Global Public Interest in International Investment Law

Author: Dr Andreas Kulick
Publisher: Cambridge University Press
ISBN: 9781107021761
Published In: July 2012
Format: Hardback , 412 pages
Jurisdiction: International ? Disclaimer:
Countri(es) stated herein are used as reference only

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The strengths of international investment law – above all, a strong focus on investor interests and an effective adjudication and enforcement system – also entail its weaknesses: it runs the danger of impeding or even sanctioning the host states' legitimate regulatory interests and ignoring other fields of public international law. How does it cope with public interest concerns such as human rights, the environment or the fight against corruption? At the heart of this book lies a fresh approach towards a general theory of such global public interest considerations in the investment realm. Delineating how and why those considerations matter, and why the current system does not accommodate them properly, Andreas Kulick fleshes out general principles and customary international law as defences the host state may raise against alleged investor rights infringements and promotes proportionality as the appropriate balancing mechanism.

• Outlines a clear doctrinal structure which serves practical implementation and provides a basis for further scholarly discussions

• Suggests factors to be taken into account when balancing competing interests and proposes procedural mechanisms to prevent abuses of public interest concerns by the host state

• Guides reader in how to use certain arguments or counter them, and provides arbitrators with a mechanism capable of halting inappropriate and unfounded public interest claims by the host state

Foreword	xiii
Acknowledgments	xv
Table of Cases	xvii
Table of Treaties and Other Documents	xxvi
1 Introduction	1
Part I Towards the Global Public Interest theory	9
2 The “internationalization” of international investment law	11
A. A first glance at Article 42(1) ICSID	12
1. Context: general principle of Article 42 ICSID is freedom of choice	12
2. Possible cases in which international law may be applicable under Article 42 ICSID	13
3. International law as applicable even in case of an exclusive choice of domestic law according to Article 42(1) first sentence ICSID	14
B. Drafting history of Article 42(1) second sentence ICSID	15
C. The role of BITs in international investment law	17
1. BITs as a recent phenomenon	17
2. Codification and promotion of international law through BITs	18
D. The relationship of domestic law and international law	19
1. Preliminary remarks	19
2. The Klöckner-Amco doctrine	21
3. The dissolution of the Klöckner-Amco doctrine	30
4. A new doctrine: Wena	33
5. The Argentine crisis Tribunals and beyond	38
E. The changing face of international investment law	45
1. Six preliminary observations	45
2. “Prominent role”: The “internationalization” of international investment law	46
3. The “integration” of international investment law	48
4. Outlook: The public interest challenge	50
5. Consequences of the above findings: Three hypotheticals	52
3 Public interest and international economic law – current approaches	57
A. Scholarly approaches towards international legal obligations of MNEs	57
1. A scholarly attempt to shape the practice: The Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights	58
2. Scholarly approaches towards an international legal personality of MNEs	61
B. Public interest considerations in recent BIT practice	66
1. Prelude: The principle of good faith and Article XX GATT	66
2. Public interest considerations in BITs	69
4 The Global Public Interest theory	77
A. Setting the stage: International investment law as Global Public Law	77
1. The Global Administrative Law face of international investment law	78
2. Constitutional elements in international investment law	85
3. International investment law as Global Public Law	94
B. Comparative insights	99
1. Recall the seven observations on international investment law	99
2. The European law system	101
3. The European Convention on Human Rights system	118
C. The Global Public Interest theory	127
1. Two examples of public interest considerations in international investment case law	127
2. Lessons learned from the comparative insights	146
3. The State as the agent of public interest	149
4. Lessons learned from international investment law as Global Public Law	151
5. The legal translation of Global Public Interest	154
5 How to balance the conflicting interests: Proportionality analysis	168
A. Doctrinal avenues of proportionality analysis in international investment law	168
B. Some skepticism regarding proportionality analysis	171
C. Comparative insights	173
1. The German pedigree of proportionality analysis and its reception in other domestic constitutional orders	174
2. Proportionality analysis in the European legal order – ECJ jurisprudence	178
3. Proportionality in the jurisprudence of international Tribunals	179
4. A glimpse into investment arbitration jurisprudence vis-à-vis proportionality	183
D. Elements of proportionality analysis	186
1. Suitability	186
2. Necessity	187
3. Proportionality stricto sensu	188
E. Principles relevant in proportionality analysis	189
1. Standards of review (Kontrolldichte), margin of appreciation and standards of scrutiny	189
2. “Praktische Konkordanz”	191
3. Limits to the balancing test (ius cogens)	192
F. Operationalizing proportionality analysis in international investment law	193
1. Why proportionality analysis?	193
2. Doctrinal structure: Three-tier analysis	195
3. “Obligations” vs. “defenses”	197
4. Factors to be considered while balancing on the proportionality stricto sensu level	198
5. Some doctrinal challenges	202
6. Consequence: Reduced amount of compensation and damages	209
G. Potential safeguards against abuse	213
1. Substantive safeguards: Recap	214
2. Procedural safeguards: Provisional measures	215
H. What this means: Completing the three hypotheticals	217
1. Environment	218
2. Human rights	219
3. Corruption	220
Part II Global Public Interest in international investment case law	223
6 International investment law and the environment	225
A. Principles of international environmental law	225
1. The polluter pays principle	226
2. The principle of preventive action	227
3. The precautionary principle	228
4. Common but differentiated responsibility principle	231
B. Do international environmental law treaties bear any relevance for the analysis at hand?	232
C. International investment disputes involving environmental issues	233
1. Santa Elena v. Costa Rica	234
2. Metalclad v. Mexico	237
3. S. D. Myers v. Canada	240
4. Tecmed v. Mexico	245
5. Waste Management v. Mexico	249
6. Methanex v. United States	251
7. Biwater v. Tanzania	252
8. Chemtura v. Canada	255
D. Analysis of the case law	258
1. Preliminary conclusions	258
2. The case law on environment in the light of the Global Public Interest theory	267
7 Human rights and investment – friends or foes?	269
A. Doctrinal approaches in a nutshell	269
B. Human rights issues in investment disputes	271
1. Alleged violations of the investor's human rights	271
2. Alleged violations of human rights by the investor	276
(a) General human rights cases	276
(b) Specific case study: The right to water	288
C. Analysis of the case law	300
1. What's wrong with human rights?	300
2. Through the back door	303
3. Growing role of third parties	304
4. The case law on human rights in the light of the Global Public Interest theory	305
8 Corruption and other irregularities	307
A. How bad is corruption?	307
B. Forms of corruption, definitions and international instruments	309
1. “Hard corruption” and “influence peddling”	309
2. International instruments	310
(a) OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions	310
(b) Criminal Law Convention on Corruption of the Council of Europe	312
(c) BIT provisions relevant in corruption cases	312
C. Corruption disputes in international investment law	313
1. Distinguish two different types of corruption disputes	313
2. International investment case law pertaining to corruption and other irregularities	314
(a) Wena v. Egypt and SGS v. Pakistan	314
(b) World Duty Free v. Republic of Kenya	315
(c) Inceysa v. El Salvador	321
(d) Fraport v. Philippines	324
(e) Kardassopoulos v. Georgia	325
D. Analysis of the case law	327
1. Preliminary conclusions	327
2. Alternative approaches	331
(a) Modification or adaptation of the main contract	331
(b) Balancing with the investor's rights on the merits stage	332
9 Concluding remarks	342
Bibliography	346
Index	365