Making Investment Arbitration Work for All: Addressing the Deficits in Access to Remedy for Wronged Host State Citizens Through Investment Arbitration

Abstract

The current dominant system for resolving international investment disputes is the Investor-State Dispute Settlement system or, more precisely, the Investor-State Arbitration system (ISA). The ISA system has proved to be an effective avenue for remedy for foreign investors whose investments are wrongfully impaired by host states. However, the system is not accessible to Host State Citizens (HSCs) whose interests may be harmed by investors. Wronged HSCs can seek redress in domestic fora only. The domestic fora in many jurisdictions leave many wronged HSCs without remedy, a problem that has long been acknowledged. This Essay proposes a solution. It proposes that access to remedy for wronged HSCs can be operationalized within the existing arbitration system (or integrated into a future international investment court system that may eventuate). This can be achieved by expanding the current ISA system to be a more inclusive system that allows all affected persons—investors and non-investors—whose interests are adversely affected to seek remedy. The proposed system, termed Investment Related Dispute Settlement, would allow for: (1) traditional ISA proceedings, in which investors may initiate proceedings against host states; (2) HSG-Investor Arbitration, in which host state governments may initiate proceedings against investors; and (3) HSCs-Investor Arbitration, in which HSCs may initiate arbitral proceedings against investors.