Still the Law of Nations: Legitimate Expectations and the Sovereigntist Turn in International Investment

Abstract

In the late twentieth century, States around the world struck a Faustian bargain. They concluded thousands of treaties among themselves, empowering private arbitrators to hear disputes between States and foreign investors. States surrendered some measure of sovereignty in order to assure investors that their governments would not have the last word regarding the treatment of foreign investments. Disputes that were once waged among States are now routinely brought before investor-State arbitral tribunals. Chief Justice John Roberts of the United States Supreme Court observed that in consenting to investor-State dispute settlement (ISDS), a State "grants to private adjudicators not necessarily of its own choosing . .. a power it typically reserves to its own courts, if it grants it at all: the power to sit in judgment on its sovereign acts."