International Investment Agreements, Investor Obligations, and the Rule of Law

Critics have claimed that international investment agreements (IIAs) protect investors without regard to the obligations of investors under the applicable law. The critique begs the question whether IIAs and investor-State dispute settlement (ISDS) comport with the rule of law, broadly defined to include both substantive and procedural elements. As for so-called first-generation IIAs, this critique has some merit, yet it is tenuous as various IIAs have recognized that the entry of investments should comply with national law. Arbitral tribunals constituted under IIAs are to interpret treaties under the Vienna Convention on the Law of Treaties in the light of their terms, context, object, and purpose, which further enables tribunals to at least address investor obligations under IIAs. Arbitration rules that recognize the ability of a State to file a counterclaim play a similar function. Engagement of the public in the development of new treaties and the ISDS process has led to a heightened focus on investor obligations, yet the reforms raise new challenges that foreshadow an ongoing adaptation of IIAs and ISDS to a continued rule-of-law critique.