James Crawford Prize 2016

The 2016 James Crawford Prize for International Dispute Settlement, awarded by the Journal of International Dispute Settlement and Oxford University Press, goes to Dr Pietro Ortolani, of the Max Planck Institute Luxembourg, for his paper The Three Challenges of Stateless Justice.

The paper argues that if we want to obtain a meaningful understanding of the rapidly emerging systems of stateless justice, which operate within private autonomous legal orders, we need to take up three core challenges: clarify the relationship between justice and authority without falling prey to our state-centrist habits; work out the appropriate structures of the processes; and determine what the essential functions of justice are and how they can be fulfilled by stateless systems. Using Bitcoin as a case study, the article develops a new epistemic model to understand justice outside of the state – a model divorced from the theoretical framework of state authority.

It will be published on the journal’s website by the end of April, and included in print in the journal’s third issue for 2016.

Many congratulations to Dr Ortolani.


New JIDS issue, on empirical research in investment arbitration

We have published, late last week, a special issue of the Journal of International Dispute Settlement on Empirical Studies on Investment Disputes. I’m nearly always proud of what I do, because the expectations are low to start with, but this thing makes me particularly happy. I think it shows, once again, how much and how easily we lawyers can learn from our neighbours’ disciplines – in this case political science, economics, development studies. That’s also, quite precisely, why we are now extending the overall purview of the journal  beyond strict legal approaches, to include relevant areas in the social sciences and humanities. This special issue marks that extension. There’ll be more of it.

To help us make the point, Oxford University Press kindly suggested to make this issue free to read online for a month, starting about now I think.

So here’s what we have in the issue:



Thomas Schultz

J Int. Disp. Settlement 2016 7: 1-2


Special Issue Articles

Towards a New Heuristic Model: Investment Arbitration as a Political System

Cédric Dupont and Thomas Schultz

J Int. Disp. Settlement 2016 7: 3-30


Foreign Investment, Development and Governance: What international investment law can learn from the empirical literature on investment

Jonathan Bonnitcha

J Int. Disp. Settlement 2016 7: 31-54


Do BITs ‘Work’? Empirical Evidence from France

Jason Webb Yackee

J Int. Disp. Settlement 2016 7: 55-71


Diplomats Want Treaties: Diplomatic Agendas and Perks in the Investment Regime

Lauge N. Skovgaard Poulsen and Emma Aisbett

J Int. Disp. Settlement 2016 7: 72-91


Investment Treaties and the Internal Vetting of Regulatory Proposals: A Case Study from Canada

Gus Van Harten and Dayna Nadine Scott

J Int. Disp. Settlement 2016 7: 92-116


Recent Trends in Investor–State Dispute Settlement

Rachel L. Wellhausen

J Int. Disp. Settlement 2016 7: 117-135


Political Risk and Investment Arbitration: An Empirical Study*

Cédric Dupont, Thomas Schultz, and Merih Angin

J Int. Disp. Settlement 2016 7: 136-160


Secrecy in International Investment Arbitration: An Empirical Analysis

Emilie M. Hafner-Burton and David G. Victor

J Int. Disp. Settlement 2016 7: 161-182


Inside the Black Box: Collegial Patterns on Investment Tribunals

Todd Tucker

J Int. Disp. Settlement 2016 7: 183-204


Political Risk Insurance as Dispute Resolution

Clint Peinhardt and Todd Allee

J Int. Disp. Settlement 2016 7: 205-224


Comity in Australia

Academically, the principle of comity is all but dead. Not only is there a distinct lack of literature regarding the principle, but in circumstances where it is addressed it is considered to be of negligible importance for the resolution of modern private international law disputes. However, a review of Australian case law demonstrates that there is a significant disjunct between the academic view of comity and its actual use in judicial practice. In the last ten years, over 850 Australian court decisions have made reference to comity – many of which relate to the field of private international law. In this article, the authors review 77 Australian cases where comity played a definitive role in the resolution of private international law issues. These cases demonstrate that comity is a relevant, useful legal tool to guide the development and application of private international law rules – doing so in a manner that helpfully mediates between the political need to uphold the doctrine of sovereignty and the commercial and judicial need to permit law to act transnationally in order to accommodate international commerce. This is the purpose for which comity was created almost 400 years ago and the examined case law demonstrates that it continues to be effective in reflecting these interests in the law.

Read the paper, by Jason Mitchenson and me, here.

Investment Arbitration as a Political System

Investment arbitration is usually viewed as an international legal dispute resolution mechanism. This means not only that it is a mechanism in which law is applied, when arbitrators render decisions applying law to facts, and to which law is applied, when questions are entertained regarding the conditions under which arbitrators can render such decisions, the limits of such decision-making, and its effects. The idea that investment arbitration is viewed as a legal dispute resolution mechanism also means that, when we try to understand it, we concentrate on legal rules and principles. We examine the relevant law, in its different aspects and manifestations, in order to form our understanding of investment arbitration.

At other times, which are also fairly habitual, investment arbitration is viewed as a business instrument. This may mean that it does or should serve the interests of business or, alternatively, that individual arbitrations should be conducted in some form of business-like fashion, and ultimately, that there is a business of investment arbitration. At a different level, the idea that investment arbitration is viewed as a business instrument also means that, when we try to understand it, we concentrate on business reflexes, on the interests of its different stakeholders, on their utility functions and how these functions reveal preferences, perceived or conscious, rational or not, and how these preferences translate into, precisely, business strategies. The resulting image we obtain from such an approach is already quite different from the picture produced by the legal approach sketched in the preceding paragraph.

Less frequently, investment arbitration is viewed as a legal system of its own, just like other types of international arbitration or precisely in opposition to them. This may mean that the label of law was successfully affixed to this legal phenomenon, thus supplying an additional illustration of legal systems that are neither national law nor international law. Another meaning may be that it operates with a certain level of autonomy from states control, a degree of autonomy we associate with the demarcation of two legal systems. Yet another may be that perhaps it should strive for a certain type of internal consistency, a degree of predictability that we attribute to the rule of law, a form of dependable signposting that we have come to associate with the very idea of what counts as law. At a different level, the idea that investment arbitration is viewed as a legal system means that, when we try to understand it, we use roles, relations between actors, mechanisms of accountability, pursuits of values that are taken from national and other well studied legal systems. They lead us to see workings of investment arbitration that neither the legal nor the business approach put to light.

Some of these views are descriptive: they offer a description of arbitration, an account of what it is. We falsify them by pointing to an inaccuracy, to an aspect of arbitration that the account has failed to represent satisfactorily. Other views are normative: they prescribe a direction that investment arbitration should take, a goal it ought to attain. We counter them, for instance, by axiological debates (or simply by academically voting for other alternatives).

Still other views are neither descriptive (properly speaking) nor normative: they make no claim, as a theory, to be accounting for what is really happening, for what investment arbitration actually is; nor do they argue about how it should develop or change. They simply claim that, if we look at investment arbitration from a certain perspective, pretending it is a certain thing, we gain a useful understanding of its workings, an understanding that other views do not reveal. If, for instance, we view investment arbitration as the court of the international investment regime, we understand certain relationships between arbitral tribunals and some constituencies. But it does not mean that we posit that investment arbitration is a court or should be a court. Such views are closer to metaphors than to pictures. This is what a heuristic view, or model is. (Or, to be precise, this is the meaning of a heuristic model that we use in this article.) As Ludwig Wittgenstein put it, “The aspects of things that are most important for us are hidden because of their simplicity and familiarity. (One is unable to notice something – because it is always before one’s eyes).” The point of a heuristic model is to make familiar things unfamiliar, and thereby make them differently noticeable. Such a heuristic approach takes to an extreme the idea, expressed for instance by Karl Popper, Bertrand Russel, and Ernest Nagel in economics, that complete and infallible knowledge is impossible, and focuses on what the heuristic view allows us to understand instead of what it fails to correctly account for: this is why it is not, strictly speaking, a descriptive view.

Our claim is that one way to make better sense of the fragmented knowledge we have today of investment arbitration is to view it as a political system: one that transforms the input of key actors into output, with feedback loops from the latter to the former. This heuristic model, we contend, allows us to bring together in an intelligible way some of the key insights of legal approaches and political science approaches to investment arbitration. To be clear, we do not seek to provide anything near a complete account of neither the legal nor the political science aspects of investment arbitration. We do not, either, suggest that any of the existing accounts is inaccurate. And we do not argue that investment arbitration is a political system or that it should be a political system. We simply contend that seeing investment arbitration as political system allows us to bring out elements of its workings with greater clarity, helping us to form an additional understanding that is particularly expressive of the actions and interactions of the various actors of investment arbitration, their uses of it and their adaptations to it. We claim that, altogether, this helps us get a better, simpler sense of some of the key dynamics of investment arbitration.

Read the rest here: Cédric Dupont and Thomas Schultz, ‘Towards a New Heuristic Model: Investment Arbitration as a Political System‘ Journal of International Dispute Settlement, 2016, forthcoming.


Political risk and investment arbitration – again

In June, I had posted a note here reporting our findings on the relationship between the political risk an investor is exposed to in the country hosting its investment, and the likelihood that this investor will eventually file an investment arbitration claim to redress the effects of the materialisation of that risk. These findings were about oil and gas.

We’ve now expanded our study to all sectors of the economy.

Here’s the abstract:

Investment arbitrations should not happen too often, because they are costly processes for both parties. Yet they regularly happen. Why? We investigate the hypothesis that investment arbitrations are used as a means of last resort, after dissuasion has failed, and that dissuasion is most likely to fail in situations were significant political risk materializes. Investment arbitration should thus tend to target countries in which certain types of political risk has materialized. In order to test this hypothesis, we focus in this paper on two drivers of political risk: bad governance, and economic crises. We test various links between those two drivers of risk and arbitration claims. We use an original dataset that includes investment claims filed under the rules of all arbitration institutions as well as ad hoc arbitrations. We find that bad governance, understood as corruption and lack of rule of law (using the WGI Corruption and WGI Rule of Law indexes), has a statistically significant relation with investment arbitration claims, but economic crises do not.

In sum, the fact that a country is hit by an economic crisis does not seem to increase the chance that it will be sued in an investment arbitration.

Surprising? Perhaps not. When hit by an economic crisis, a country may become cautious and willing to negotiate more than on average.

The paper’s Cédric Dupont, Thomas Schultz and Merih Angin, ‘Political Risk and Investment Arbitration: An Empirical Study‘, Journal of International Dispute Settlement, 2016, forthcoming.

International Arbitration Scholarship: Forms, Determinants, Evolution

We have spilled much ink, we as a community, in our discussion of international arbitration. Much of it we have used on specific technical aspects of the laws and rules that apply to it, or that apply in it. A great deal too has gone to how good procedures are to be conducted. And increasingly, of late, we have written on how arbitration works beyond the rules – the rules which reflect some (but only some) of its true operations. We have taken interest in its broader social and economic significance. We are, now and then, zooming out from the bolts and screws and consider it at the level of an entire system. Engagements with problems that truly vex – truly vex beyond offering legal conundrums or presenting complicated logistical puzzles – no longer stand out today as so many sore thumbs. Or much less so.

Why? And where is it going? Why and how is international arbitration scholarship evolving? What are, to start with, its forms today? And why did we scholars make it what it is? Surely there is something – or rather many somethings – that determine what we write. What could they be?

These are the principal questions I seek to entertain in this chapter, which constitutes my report as research rapporteur for the conference celebrating the 30th Anniversary of the Queen Mary School of International Arbitration. It is also, to be fair, part of a bigger project that tries to understand how the thinking about law more generally is produced.

To be clear I do not offer here an elaborate study in the sociology of professions. Nor do I attempt to engage in advanced considerations of what forms the arbitral epistemic community or communities, and what forces animate that community. These are or would be meaningful endeavours, but they are not mine. The outline I offer is of necessity a sketch; I merely want to map a few conventional types of arbitration scholarship and mark some of the possible places where interests can be found that incentivise or constraint research in the field. The ambition is that these types and these interests can inform our perspective when we ponder how the thinking about arbitration law and practice is produced. Accordingly, the propositions I formulate are submitted, in this essay, to rational assent, not to empirical demonstration. Possibly a research programme could be developed to test these propositions. But this is not the point of this essay. Its point is heuristic.

I believe there is an important general point about arbitration that comes from thinking in particular about how scholarship on arbitration is produced. The general point is about what is likely to become of arbitration, about the support it will garner, the pains that will be visited on it, and the changes and adaptations that will be required of it – required of it and of its participants and stakeholders. Arbitration is indeed a fairly technical field, a fairly complex area of the law. And so it often appears that political powers have difficulties in understanding its intricacies, let alone in developing a reliable understanding of their own, distinct from what our discourses showcase – this is the very idea of regulatory capture by an epistemic community. It seems credible, however, that these same political powers will have no difficult in forming an opinion about the allure of the consequences of sundry arbitral regimes, and if their understanding of either the causes or the consequences is muddled by unhelpful discourses, unhappy things are not unlikely to follow.

The chapter moves in four parts. I begin with an overview of different forms of arbitration scholarship, what they seek to achieve and how, what from of thinking they correspond to and how they progress, all of this in quite general terms. This part ends with an impressionist account of the evolution of arbitration scholarship over the last 30 years.

With Part II, I turn to what incentivises and constrains scholarship in the field. I first enter a general approach, which draws heavily on the concept of reasons-for-action, which I combine with basic law & economics tenets. I further introduce a classic distinction between two types of such reasons-for-action.

In Part III, I apply this general approach to identify ways in which the pursuit of other people’s interests may determine what kind of arbitration scholarship we produce. In Part IV, the focus shifts, within the same approach, to the advancement of our own interests when we write on arbitration.

A final clarification bears noting: my stance is not evaluative. The intent of my chapter is not to dwell on the virtues and demerits of arbitration scholarship, or even, as I already said, to supply evidence of what it is we really do. I simply offer, without much further adornment, a lens for everyone to look at arbitration scholarship from the vantage of their own search.

Read more here.

Le Monde: Permanent Court or Arbitral Tribunals for the TTIP?

Two days ago, the European Commission released a document in which it suggests the creation of a permanent court – actually, two courts – to resolve investment disputes in the Transatlantic Trade and Investment Partnership. Florian Grisel (CNRS, King’s College London) and I comment on this, in the form of historical background from a century ago, in a piece for the French newspaper Le Monde.


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