Access and advantage in investor-state arbitration: The law and practice of treaty shopping

Abstract

This paper is concerned with ‘Treaty Shopping’ in foreign direct investment. In this context, the expression ‘Treaty Shopping’ connotes the conduct of foreign investors who deliberately seek to acquire the benefits of an investment treaty by making foreign investments or bringing claims from third countries that have more favourable treaty terms with the target host state. This paper begins with an overview of the investment treaty system. It then describes the process by which investment treaty claims are prosecuted and resolved by investor-state arbitration. This is followed by a discussion of the various methods of Treaty Shopping, and a survey of the key provisions of investment treaties (including the Energy Charter treaty) that regulate this practice. The paper closes with a discussion of recent developments in the jurisprudence of Treaty Shopping. This piece will be of interest to lawyers with clients engaged in foreign investment in the energy and resources sectors of both developed and developing countries, and parties with potential or current investment treaty claims.