Responses to the legitimacy crisis of international investment law

LEGINVEST’s main objective has been to map the need for and propose measures to ensure that international investment law does not prevent but rather contributes to the environmental protection, human rights and sustainable development. The project has employed two PhD candidates and one part-time associate professor, as well as permanent staff at the PluriCourts Centre for the Study of the Legitimate Roles of the Judiciary in the Global Order. In early 2019, the project launched the PITAD database on treaty-based arbitration, combined with a workshop on treaty and arbitration reform. Two project team members (Behn and Langford) were elected to chair an Academic Forum that provides input to negotiations on such reform in UNCITRAL Working Group III. LEGINVEST has performed secretariat functions for the Academic Forum, subsequently attended all negotiation meetings, participated in numerous academic contributions, and debated new research and policy in blog posts. LEGINVEST has had a significant academic output which has been influential within the broader academic and political discussions of challenges associated with international investment law and arbitration, as well as measures to address such challenges. The most important contributions consist of two anthologies (CUP) published respectively in 2020 on the relationship between international investment and trade law and in 2022 on the legitimacy crisis in international investment law. Three special issues of journals were published respectively in 2020 and 2023 on the UNCITRAL negotiations (Journal of World Investment and Trade, Brill and Journal of International Dispute Settlement, OUP), and in 2021 on human rights (Leiden Journal of International Law, CUP). An article on double hatting among arbitrators (Journal of International Economic Law, OUP) won the John H. Jackson Prize in 2020. Runar Lie defended an article-based PhD thesis that provides a computational analysis of influence and change in international investment law. One of the dissertation's articles, which showed that initiatives to reform treaties have had limited impact beyond the specific initiatives, was awarded the European Society of International Law's Early-Career Scholar Prize in 2023. Laura Létourneau-Tremblay's handed in her PhD on environmental protection in international investment law – interaction, change and adaptation in 2023. During the project period, there have been extensive changes in Norwegian and international policy regarding investment treaties. Several states, including Norway, have renegotiated and terminated treaties. In contrast, the number of arbitration cases has increased and remains at an all-time high. Only in 2020 did Norway face its first treaty based arbitration case, concerning access to snow crab fisheries around Svalbard. For environmental policy, LEGINVEST has shown that long-term initiatives consisting of treaty amendments to address environmental concerns have had limited impact, especially in arbitration decisions. Statistically, investors have won with claims against states to a greater extent in environmental cases than in other cases. This suggests that environmental policy, which is often characterized by considerable discretion and case-by-case assessments, is particularly vulnerable in rights-based arbitration. Seen from a human rights perspective, the investment treaties provide investors with human rights-like protection of economic rights. Many of the most controversial arbitration cases concern situations where such rights come into conflict with the economic, social and cultural rights of vulnerable groups. Tribunals increasingly mention such human rights. Nevertheless, LEGINVEST points out that a main challenge for safeguarding such rights is that those who are recruited as judges and lawyers are mainly men educated and living in Western countries. The project has also demonstrated that a limited number of persons and law firms alternates between different roles and dominates the arbitration community. LEGINVEST has contributed to UNCITRAL proposing a new code of conduct for arbitrators and judges and initiatives aiming to increase diversity among arbitrators and lawyers. LEGINVEST has pointed out that treaty protection of foreign investment is almost non-existent in the poorest and least developed countries and that treaty-based arbitration is used against such countries only exceptionally. The project has also pointed out that such treaties are in competition with investment protection based on legislation and contracts, and that knowledge about and empirically based research on this relationship is limited. Against this background, the project has concluded that there is potential for using treaty-based investment protection to promote sustainable development. In particular, investment treaties may contribute to better protection of third-party interests and greater predictability than legislation- and contract-based arbitration.

Forskningsmessig har prosjektet lansert og videreført en omfattende database over traktatbasert investeringsvoldgift. Databasen er unik i den forstand at den er fritt tilgjengelig og innrettet mot forskningsmiljøer, samt at den er lagt opp til å kunne integrere ny og relevant datainnsamling. Databasen er videreført i forskningsprosjektet Compliance Politics and International Investment Disputes (COPIID, prosjektnummer 326269), og det er sendt inn prosjektsøknader som tar sikte på å utvide forskningen til kommersielle voldgiftssaker mot stater. Det er god utsikt til at databasen blir videreført de kommende årene, og forhåpentligvis at det finnes metoder for å bevare dens relevans eller gjøre det lett å reaktivere den. Politikkmessig har prosjektet hatt stor betydning for internasjonale de internasjonale forhandlingene om reform av traktatbasert voldgift om utenlandsinvesteringer. LEGINVEST var sentral ved etableringen av et akademisk forum for bidrag til forhandlingene, og har hatt sekretariatsfunksjoner for det akademiske forumet gjennom nesten hele prosjektperioden. Det har vært avholdt internasjonale møter for forumet i regi av prosjektet, og prosjektmedlemmer har deltatt på alle forhandlingsmøtene som har vært avholdt i prosjektets levetid. LEGINVEST har hatt særlig viktige bidrag til at UNCITRAL har foreslått nye regler for å unngå inhabilitet og at det igangsettes tiltak for økt mangfold blant dommere og advokater. LEGINVEST ble også invitert av EU-kommisjonens møte for forhandlingsdelegater for å redegjøre for prosjektets konklusjoner i forbindelse med diskusjoner om etablering av en investeringsdomstol som et alternativ til ad hoc voldgiftstribunaler. Nasjonalt har LEGINVEST bidratt i diskusjonene av Norges utkast til en modellavtale for investeringtraktater. Denne ble ikke vedtatt, men har vært brukt i forhandlinger. Videre var prosjektet aktivt i å fremme norsk deltagelse i de tidlige fasene av forhandlingene. Norske myndigheter har imidlertid etter dette valgt å holde en lav profil og å prioritere arbeidet med en utfasing av eksisterende og utdaterte avtaler. Hvorvidt Norge vil åpne for å inngå nye generasjoner av investeringstraktater eller å ta inn bestemmelser om internasjonale investeringer i fremtidige økonomiske samarbeidsavtaler er spørsmål som ikke er endelig besvart, og som LEGINVEST har lagt et godt grunnlag for en empirisk informert diskusjon om.

Countries have signed more than 3000 international investment agreements (IIAs). Most of these establish broad rights to foreign investors and allow them to bring disputes to international arbitration tribunals. Many of the cases before such tribunals have been controversial, and they have generated a long-standing debate concerning the legitimacy of IIAs and associated disputes. The project will study the extent to which the significant growth of disputes during the last 30 years has led states to reassess their commitments under IIAs. Arguably, the disputes have shifted state attitudes and strategies towards IIAs: some states have sought to restrict commitments to foreign investors in new IIAs or to terminate or renegotiate existing IIAs. This project also aims to understand the extent to which shifting state attitudes influence decisions of tribunals. While courts are generally required to be impartial and independent, we expect arbitration tribunals to be responsive to shifts in state attitudes. The project will focus on the relationship between IIAs and environmental protection, human rights and the sustainable development of countries facing poverty challenges. It will improve the ability of public authorities to respond to disputes in such settings. It will also seek to improve investors' understanding of how IIAs and disputes can affect countries and help them avoid harmful practices. The project will provide negotiators of IIAs with better tools for assessing consequences of signing, ratifying, revising or withdrawing from IIAs. The project is particularly relevant for Norway and its foreign investment policy due to the long-standing debate on how Norway's IIA policy. Given the exceptionally high number of IIAs and disputes and the secrecy surrounding dispute settlement, the project is highly dependent on gathering data. The Project will establish two extensive databases and make these available to researchers, public authorities and others.