Investor State Dispute Settlement

Abstract

This paper scrutinises the Investor-State Dispute Settlement (ISDS) mechanism, which allows foreign investors to sue host governments for any regulations that might directly or indirectly affect private investments. It gives investors rights over host-states – and local populations – in international arbitration tribunals. The focus of this article is a critical examination of how the ISDS institutionalises a framework of exceptionality that is characteristic of neoliberal capitalism; one that centres upon the institutionalisation of subjecting public regulation to the rationality of the market. We argue that this privatised quasi-legal arena is incompatible with the rule of law, human rights and socially emancipatory practices. What this reveals is that the political and economic dynamics that mobilise and shape international investment law are characterised by capitalist class relations. The article concludes with some reflections upon the marketization of public regulation through the ISDS, where profitability and cost-reduction are prioritised over human and environmental rights.