Abstract:
International investment arbitration (IIA) faces a crisis of legitimacy. The United Nations Conference on Trade and Development has identified four pathways that states are exploring in response: maintaining the status quo; disengaging from the regime; introducing selective adjustments; and engaging in systematic reform. States’ responses have largely aligned to their development status. This article locates the challenge to IIA within two broader critiques of international economic law. One perspective, from the global North, treats the investment regime as part of a troubled neoliberal paradigm that is politically and socially unsustainable. The second, from the global South, views investment treaties as a legacy of colonialism and imperialism and imbued with power asymmetries that are endemic and inescapable. That leads to the question examined here of whether large and ascending powers known colloquially as the BRICs can act as catalysts for a new architecture and normative framework for the international investment regime, one that rebalances power relations between state, society and capital, and between the global North and South. Three of the BRICs — Brazil, South Africa and India — have recently developed alternative forms of investment instruments through treaties and domestic legislation. They vary in their priorities and their radicalism. A comparison of four features — the reassertion of state authority, core investment protection rules, the balance between investor rights and social and development objectives, and the dispute settlement mechanism — shows it is technically and politically possible to create a new architecture for investment instruments that rebalances priorities and power. Whether they can help catalyse a systemic change to the IIA regime remains to be seen.