State Liability in Investment Treaty Arbitration: Global Constitutional and Administrative Law in the BIT Generation

STATE LIABILITY IN INVESTMENT TREATY ARBITRATION Today there are more than 2,500 bilateral investment treaties (BITs) around the world. Most of these investment protection treaties offer for-eign investors a direct cause of action to claim damages against host-states before international arbitral tribunals. This procedure, together with the requirement of compensation in indirect expropriations and the fair and equitable treatment standard, have transformed the way we think about state liability in international law. We live in the BIT generation, a world where BITs define the scope and conditions according to which states are economically accountable for the consequences of regulatory change and administrative action. Investment arbitration in the BIT generation carries new functions which pose unprecedented normative challenges, such as the arbitral bodies estab-lished to resolve investor/state disputes defining the relationship between property rights and the public interest. They also review state action for arbitrariness, and define the proper tests under which that review should proceed. State Liability in Investment Treaty Arbitration is an interdisciplinary work, aimed at academics and practitioners, which focuses on five key dimensions of BIT arbitration. First, it analyses the past practice of state responsibility for injuries to aliens, placing the BIT generation in historical perspective. Second, it develops a descriptive law-and-economics model that explains the proliferation of BITs, and why they are all worded so sim-ilarly. Third, it addresses the legitimacy deficits of this new form of dis-pute settlement, weighing its potential advantages and democratic shortfalls. Fourth, it gives a comparative overview of the universal tension between property rights and the public interest, and the problems and challenges associated with liability grounded in illegal and arbitrary state action. Finally, it presents a detailed legal study of the current state of BIT jurisprudence regarding indirect expropriations and the fair and equitable treatment clause. Volume 26 in the series Studies in International Law Studies in International Law Volume 1: Between Light and Shadow: The World Bank, the International Monetary Fund and International Human Rights Law Mac Darrow Volume 2: Toxics and Transnational Law: International and European Regulation of Toxic Substances as Legal Symbolism Marc Pallemaerts Volume 3: The Chapter VII Powers of the United Nations Security Council Erika de Wet Volume 4: Enforcing International Law Norms Against Terrorism Edited by Andrea Bianchi Volume 5: The Permanent International Criminal Court Edited by Dominic McGoldrick, Peter Rowe and Eric Donnelly. Volume 6: Regional Organisations and the Development of Collective Security Ademola Abass Volume 7: Islamic State Practices, International Law and the Threat from Terrorism: A Critique of the ‘Clash of Civilizations’ in the New World Order Javaid Rehman Volume 8: Predictablity and Flexibility in the Law of Maritime Delimitation Yoshifumi Tanaka Volume 9: Biotechnology and International Law Edited by Francesco Francioni and Tullio Scovazzi Volume 10: The Development of Human Rights Law by the Judges of the International Court of Justice Shiv Bedi Volume 11: The Environmental Accountability of the World Bank to Third Party Non-State Actors Alix Gowlland-Gualtieri Volume 12: Transnational Corporations and Human Rights Edited by Olivier De Schutter Volume 13: Biotechnologies and International Human Rights Edited by Francesco Francioni Volume 14: Human Security and International Law: Prospects and Problems Barbara Von Tigerstrom Volume 15: The Arms Trade and International Law Zeray Yihdego Volume 16: Africa: Mapping New Boundaries in International Law Edited by Jeremy Levitt Volume 17: Forced Migration, Human Rights and Security Edited by Jane McAdam Volume 18: The Use of Nuclear Weapons and the Protection of the Environment during International Armed Conflict Erik Koppe Volume 19: The Shifting Allocation of Authority in International Law: Considering Sovereignty, Supremacy and Subsidiarity Edited by Tomer Broude and Yuval Shany Volume 20: Counterterrorism: Democracy’s Challenge Edited by Andrea Bianchi and Alexis Keller Volume 21: Amnesty, Human Rights and Political Transitions Louise Mallinder Volume 22: Property Rights and Natural Resources Richard Barnes Volume 23: Human Dignity and the Foundations of International Law Patrick Capps Volume 24: Sovereignty and the Stateless Nation: Gibraltar in the Modern Legal Context Keith Azopardi Volume 25: The International Court of Justice and Self-Defence in International Law James A Green State Liability in Investment Treaty Arbitration Global Constitutional and Administrative Law in the BIT Generation Santiago Montt OXFORD AND PORTLAND, OREGON 2009 Published in North America (US and Canada) by Hart Publishing c/o International Specialized Book Services 920 NE 58th Avenue, Suite 300 Portland, OR 97213-3786 USA Tel: +1-503-287-3093 or toll-free: (1)-800-944-6190 Fax: +1 503 280 8832 E-mail: orders@isbs.com Website: www.isbs.com © Santiago Montt 2009 Santiago Montt has asserted his right under the Copyright, Designs and Patents Act 1988, to be identified as the author of this work. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission of Hart Publishing, or as expressly permitted by law or under the terms agreed with the appropriate reprographic rights organisation. Enquiries concerning reproduction which may not be covered by the above should be addressed to Hart Publishing at the address below. Hart Publishing, 16C Worcester Place, Oxford, OX1 2JW Telephone: +44 (0)1865 517530 Fax: +44(0)1865 510710 E-mail: mail@hartpub.co.uk Website: http://www.hartpub.co.uk British Library Cataloguing in Publication Data Data Available ISBN: 978-1-84113-856-5 Typeset by Hope Services, Abingdon, Oxon Printed and bound in Great Britain by TJ International Ltd, Padstow, Cornwall ... - tailieumienphi.vn