Global Perspectives on Teaching International Investment Arbitration: Reflections on Three Plus Decades of Change and Continuity

I started teaching a course I called “International Law on Foreign Investment” as an adjunct professor at Cardozo Law School in the fall of 1992.  The course was highly unusual at that time, with investment typically getting a little treatment in an international economics law course.  Since then, I have taught the course regularly, generally covering the process of foreign investment, the substantive content of international investment law (“IIL”), and methods for resolving disputes between investors and states.  Over more than three decades, that course has changed a great deal, even as some continuities emerge.

Change 1:  From Neo-Liberalism’s Apogee to the Legitimacy Challenge

In 1992, I approached IIL as a law of investor protection.  This slant was undoubtedly influenced by my recent experience as a part-time bilateral investment treaties (“BITs”) negotiator at the U.S. State Department, where I participated in the Argentina negotiations, aborted talks with Costa Rica and Pakistan, and the drafting of the NAFTA investment chapter.  But I was undoubtedly affected by the neo-liberal political zeitgeist.  To give you a sense of that, consider my first assignment: an article from the Far Eastern Economic Review from 1993 by the governor of a province in Kazakhstan called “Come and Exploit Us.”  (I still assign it to show neo-liberalism’s influence.)  The protections that the U.S. sought for its investors, and as a way of promoting its foreign economic policy, were the ones that I taught.  And I taught the resolution of disputes – from diplomatic protection to arbitration – from the perspective of the supposedly aggrieved investor.  Scholarship on IIL was limited (Schreur’s first edition was not until 2008); and certainly scholarship critical of the enterprise of investment protection was limited (Sornarajah’s first edition was in 1994). 

By the mid-2000s, especially in the wake of Argentina’s losses at ICSID, governmental, NGO, and academic criticism of IIL and investor-state arbitration had grown significantly, even as the status quo had many defenders.  My distance from my professional role as a State Department lawyer also grew.  Both of these changed the way I thought about and taught the topic.  In our classroom discussions, we began to consider whether, for instance, investment law limited the discretion of the host state too much, with a key study by the International Institute for Sustainable Development (“IISD”) guiding our discussion.  Over time, as investor-state arbitration became the topic of significant criticism (e.g., pioneering work by Gus Van Harten), the readings I assigned and our discussions shifted to engage with them.  We turned to challenges to the composition of arbitral tribunals, amicus participation, an international investment court, appellate review, alternatives to arbitration, and other questions now at the forefront of criticisms of investor-state arbitration.  They came to occupy a central part of my teaching.  At the same time, I avoid telling students my own views on the legitimacy of arbitration, preferring to let them read different perspectives and debate it among themselves.

Change 2: The Integration of Human Rights into IIL

The early 2000s also saw enormous normative developments on the issue of business and human rights.  This topic had long interested me, and I wrote an article in 2001 offering a theory of business legal responsibility for human rights violations.  This topic became more integrated into my course following the issuance of the United Nations (“UN”) Guiding Principles on Business and Human Rights (altogether “UNGPs”) in 2011 and domestic litigation in the U.S., UK, Netherlands, and Canada on business abuses by multinational companies (e.g., U.S. Alien Tort Statute cases, Vedanta v. Lungowe, Okpabi v. Shell, and Nevsun v. Araya).  The early bribery and corruption cases considered by investment tribunals (e.g., World Duty Free v. Kenya and Kim v. Uzbekistan) also merited treatment in the context of business duties, and the students particularly liked discussing the blame-shifting questions that they raised.  Eventually I devoted a quarter of the class to the intersection of IIL and human rights (both the potentially competing duties of states under treaties as well as the direct responsibility itself), anti-corruption law, and broader questions of global justice. My teaching also benefitted from my personal experiences as one of the (many) academic advisers to John Ruggie during the drafting of the UNGPs and as a member of the drafting team of the 2019 Hague Rules on Business and Human Rights Arbitration.  These issues about investor responsibilities are, to me, essential for understanding what IIL incorporates today.

Change 3:  The Explosion of Source Material as a Challenge to Teaching IIL

When I started teaching IIL, states had concluded about 700 BITs – though I really only knew about US BIT practice!  More important, for teaching various doctrinal topics – “internationalization” of contracts, expropriation, denial of treatment, nationality, etc. – the caselaw was extremely limited.  I assigned the major cases at the time  – including TOPCO, Aminoil, Elsi, Starrett Housing, Aramco, AAPL, Barcelona Traction, and some US cases like Sumitomo and Asakura.  I spent a lot of time on expropriation because that is where the caselaw was.  There was little about the meaning of fair and equitable treatment (“FET”). 

By the mid-2000s, that was all changing as tribunals started deciding BIT and NAFTA cases.  The caselaw eventually became a flood, in terms of the number of cases, the number of issues each case addressed, and the number of pages in each decision (with dissents too).  I became extremely selective as to which cases to choose and spent enormous amounts of time editing them down to something digestible (as casebooks on IIL did not exist, and I still do not use one).  The caselaw on FET exploded, tribunals and annulment committees issued opinions about necessity and national security exceptions, and tribunals engaged with human rights in a select number of cases.  I have stopped trying to keep up with every case, but focus on those that I think highlight the internal challenges and tensions within IIL.  So, for FET, I continue to teach Glamis Gold, Philip Morris, and Bilcon to highlight the key issues, without diving too far into more recent cases. 

Several aspects of teaching investment law have remained more or less constant.

Continuity 1:  IIL Is a Public International Law Course

IIL should be seen first and foremost as an international law course. I consider myself a generalist in international law, with interests ranging from the UN to international criminal law to the use of force to border disputes.  Thus, I have always seen IIL from the perspective of the key themes in all international law classes – the diverse processes of prescription (bilateral and multilateral, hard and soft law); the many participants, without obsession with their so-called legal personality; the challenges of enforcement involving both centralized decision-making and individual states; and the extent to which international law both affects behavior and reflects power realities.  I have never considered IIL what some U.S. lawyers mistakenly call “private” international law nor a course of interest only to those headed to law firms (though I do get a different makeup of students in that class compared to my human rights class).  This perspective means I bring in analogies and comparisons from other international law courses more than from domestic corporate law (about which I know almost nothing) or even international commercial arbitration.

Continuity 2:  Process Over Doctrine, Reality Over Form

My teaching method is grounded in the traditions of legal realism and anti-formalism common in American law schools; the U.S. approach to law teaching that emphasizes the policy behind, as well as critique of, law and not merely mastery of every doctrinal nuance; and my own methodology that views international law as a process of decision to advance certain policy goals and values.  I see courts and tribunals as just one participant in international law, even in IIL despite the explosion of caselaw.  I imagine my IIL course is quite different from that taught at many European institutions, but also different from what a Third World Approaches to International Law (“TWAIL”)-oriented scholar would teach. 

As a result, I do not bombard my students with numerous cases in an attempt to find some coherence or essence to each doctrine or rule.  On the contrary, for certain topics I aim to show how tribunals have markedly inconsistent and sometimes thinly reasoned approaches.  I try to emphasize how the law changes, and how the current content of IIL contrasts with what came before and what will emerge in the future.  Understanding how that law evolves, and what role my students as future lawyers can play – whether representing a state, investor, indigenous group, labor union, or human rights NGO – requires more than appreciating what some tribunal regards as the rule. 

As for resolution of investment disputes, rather than analyze each aspect of arbitration (which would be impossible anyway, as this is not a course on arbitration alone), I focus on key process challenges – certainty vs. accuracy when it comes to annulment, the role of domestic courts in enforcement, the composition of arbitral tribunals, the need for some consistency, and the participation of non-state actors.  It is not a “how to” course on how to arbitrate, something I know students who go into the profession will learn in the real world.

Continuity 3: Thinking Not Just Like a Lawyer

Finally, my outlook on international law has always been interdisciplinary, first with international relations theory and, for the last two decades or so, with political philosophy and global justice.  In teaching IIL, I ask questions that those fields ask of international law.  From international relations theory: Why would states agree on a BIT?  What incentives do they have to comply?  Why does the dispute system seem to privilege investors at one stage and yet allow states a key role at others?  And from political philosophy: Are the rules fair to developing states or communities affected by foreign investment?  Do they reflect concerns of non-business actors like indigenous peoples?  Who are the winners and losers in this system?  Such inquiries do not mean neglecting the lawyers’ questions: Is this treaty well-drafted and what are its ambiguities?  Are tribunals treating like cases alike?  Is the reasoning in this case persuasive?  But thinking beyond the doctrine will make them indispensable as lawyers, as well as better global citizens and leaders.

Conclusion

My three decades of teaching IIL, and seeing how others teach it, confirms that, like all courses in international law, academics can teach it from multiple perspectives – from a positivist focus on mastery of the rules and rulings in all their minutiae – downplaying both their relevance and their fairness; to defenses of the existing rules and institutions and more generally of investor interests; to a highly critical perspective that sees only hegemonic power, finds little fairness, and looks down on compromise between stakeholders.  In the end, teachers need to expose students to all these approaches, and those (like mine) in between, but leave it to them to make up their mind about the state of IIL.  We fail in our professional obligations if they are uninformed, and uncritical, but equally so if they only hear one side of the debates. 

In the end, whatever one’s priors about IIL, the course continues to offer opportunities to raise all the important challenges to international law – through the lens of one topic in international economic law.  IIL is not just another specialized regime within international law; it is actually a window into all of international law.  I hope faculty will seize the chance to situate and contextualize IIL and thereby educate future lawyers about how international law works and does not work, and what they as future lawyers need to do to make it more legitimate, effective, and just.