Conceptual Difficulties in the Empirical Study of Bilateral Investment Treaties

Brooklyn Journal of International Law, Sep 2017

By Jason Webb Yackee, Published on 01/01/08

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Conceptual Difficulties in the Empirical Study of Bilateral Investment Treaties

Brooklyn Journal of International Law Conceptual Difficulties in the Empirical Study of Bilateral Investment Treaties Jason Webb Yackee 0 0 Jason W. Yackee, Conceptual Difficulties in the Empirical Study of Bilateral Investment Treaties, 33 Brook. J. Int'l L. (2008). Available at: https://brooklynworks.brooklaw.edu/bjil/vol33/iss2/13 - * J.D., Ph.D. (Political Science); Assistant Professor, University of Wisconsin Law School. This Article is based upon work supported by the National Science Foundation under Grant No. 0418036. I may be contacted at . © JWY 2007. Professor Susan Franck and Dr. Karl Sauvant provided helpful comments. 1. I show below that, as a conceptual and factual matter, this claim regarding the “first” BIT is problematic. But it is sufficiently accurate to allow that year to serve as a very rough guide to the start of the BIT era. See also infra Figure 3, note 84, and accompanying text. 2. UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT [UNCTAD], TRENDS IN INTERNATIONAL INVESTMENT AGREEMENTS: AN OVERVIEW 22 fig.2, U.N. Doc. No. UNCTAD/ITE/IIT/13 (1999) [hereinafter UNCTAD TRENDS IN INTERNATIONAL INVESTMENT AGREEMENTS]; UNCTAD, BILATERAL INVESTMENT TREATIES IN THE MID1990S (1998) [hereinafter UNCTAD BITS IN THE MID-1990S] (“The total number of treaties signed by the end of 1980s jumped to 386 from a total of 167 at the end of the 1970s.”). In addition to these comprehensive reports, UNCTAD has published other important accounts of the growth of the BIT phenomenon. See, e.g., UNITED NATIONS CENTRE ON TRANSNATIONAL CORPORATIONS [UNCTC], BILATERAL INVESTMENT TREATIES (1988) [hereinafter UNCTC BILATERAL INVESTMENT TREATIES]; UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT, BILATERAL INVESTMENT TREATIES 1959–1999, U.N. Doc. No. UNCTAD/ITE/IIA/2 (2000) [hereinafter UNCTAD BITs 1959–1999]. compensation due under international law for government actions that amount to an expropriation of the foreign investor’s property.3 As a result of the proliferation of BITs, there has been a proliferation of international arbitration claims in which investors seek to recover money damages from the states hosting their investments for alleged violations of international law. For example, arbitral tribunals organized under the World Bank’s International Centre for the Settlement of Investment Disputes (“ICSID”), the frequent forum of choice in BIT-based arbitration clauses, decided just twenty-six international investment disputes as of 1990; by 2007 ICSID tribunals had decided over 130 such cases, with over 120 additional cases still pending.4 Argentina alone faced international legal claims of approximately $16 billion in 2004, roughly one percent of its gross domestic product (“GDP”) at the time.5 These developments have led to critiques of the BIT system6 and increased interest from empirically minded social scientists who have studied the causes and effects of the treaties. For example, Elkins, Guzman, and Simmons have presented a sophisticated statistical model to support their argument that developing countries enter into BITs as part of a rational “competition for capital.”7 Others have examined whether states 3. See Vicki Been & Joel C. Beauvais, The Global Fifth Amendment? NAFTA’s Investment Protection and the Misguided Quest for an International “Regulatory Takings” Doctrine, 78 N.Y.U. L. REV. 30, 55 (2003). 4. ICSID was established by multilateral treaty in the 1960s as a specialized forum to decide disputes between host states and investors. Convention on the Settlement of Investment Disputes between States and Nationals of Other States, opened for signature Mar. 18, 1965, 17 U.S.T. 1270, 575 U.N.T.S. 159 [hereinafter ICSID Convention]. Information on the ICSID docket is available at http://icsid.worldbank.org/ICSID/Index.jsp. 5. Figures for legal claims pending against Argentina are those as of August 2004. R. Doak Bishop & Roberto Aguirre Luzi, Investment Claims—First Lessons from Argentina, in INTERNATIONAL INVESTMENT LAW AND ARBITRATION: LEADING CASES FROM THE ICSID, NAFTA, BILATERAL TREATIES, AND CUSTOMARY INTERNATIONAL LAW 425, 4 25 (Todd Weiler ed., 2005 ). For data on gross domestic product, see United Nations Statistics Division, http://unstats.un.org/unsd/cdb/cdb_country_prof_select.asp (select country “Argentina” and profile “Economic growth, investment”) (last visited Apr. 9, 2008). 6. For example, Van Harten argues that BITs set up a legal system that benefits business interests. GUS VAN HARTEN, INVESTMENT TREATY ARBITRATION AND PUBLIC LAW (2007). Sornarajah provides a brief overview of the most important critiques. M. SORNARAJAH, THE INTERNATIONAL LAW ON FOREIGN INVESTMENT 259–268 (2d ed. 2004). 7. Zachary Elkins, Andrew T. Guzman & Beth A. Simmons, Competing for Capital: The Diffusion of Bilateral Investment Treaties, 1960–2000, 60 INT’L ORG. 811 (2006). See also Deborah L. Swenson, Why Do Developing Countries Sign BITs?, 12 U.C. DAVIS J. INT’L L. & POL’Y 131, 147 (2 (...truncated)


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Jason Webb Yackee. Conceptual Difficulties in the Empirical Study of Bilateral Investment Treaties, Brooklyn Journal of International Law, 2017, Volume 33, Issue 2,