The Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) provides for a ‘self-contained’ annulment mechanism independent from domestic courts and laws. This mechanism is available to challenge the awards rendered by arbitration tribunals operating only under this Convention. Chapter 16 focuses on the annulment proceedings that this Convention establishes, while annulment in other contexts is dealt with in Chapter 11. More specifically, it first sheds light on the main features of ICSID Convention annulment proceedings before analysing in light of the relevant arbitration practice the main grounds for annulment relied upon before annulment committees – namely, manifest excess of powers, serious departure from a fundamental rule of procedure and failure to state reasons. Chapter 16 then provides an overview of the two additional grounds mentioned in the Convention: improper constitution of a tribunal and corruption on the part of a member of the tribunal.

The principle, extent and modalities pursuant to which States allow foreign investors to undertake economic activities over their territory depend mainly on domestic economic and social considerations. Host States strike a balance between conflicting interests and objectives, namely their economic development on the one hand, and the protection of a range of other domestic interests, on the other. Beyond the promotion and facilitation of foreign investments that constitutes a common teleological denominator of international investment agreements, treaty practice displays some diversity in relation to admission and establishment. This diversity reflects different balances struck by States parties between the above-mentioned interests and objectives and, more generally, between liberal and protectionist policies. Chapter 4 provides a study of this treaty practice. It examines briefly the promotion and facilitation of foreign investments before analysing in detail admission and establishment matters.

The rules governing the conduct of host States with regards to foreign investors – and, in some instances, which govern the conduct of foreign investors themselves and that of home States – as well as those rules which govern investor–State dispute settlement are largely to be found in international law sources. For that reason, Chapter 2 focuses on the sources of international law as they relate to international investment law and arbitration. In line with the classical dichotomy adopted in public international law as it is reflected in Article 38 of the Statute of the International Court of Justice, it provides an analysis of the primary and subsidiary sources of international investment law and arbitration as well as the interplay between them. As forming part of primary sources, it examines international investment agreements (bilateral investment treaties and free trade agreements containing an investment chapter), customary international law and general principles of law recognised by civilised nations. As regards subsidiary sources, Chapter 2 discusses arbitral awards and the teaching of publicists. In addition to the primary and subsidiary sources of international investment law and arbitration, it also examines the role played by equity and soft law instruments in this field of law.

Along with the increasing reference to public interest considerations in the preamble to many international investment agreements (IIAs), obligations geared at ensuring the respect and the protection of public interests have progressively gained more importance in treaty practice since the 1990s. Even though these obligations are not widespread, they constitute a noticeable evolution that results from the growing concern towards providing a greater protection to human rights largo sensu and sustainable development in international investment law and in public international law more generally. In this respect, it is noteworthy that the fulfilment of these objectives has traditionally been searched for in public international law through obligations placed upon States. This helps to explain why the relevant IIAs incorporate obligations placed primarily upon States and less frequently upon investors as a means of ensuring the protection and respect of the public interests attached to human rights and sustainable development. In line with this duality in terms of addressees, Chapter 8 analyses in turn the obligations placed upon States and those placed upon foreign investors. It emphasises the potential they have to contribute towards enhancing the enforcement of human rights in particular as well as the ‘horizontalisation’ of human rights law, meaning the trend at play in public international law towards placing human rights obligations upon non-state actors, and in particular upon multinational corporations.

International investment law and arbitration has a long history dating back to the nineteenth century. It has since developed and adapted following the political and societal forces at work both domestically and internationally. The balance between the interests of developing States and developed States and, more fundamentally, between public and private interests have played a key role in this process. It can be seen that the balance struck between these interests at different periods of time explains to a large extent the evolutive features of this field of law. This holds true with regards to the set of rules governing both the relations of foreign investors with the States in which they invest and the settlement of the disputes between them.

To make sense of this evolution and for the purpose of contextualising the analysis of international investment law and arbitration provided in the textbook, Chapter 1 distinguishes between three key stages in its history and analyses the respective societal context and legal features pertaining to each. These stages are: (1) the origin of international investment law and arbitration; (2) its emergence as a proper field of international law; and (3) the rise and then crisis this field of law has known since the 1990s.

Together with the prohibition of illegal expropriation analysed in Chapter 6, the standards of treatment examined in this chapter constitute the core of the protection conferred by international investment agreements (IIAs) to foreign investors and their investments. They protect these investors and investments against a broad range of conduct attributable to host States, sometimes in connection with the conduct of private persons. The extent and modalities of the protection granted by these standards have traditionally suffered from a lack of clarity, which has led arbitration tribunals to decide on the legal issues raised by their practical application. Beyond this lack of clarity, treaty practice has also displayed nuances and differences concerning the extent and modalities of the protection granted by those treaty standards. Although nuances and differences remain in IIAs concluded in the 2010s, States have endeavoured to clarify the extent and modalities of this protection. Chapter 5 provides in-depth analyses of the standards of treatment, focusing on treaty practice and arbitration practice as well as the evolution thereof. More specifically, it examines in turn: (1) the fair and equitable treatment standard; (2) the full protection and security standard; (3) the national treatment standard; (4) the most-favoured-nation treatment standard; and (5) the umbrella clause.

Subject to certain conditions, either party in investor–State arbitration proceedings can request that provisional measures be granted to protect specific rights until the arbitration tribunal has decided on the dispute. Focusing on the ICSID Convention Arbitration Rules and the UNCITRAL Rules of Arbitration, and analysing the relevant arbitration practice, Chapter 13 examines successively: (1) the notion of provisional measures; (2) the rights and interests that can be preserved through them; (3) the substantive conditions that shall be met for those measures to be granted; and (4) the procedural aspects of provisional measures and their legal force.

Before arbitration tribunals can decide on the merits of a case, they must first appraise whether they have jurisdiction to hear it. The establishment of jurisdiction is a complex exercise that raises numerous legal issues. To make sense of this, Chapter 14 first explains the relevant fundamental notions and principles that govern the matter and examines how jurisdiction is formally appraised. From a substantive point of view, it then delves into the key aspects and issues of jurisdiction and admissibility based on a close analysis of treaty and arbitration practices. More specifically, it examines in turn (1) the offer to arbitrate; (2) the notion and definition of ‘investment’; (3) the notion and definition of ‘investor’; and (4) the impact of investors’ conduct on jurisdiction and admissibility.

By way of context to the detailed analysis of investor–State arbitration conducted in Part III of the textbook, Chapter 10 examines in turn the types of investment-related disputes that can arise and the various dispute settlement mechanisms that can be availed of to settle such disputes. For the types of investment-related disputes, it distinguishes between the different types of State–State disputes and investor–State disputes. For the purpose of examining dispute settlement mechanisms, a distinction is made between the mechanisms made available in international investment agreements (IIAs) to settle investment-related disputes and those that have been used prior to or in parallel to the development of IIA practice to settle ‘single’ disputes or ‘sets’ of disputes. Specific attention is paid to the mechanisms that have been established or contemplated in the 2010s to replace investor–State arbitration in the settlement of investor–State disputes as a reaction to the criticism formulated across civil society against the latter.

The law of expropriation stands at the crossroad of three fundamental rights: the right of States to expropriate, their right to regulate and the right of foreign investors to property. Underlying these rights and their interplay, one finds the protection of public and private interests and the conflict between them. In establishing a balance between these, international investment agreements (IIAs) have traditionally subjected the legality of expropriation to certain conditions and failed to address explicitly the issue of the right of States to regulate. A great number of IIAs concluded in the 2010s tackle this issue, typically by distinguishing expropriatory measures from regulatory measures. Likewise, those agreements also contain articles or annexes that specify the scope and modalities of application of the expropriation provision with regards to specific matters pertaining in particular to intellectual property rights, land, subsidies and grants. Those specifications are analysed in Chapter 7. Analysing in detail treaty practice and arbitration practice as well as their evolution, Chapter 6 examines the two main issues raised by the protection of foreign investors against illegal expropriation: (1) the types of expropriation covered; and (2) the conditions of legality of expropriation. As a preliminary matter, it first focuses on the types of property protected, in particular contractual rights.

As a result of the multilateralisation of FDI operations, of the criticism formulated against international investment law and arbitration and of the evolution of States’ policies, limitations placed on the protection of foreign investors have spread and diversified over time in international investment agreements (IIAs). Chapter 7 focuses on these limitations as contained in IIAs concluded in the 2010s, as these IIAs incorporate both traditional limitations and the new limitations that have recently appeared in treaty practice. It provides an analysis of treaty limitations by distinguishing between them on the basis of their scope of application, meaning mainly whether they apply to IIAs as a whole or to specific provisions thereof.

Under the international law of State responsibility, the existence of an internationally wrongful act requires that three cumulative conditions be fulfilled: (1) attribution of a conduct to the State; (2) breach of a State’s international obligation by that conduct; and (3) a lack of circumstances precluding the wrongfulness of that conduct. A finding that such an internationally wrongful act occurred entails certain legal consequences, which in particular requires the State to provide full reparation for the damages caused. Chapter 15 analyses how these rules apply in the context of investor–State arbitration. More precisely, it focuses on attribution, circumstances precluding wrongfulness and reparation, with Part II of the textbook setting out a discussion of the relevant breaches of IIA obligations. This analysis is conducted in light of the relevant treaty and arbitration practices as well as the Articles on Responsibility of States for Internationally Wrongful Acts, which are almost systematically referred to by arbitration tribunals when dealing with those matters.

At the core of the settlement of investor–State disputes, there is a dialectic between the facts and the law. The legal component of this dialectical exercise draws our attention to two issues in particular: the law to be applied in the settlement of disputes and the interpretation of international investment agreements (IIAs). Each of these issues is analysed in turn in Chapter 12. For applicable law, it provides an analysis of the choice of substantive applicable law and the content thereof. It then sheds light on how arbitration tribunals interpret IIAs, specifically what means they employ and how these are used to interpret those agreements. It focuses in particular on the means of interpretation explicitly mentioned in the Vienna Convention on the Law of Treaties, i.e. the general rule of interpretation, supplementary means of interpretation and the rules pertaining to the interpretation of treaties authenticated in two or more languages.