 May 2005; LG&E Energy Corp., LG&E Capital Corp., LG&E International Inc. v. Argentine Republic, ICSID Case No. ARB/02/1, Decision on Liability of 3 October 2006.Google Scholar

¹³ See, e.g., Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Award of 24 July 2004; Suez, Sociedad General de Aguas de Barcelona SA, and Vivendi Universal SA v. Argentine Republic, ICSID Case No ARB/03/19, Decision on Liability, 30 July 2010 (all cases concerning the water sector).Google Scholar

¹⁴ See, e.g., Methanex Corporation v. United States, UNCITRAL (NAFTA), Final Award of the Tribunal on Jurisdiction and Merits of 3 August 2005.Google Scholar

¹⁵ Glamis Gold, Ltd. v. United States of America, UNCITRAL (NAFTA), Award of 8 June 2009.Google Scholar

¹⁶ Piero Foresti and others v. Republic of South Africa, ICSID Case No. ARB(AF)/07/1, Award of 4 August 2010.Google Scholar

¹⁷ FTR Holding S.A., Philip Morris Products S.A. and Abal Hermanos S.A. v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7, registered on 26 March 2010 (pending).Google Scholar

¹⁸ See Kingsbury, Benedict & Schill, Stephan W., Investor-State Arbitration as Governance: Fair and Equitable Treatment, Proportionality, and the Emerging Global Administrative Law, IILJ Working Paper 2009/6 (Global Administrative Law Series), available at: http://www.iilj.org/publications/documents/2009-6.KingsburySchill.pdf.Google Scholar

¹⁹ System-building in the present context is therefore understood as a process that takes place within international investment law, that is, a process by which international investment law is established as a uniform body of law. System-building in this context is not about whether and how arbitral tribunals operate as part of the overarching system of international law or how international investment law relates to other bodies of international law.Google Scholar

²⁰ See The Mavrommatis Palestine Concessions (Greece v. Britain), Judgment of 30 August 1924, PCIJ 1924, Series A, No. 2, 12. On diplomatic protection generally, see Chittharanjan F. Amerasinghe, Diplomatic Protection (2008).Google Scholar

²¹ See Sweet, Alec Stone, Judicialization and the Construction of Governance, 32 Comparative Political Studies 147 (1999).Google Scholar

²² See Schreuer, Christoph, Loretta Malintoppi, August Reinisch & Anthony Sinclair, Art. 27, in: The ICSID Convention - A Commentary (2009), para. 14.Google Scholar

²³ Cf. Shihata, Ibrahim F. I., Towards a Greater Depoliticization of Investment Disputes: the Roles of ICSID and MIGA, 1 ICSID Review - Foreign Investment Law Journal 1 (1986).Google Scholar

²⁴ An investor claiming violations of an investment treaty can simply invoke the host State's consent to investor-State arbitration given in the applicable investment treaty. No contractual privity between investor and State is necessary. Cf. Jan Paulsson, Arbitration Without Privity, 10 ICSID Review - Foreign Investment Law Journal 232 (1995).Google Scholar

²⁵ Modern investment treaty tribunals have more extensive jurisdiction than tribunals established in post-conflict situations whose mandates were limited to a certain time-period, such as the Iran-United States Claims Tribunal, the Ethiopia-Eritrea Claims Commission, or the claims commissions during the pre-World War II era. On the specifics of State consent in modern investment treaties compared to more classical investment dispute settlement mechanisms, see Barton Legum, The Innovation of Investor-State Arbitration under NAFTA, 43 Harvard International Law Journal 531 (2002).Google Scholar

²⁶ See Amerasinghe (note 20), 334-341.Google Scholar

²⁷ This conforms to the principle of State responsibility, according to which an injured State is entitled to obtain reparation for the internationally wrongful act of another State. See Art. 34 of the ILC Articles on State Responsibility.Google Scholar

²⁸ Yet, States retain certain procedural privileges, such as the right to invoke national security interests against producing evidence. See, e.g., Richard M. Mosk & Tom Ginsburg, Evidentiary Privileges in International Arbitration, 50 International Comparative Law Quarterly (ICLQ) 345, 363 (2001).Google Scholar

²⁹ See, e.g., Art. 37 of the ICSID Convention; Art. 7 of the UNCITRAL Arbitration Rules.Google Scholar

³⁰ See Sempra Energy International v. The Argentine Republic, ICSID Case No. ARB/02/16, Decision on Objections to Jurisdiction of 11 May 2005, para. 146.Google Scholar

³¹ See Roberts, Anthea, Power and Persuasion in Investment Treaty Interpretation: The Dual Role of States, 104 AJIL 179 (2010) (stressing that States in investment treaty arbitration have a dual role as parties to the arbitration and as parties to the applicable investment treaty).Google Scholar

³² Although home State and host State are empowered under general international law to dispose of a claim raised by an investor, the ICSID Convention arguably restricts this right to the period prior to the commencement of arbitration. See Stephan W. Schill, The Multilateralization of International Investment Law 253 (2009).Google Scholar

³³ See Arts 16(4) & 17(14) of the Understanding on Rules and Procedures Governing the Settlement of Disputes, 15 April 1994, UNTS, Vol. 1869, 401.Google Scholar

³⁴ On annulment proceedings, see Christoph Schreuer, Loretta Malintoppi, August Reinisch & Anthony Sinclair, Art. 52, in: The ICSID Convention - A Commentary (2009). Grounds for annulment are limited to improper constitution of the tribunal, corruption by one of the tribunal's members, the tribunal's manifest excess of power, its serious departure from a fundamental rule of procedure, or its failure to state the reasons for the award. See Art. 52(1) of the ICSID Convention.Google Scholar

³⁵ Under rare circumstances, domestic courts already have set aside investment treaty awards. See, e.g., The United Mexican States v. Metalclad Corporation, 2001 BCSC 644.Google Scholar

³⁶ See, e.g., Art. 16(1) of the UNCITRAL Arbitration Rules.Google Scholar

³⁷ Art. 54(1) of the ICSID Convention.Google Scholar

³⁸ Christoph Schreuer, Loretta Malintoppi, August Reinisch & Anthony Sinclair, Art. 54, in: The ICSID Convention - A Commentary (2009), para. 74.Google Scholar

³⁹ See Art. 55 of the ICSID Convention.Google Scholar

⁴⁰ See Art. V(2)(b) of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), 10 June 1958, UNTS, Vol. 330, 38.Google Scholar

⁴¹ See MTD Equity Sdn. Bhd. & MTD Chile S.A. v. Republic of Chile, ICSID Case No. ARB/01/7, Award of 25 May 2004, para. 113; Saluka Investments BV v. The Czech Republic, UNCITRAL, Partial Award of 17 March 2006, para. 297.Google Scholar

⁴² See only Perkams, Markus, The Concept of Indirect Expropriation in Comparative Public Law – Searching for Light in the Dark, in: International Investment Law and Comparative Public Law, 107, 108 (Stephan W. Schill ed., 2010).Google Scholar

⁴³ Art. 42(2) of the ICSID Convention explicitly prohibits the finding of non liquet on the ground of silence or obscurity of the law.Google Scholar

⁴⁴ Cf. more generally on the variables that explain the institutional choice between bilateralism and multilateralism Thomas Rixen & Ingo Rohlfing, The Institutional Choice of Bilateralism and Multilateralism in International Trade and Taxation, 12 International Negotiation 389 (2007).Google Scholar

⁴⁵ Art. 1136 (1) of the NAFTA; Art. 53(1) of the ICSID Convention.Google Scholar

⁴⁶ AES Corporation v. Argentina, ICSID Case No. ARB/02/17, Decision on Jurisdiction of 26 April 2005, para. 30. This conclusion is shared widely by investment treaty tribunals more generally. For further arbitral jurisprudence on point, see Schill (note 32), 292, footnote 45. For a recent expression of the same view, see Chevron Corporation and Texaco Petroleum Company v. The Republic of Ecuador, UNCITRAL, PCA Case No. 34877, Partial Award on the Merits of 30 March 2010, para. 163.Google Scholar

⁴⁷ See Schill (note 32), 284, 339.Google Scholar

⁴⁸ See on the standardization of treaty texts and the entrenchment of bilateral treaty-making in multilateral processes id., 65-120.Google Scholar

⁴⁹ See id., 121-196.Google Scholar

⁵⁰ See id., 197-240.Google Scholar

⁵¹ Commission, Jeffrey, Precedent in Investment Treaty Arbitration - A Citation Analysis of a Developing Jurisprudence, 24 Journal of International Arbitration 129, 148 (2007).Google Scholar

⁵² See id., 137-141.Google Scholar

⁵³ See in depth Marc Jacob, Precedents: Lawmaking Through International Adjudication, in this issue.Google Scholar

⁵⁴ See AES Corporation v. Argentina (note 46), paras 23 & 30.Google Scholar

⁵⁵ Id., para. 31. A similar approach may be found in Gas Natural v. Argentina, ICSID Case No. ARB/03/10, Decision on Jurisdiction of 17 July 2005, para. 36.Google Scholar

⁵⁶ AES Corporation v. Argentina (note 46), paras 31-32. Similarly, Romak S.A. v. The Republic of Uzbekistan, UNCITRAL, PCA Case No. AA280, Award of 26 November 2009, para. 170; Chevron v. Ecuador (note 46), para. 164.Google Scholar

⁵⁷ See Shahabuddeen, Mohamed, Precedent in the World Court 47 (1996).Google Scholar

⁵⁸ Azurix Corp. v. The Argentine Republic, ICSID Case No. ARB/01/12, Award of 14 July 2006, para. 391.Google Scholar

⁵⁹ Eureko B.V. v. Republic of Poland, UNCITRAL, Partial Award of 19 August 2005. Similarly cautious in its use of precedent also Azurix Corp. v. The Argentine Republic, ICSID Case No. ARB/01/12, Decision on Jurisdiction of 8 December 2003, paras 73 & 89.Google Scholar

⁶⁰ Eureko v. Poland (note 59), paras 246-249.Google Scholar

⁶¹ Id., paras 252-258. Google Scholar

⁶² Id., para. 257.Google Scholar

⁶³ Enron Corporation and Ponderosa Assets L.P. v. The Argentine Republic, ICSID Case No. ARB/01/3, Decision on Jurisdiction of 14 January 2004.Google Scholar

⁶⁴ Id., before para. 24.Google Scholar

⁶⁵ Id., para. 38.Google Scholar

⁶⁶ Id., para. 41.Google Scholar

⁶⁷ Id., para. 40.Google Scholar

⁶⁸ Camuzzi International S.A. v. The Argentine Republic, ICSID Case No. ARB/03/2, Decision on Objections to Jurisdiction of 11 May 2005, para. 82; Sempra Energy v. Argentina (note 30), para. 94.Google Scholar

⁶⁹ Cf. also Gas Natural v. Argentina (note 55), para. 49 (observing that “unless it appears clearly that the state parties to a BIT or the parties to a particular investment agreement settled on a different method for resolution of disputes that may arise, most-favored-nation provisions in BITs should be understood to be applicable to dispute settlement”).Google Scholar

⁷⁰ Saipem S.p.A. v. The People's Republic of Bangladesh, ICSID Case No. ARB/05/07, Decision on Jurisdiction and Provisional Measures of 21 March 2007, para. 67.Google Scholar

⁷¹ International Thunderbird Gaming Corporation v. The United Mexican States, UNCITRAL (NAFTA), Arbitral Award of 26 January 2006, Separate Opinion of Thomas Wälde, para. 16 (“A deviation from well and firmly established jurisprudence requires an extensively reasoned justification”).Google Scholar

⁷² An exception is the award in Glamis Gold v. United States (note 15), paras 598–616, which stressed the importance of State practice and opinio juris in the context of interpreting fair and equitable treatment under Art. 1105(1) of the NAFTA.Google Scholar

⁷³ See, supra, section B.V.Google Scholar

⁷⁴ The same dynamic, however, equally holds true with respect to all other standards of investment protection, including full protection and security, the prohibition of direct and indirect expropriation without compensation, or national treatment. For the jurisprudence on these standards, see the references cited supra, note 5.Google Scholar

⁷⁵ Waste Management, Inc. v. The United Mexican States, ICSID Case No. ARB(AF)/00/3 (NAFTA), Award of 30 April 2004, para. 98.Google Scholar

⁷⁶ Tecmed v. Mexico (note 11), para. 154.Google Scholar

⁷⁷ MTD v. Chile (note 41), paras 113 et seq. Google Scholar

⁷⁸ Occidental Exploration and Production Company v. The Republic of Ecuador, LCIA Case No. UN3467, Final Award of 1 June 2004, para. 185.Google Scholar

⁷⁹ Siemens A.G. v. The Argentine Republic, ICSID Case No. ARB/02/8, Award of 6 February 2007, paras 298-299.Google Scholar

⁸⁰ See on the function of general clauses Gunther Teubner, Standards und Direktiven in Generalklauseln 60 et seq. (1971).Google Scholar

⁸¹ See Schill (note 32), 347-352.Google Scholar

⁸² Id., 352-355.Google Scholar

⁸³ Differently in this respect RosInvestCo UK Ltd. v. The Russian Federation, SCC Case No. V 079/2005, Award on Jurisdiction of October 2007, para. 137.Google Scholar

⁸⁴ Schill (note 32), 341-347.Google Scholar

⁸⁵ See comprehensively Stephan W. Schill, Enabling Private Ordering - Function, Scope and Effect of Umbrella Clauses in International Investment Treaties, 18 Minnesota Journal of International Law 1 (2009).Google Scholar

⁸⁶ SGS Société Générale de Surveillance S.A. v. Republic of the Philippines, ICSID Case No. ARB/02/6, Decision of the Tribunal on Objections to Jurisdiction of 29 January 2004, para. 119.Google Scholar

⁸⁷ Id., para. 125.Google Scholar

⁸⁸ Id., para. 97.Google Scholar

⁸⁹ Id. Google Scholar

⁹⁰ Similar systemic considerations also reappear in later decisions on umbrella clauses, some of which supported SGS v. Pakistan, some of which supported SGS v. Philippines. See Schill (note 85).Google Scholar

⁹¹ See, supra, note 45.Google Scholar

⁹² See, e.g., AES Corporation v. Argentina (note 46), para. 18.Google Scholar

⁹³ On the interaction between investment treaty arbitration and investment treaty making, see also UNCTAD, Investor-State Dispute Settlement and Impact on Investment Rulemaking (2007), available at: http://unctad.org/en/docs/iteiia20073_en.pdf.Google Scholar

⁹⁴ See Emilio Agustín Maffezini v. The Kingdom of Spain, ICSID Case No. ARB/97/7, Decision of the Tribunal on Objections to Jurisdiction of 25 January 2000, paras 38-64.Google Scholar

⁹⁵ See Art. 10.4(2), footnote 1 of the Draft of the Central America - United States Free Trade Agreement, dated 28 January 2004, available at: http://www.sice.oas.org/TPD/USA_CAFTA/Jan28draft/Chap10_e.pdf.Google Scholar

⁹⁶ Cf. Art. 10.5(2)(a) of the Dominican Republic-Central America-United States Free Trade Agreement, available at: http://www.ustr.gov/trade-agreements/free-trade-agreements/cafta-dr-dominican-republic-central-america-fta.Google Scholar

⁹⁷ See Kingsbury & Schill (note 18).Google Scholar

⁹⁸ See in depth the contributions in Stephan Schill, International Investment Law and Comparative Public Law (2010).Google Scholar