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FRIHUMSAM-Fri prosj.st. hum og sam

Compliance Politics and International Investment Disputes

Alternative title: Samsvarspolitikk og internasjonale investeringstvister

Awarded: NOK 12.0 mill.

Arbitration of international investment disputes is deeply controversial. Through a network of 3 000-plus investment treaties (including 14 signed by Norway), foreign investors can sue states for discrimination, loss of property, and unexpected legal changes. While this system was designed to prevent conflicts, it is a lightning rod for critique. Developing countries lose frequently and investors have challenged sensitive policies. The procedure is shrouded in secrecy, dominated by Western arbitrators, and compensation levels can be astronomically high. Yet, while scholarship has focused on the system’s origins and dynamics, little is known about what happens after a decision is made: It is a ‘black box’. This project asks four questions: (1) To what extent do states comply with decisions? (2) Why do they comply with such controversial decisions? (3) Does it change existing theories on how actors engage with international tribunals (4) What are the implications for the current United Nation’s reform process? The first phase of the project involves investigations by an experienced multi-lingual team into the compliance process for each compensation decision, which will be coded in team members’ award-winning PITAD database. This fact-finding is challenging: there is no final arbiter of compliance, enforcement processes occur in multiple courts throughout the world, and awards can be bought/ sold on the open market. The second phase involves combining legal, qualitative, quantitative and computational methods to understand states’ decisions over whether to comply. Is it due to reasons of financial costs and domestic politics? Or is it also driven by emotions and ideology? The third phase involves putting the above findings in a broader context. The project will examine how arbitrators/investors adjust their behaviour in light of expected compliance, compare our results to existing theories on international tribunals, and contribute to the reform process at UNCITRAL.

International investment arbitration represents the most controversial form of adjudication in international law. Tribunals only make judgments against states, developing countries lose frequently, and investors have challenged domestic policies on climate change, public health, and human rights. However, little is known on the post-adjudication phase and whether states comply with adverse decisions and how compliance affects actor behaviour and domestic policy. This project asks three questions: (1) To what extent do states comply? (2) Why do states comply? (3) What are the implications for compliance theories in international relations, ISDS actor behaviour theories, and UN reform processes? An interdisciplinary approach is taken with an emphasis on agentic and structural factors in explaining compliance (including the salient role of emotions). The methodology consists of qualitative, quantitative, legal, and computational approaches, which are implemented concurrently and sequentially. The project will be carried out in five work packages by a multi-disciplinary and multi-lingual team, given the need to undertake investigative and field work in diverse countries. Enforcement processes in investment arbitration are unique and transnational - as investors chase state assets throughout the world, litigating in different national courts. In doing so, the project lays the bases for creating a new research field on ISDS compliance and enriching the broader scholarship on international courts and tribunals.

Funding scheme:

FRIHUMSAM-Fri prosj.st. hum og sam