The Remedies Stage of the Investment Treaty Arbitration Process: A Public Interest Perspective.

Abstract

As the investment treaty arbitration regime matures, consensus is emerging as to the need for public interest considerations to be taken into account in resolving disputes under international investment agreements (IIAs). However, the question of how such considerations should be reflected remains contentious. This thesis proposes that the remedies stage of the process can, and should, play a role in taking account of public interest considerations and so in easing the tension between host state regulatory sovereignty and investment protection that lies at the heart of the investment treaty regime. Thus, this thesis argues that, while, on the one hand, there is a need to introduce an element of reciprocity into the investment treaty arbitration process in order to ensure continuing state co-operation and to reflect the broader underlying purposes of IIAs, on the other, the primary object of the system remains the protection of foreign investors. These competing imperatives can lead to difficulties in taking account of public interest considerations at the merits stage of the arbitration process. Therefore, in order to reconcile these competing imperatives and to achieve an optimal balance between host state regulatory sovereignty and investment protection, this thesis proposes that public interest considerations should be recognised at the remedies stage where such considerations cannot be taken into account either sufficiently or at all at the merits stage and identifies a number of situations in which this approach would be appropriate. Potential doctrinal bases for implementation of this approach are also examined and the conclusion reached that, given the significant degree of discretion afforded to tribunals in applying the full reparation principle and the role that equity can permissibly play in quantifying damages, this approach can, save in the case of lawful expropriations, be implemented within the parameters of existing legal principles.