Alternative Visions of the International Law on Foreign Investment : Essays in Honour of Muthucumaraswamy Sornarajah

This book is about the forces that are reshaping the international law on foreign investment today. It begins by explaining the liberal origins of contemporary investment treaties before addressing a current backlash against these treaties and the device of investment arbitration. The book describes a long-standing legal-intellectual resistance to a neo-liberal global economic agenda, and how tribunals have interpreted various treaty standards instead. It introduces our reader to the changes now taking place in the design of a range of familiar treaty clauses, and it describes how some of these changes are now driven not only by developing and emerging economies but also by the capital-exporting nations. Finally, it explores the life, career and writings of Muthucumaraswamy Sornarajah, a scholar whose work has been dedicated to the realisation of many of these changes, and his views about the hold global capital has over legal practice. Cover 1 Half-title page 3 Frontispiece 4 Title page 5 Copyright page 6 Contents 7 Figures 13 Tables 14 Contributors 15 Preface 17 Acknowledgements 19 List of Treaties, National Legislation, Cases and Awards 21 Part I 39 1 The worm’s view of history and the twailing machine 41 Introduction 41 Muthucumaraswamy Sornarajah 44 Overview of Sornarajah’s works 50 Essays for Muthucumaraswamy Sornarajah 71 2 The liberal vision of the international law on foreign investment 81 Introduction 81 US postwar FCN treaties as a reflection of liberal principles 82 Defining liberalism 85 Fashioning a liberal investment regime 89 The emergence of neoliberalism 94 Assessing the liberal vision today 98 Liberalism and its critics 102 Conclusion 105 3 Caveat investors – where do things stand now? 107 Introduction 107 The new wave of discontent against ISA 108 Arguments for and against ISA 116 Investment agreements of states dissatisfied with ISA 124 Why ISA has retained its resilience 134 Conclusion 136 Part II 139 4 Reforming the system of international investment dispute settlement 141 Introduction 141 Professor Sornarajah’s contribution 142 Flaws in the official reform model 144 European Commission’s adoption of the official reform model 146 Conclusion 167 5 The paranoid style of investment lawyers and arbitrators: investment law norm entrepreneurs and their critics 169 Introduction 169 Irreversible? 171 When things fall apart 173 Crisis? What crisis? 183 Conclusion 192 6 The COMESA Common Investment Area: substantive standards and procedural problems in dispute settlement 194 Introduction 194 Current issues in investor-state dispute settlement 197 Investor-state dispute settlement procedures under the CCIA Agreement 204 Substantive rights of action under the CCIA Agreement 216 Concluding remarks 222 7 Lessons from the negotiations of the United Nations Code of Conduct on Transnational Corporations and related instruments 224 Part III 233 8 India and investment protection 235 Introduction 235 Foreign investment and India 237 Legal framework for foreign investment 241 Protection under international law 248 Protection under municipal law 251 Recent developments 257 Conclusion 259 9 China–US BIT negotiation and the emerging Chinese BIT 4.0 261 Introduction 261 The background: why a BIT 4.0 now? 262 The issues: what has to be addressed? 270 The features: a model BIT with “Chinese Characteristics” 285 Conclusions 289 Part IV 291 10 Regulating foreign investment: Methanex revisited 293 Introduction 293 The Case: Methanex v. United States of America 297 Academic reaction to the decision 306 The legacy of Methanex 310 Beyond Methanex: treaty safeguards 316 Conclusions 325 11 The new frontier: economic rights of foreign investors versus government policy space for economic development 327 Introduction 327 Sustainable development, economic development, and income equity 330 FDI and economic development: from assumptions to policy action 335 Economic development and policy tools 337 Tracking the development of international law in respect to the economic development tools and economic rights of transboundary investors 339 Mapping the development tools and the trends 358 Additional factors in investment treaties 359 Conclusion 360 12 Giving arbitrators carte blanche – fair and equitable treatment in investment treaties 362 Introduction 362 The fair and equitable treatment standard in treaties, their interpretation, and state reaction 364 Fair and equitable treatment standard explicitly linked to customary international law 368 Looking for new approaches 378 Concluding remarks 382 Part V 385 13 Is the umbrella clause not just another treaty clause? 387 Introduction 387 The origin and definition of the umbrella clause 389 Sornarajah’s scepticism 391 Observing the language of the umbrella clause 394 El Paso: the myth of the ‘internationalised’ contract lurks still 401 Distinguishing commercial from investment commitments 403 Acta jure imperii 405 Overlap with fair and equitable treatment and other substantive treaty standards 407 Problems with the contractual forum selection clause 407 The doctrine of privity of contract 410 The problem with elevating or internationalising the contractual terms under an umbrella clause 411 Conclusion 412 14 Internationalisation and State contracts: are State contracts the future or the past? 415 Introduction 415 State contracts as treaties 416 Stabilisation clauses as tools of internationalisation 434 Investment protection and immutable contracts 437 Conclusion 439 Part VI 441 15 State capitalism and sovereign wealth funds: finding a “soft” location in international economic law 443 Introduction 443 Hard and soft law in international [economic] law 446 State capitalism under “hard” international economic law: WTO regulation of state enterprises 448 The Santiago Principles and their discontents: the developing soft law framework for SWFs 452 Concluding remarks: an “inclusive soft law approach” 463 Part VII 467 16 The many-headed hydra and laws that rage of gain, a chapter in conclusion 469 The privatisation of international state responsibility 469 Neo-conservatism 476 Need and greed 477 Sociology and legal doctrine 480 Power and justice 483 The many-headed hydra 487 Privateers bearing letters of marque 490 To spurn the rage of gain 493 Index 495 Author Index 531 International Economic Law Is A Branch Of Public International Law. Its Sub-fields, However, Have Taken On The Appearance Of Disconnected Specialist Subjects Over The Years; Not Least In The World Of International Legal Practice With Its Gattologists, Bitologists And Sovereign Debt Workout Specialists. In Recent Decades, The International Law On Foreign Investment Especially Risked Becoming Unmoored From Sovereign Legal Relations. Sornarajah, However, Always Took The Classic View Of A Subject Rooted Deeply In The Sources And Systems Of Public International Law-- The Worm's View Of History And The Twailing Machine / By C.l. Lim -- The Liberal Vision Of The International Law On Foreign Investment By / Kenneth J. Vandevelde -- Caveat Investors : Where Do Things Stand Now? / By Leon Trakman And David Musayelyan -- Reforming The System Of International Investment Dispute Settlement / By Gus Van Harten -- The Paranoid Style Of Investment Lawyers And Arbitrators : Investment Law Norm Entrepreneurs And Their Critics / By David Schneiderman -- The Comesa Common Investment Area : Substantive Standards And Procedural Problems In Dispute Setlement / By Peter Muchlinski -- Lessons From The Negotiations Of The United Nations Code Of Conduct On Transnational Corporations And Related Instruments / By Karl P. Sauvant -- India And Investment Protection / By Aniruddha Rajput -- China : Us Bit Megotiation And The Emerging Chinese Bit 4.0 / By Wenhua Shan And Hongrui Chen -- Regulating Foreign Investment : Methanex Revisited / By Kyla Tienhaara And Todd Tucker -- The New Frontier : Economic Rights Of Foreign Investors Versus Government Policy Space For Economic Development / By Howard Mann -- Giving Arbitrators Carte Blanche : Fair And Equitable Treatment In Inveswtment Treaties / By Nathalie Bernasconi-osterwalder -- Is The Umbrella Clause Not Just Another Treaty Clause? / By C.l. Lim -- Internationalisation And State Contracts : Are State Contracts The Future Or The Past? / By Jean Ho -- State Capitalism And Sovereign Wealth Funds : Finding A Soft Location In International Economic Law / By Jiangyu Wang -- The Many-headed Hydra And Laws That Rage Of Gain, A Chapter In Conclusion / By C.l. Lim. Edited By Chin Leng Lim. Includes Bibliographical References And Index. These essays pay tribute to Muthucumaraswamy Sornarajah, Professor of Law at the National University of Singapore. The book surveys issues and themes connected with scholarly resistance to a neo-liberal perspective. It offers an account of the current backlash against investment treaties and investment arbitration in various countries.