Introduction to Part I

Summary

International investment law (IIL) and its dispute settlement mechanism is a rare model in international law that allows foreign investors to bring claims for monetary awards directly against States in an international forum, on the basis of international law. Traditionally, individuals have not been subjects of public international law, while State sovereignty has been the main tenet of public international law. How then could individuals, let alone foreign private entities, compel States to engage in dispute resolution with far-reaching consequences? Born out in the 1960s of necessity to protect cross-border investment flows, this area of international law has developed into an extensive and yet fragmented system of instruments for protection of foreign investments and liberalisation of international markets. The development of IIL in a relatively short period of time has been stimulated by an increase in the number of international investment agreements (IIAs) and driven by the rise of investment treaty arbitration (ITA) and jurisprudence. Consequently, the institutional design for investment disputes has become the focus of intense criticism. Debate has evolved around questions of the legitimacy of the international investment regime and its compliance with the rule of law.