6 - The Rise of Investment Treaty Arbitration

Summary

Many countries have entered into international treaties that accord substantive protections to foreign investors. Such treaties often include clauses enabling investors to institute arbitral proceedings on the international level against the host state. A number of arbitral centers have been established around the world to manage investor-state disputes. Chief among these is ICSID, which was created in 1965 under the auspices of the World Bank. Many of the controversies that get arbitrated in these forums are governed by public law, since they raise questions about the way state authorities have exercised their governmental powers. The ability of investors to take a state before an international tribunal is a remarkable example of the tendency to give private persons an active role in international adjudication.