21st Century Investment Agreements: Justice, Governance and the Rule of Law

Abstract

Investment treaty law can no longer be managed as if it were merely a system of private ordering setting out the protected rights of capital owners. This philosophy has contributed to the ongoing legitimacy crisis affecting investment law today, including the TPP and TTIP negotiations. In response to a similar legitimacy crisis in the 1990s, the international trade system began a profound paradigm shift, recognizing that trade law was not simply a technical regime for liberalizing economic flows, but a system of treaty-based governance for managing transnational economic resources for the good of society as a whole.

Investment law has today reached the same point, and a similar paradigm shift is the key to successful resolution of the legitimacy crisis facing international investment. The international investment regime certainly involves private actors with valid and important interests, but it is not solely about private actor rights — it is also about state responsibilities to the larger society. International investment agreements (IIAs) are instruments of economic governance, by their nature subject to principles of procedural and distributive justice, as with any system that allocates social resources.