Reading 13: Sornarajah
Sornarajah, Muthucumarswamy (2013). "The case against a regime on international investment law." in: L. Trakman and N. Ranieri (eds) Regionalism in international investment law. Oxford University Press.
A successful regime for international trade was created with the establishment of World Trade Organization, and its effective dispute settlement mechanism and secure treaty rules. The dispute settlement mechanism is regarded as the most efficient so far devised in international law. There is no such regime on foreign investment protection. This chapter begins by tracing the history of the international law on foreign investment. The history illustrates that the law, even at the zenith of the neoliberal phase, was not characterized by a uniform set of norms that would have promoted the formation of a regime. It also analyzes current literature, which seeks to conserve methods of creating a global regime on investment law. It is argued that since the global economic crises, the developed states have reined in the offenesive nature of investment treaties so as to make the possibility of a regime such a mirage. As a result, none of the mutations to conserve the construction of norms based on neoliberalism could survive without resistance fro interests opposed to the imposition of a regime through indirect means.
Why this reading?
The article demonstrates the importance of dispute settlement for a regime that otherwise would have had little impact on the behavior of states. It also provides a critical perspective on the regime by an author who have researched the regime and authored a widely recognized treatise. The author is probably the most advanced critic of the regime from the perspective of developing countries. The article also provides some comparators to the dispute settlement mechanism of the WTO. It is of particular interest that the article considers whether the reform initiatives that emerge among developed countries, due to the increased likelihood that they might lose investment disputes, is likely to alleviate the concerns of developing countries. Another important aspect of the article is its comparisons between investor – state dispute settlement and the WTO dispute settlement mechanism, which is a combination of ad hoc panels (comparable to the investment regime’s reliance on arbitration) and a permanent Appellate Body.
Questions for discussion
- How is the current situation of “hegemonic countries” influencing the regimes of international courts and tribunals? Sornarajah emphasizes the changes that are currently occurring in this regard, and indicates that they have fundamental impacts for the investment regime. Do you agree with his observations regarding such changes? Do we see similar trends elsewhere?
- Sornarajah also emphasizes the importance of the transition from neoliberalism (probably in the direction of nationalism or protectionism), and he indicates this as the second essential factor why the current investment treaties are in decline? Do you agree with his observations in this regard? Do we see similar trends elsewhere?
- Do you agree with his assertion that a regime, in the sense he uses this term and as pertaining to international courts and tribunals, must be driven by a definite political aim or philosophy and backed by one or more hegemon(s), and that lack of such an aim or philosophy and/or hegemon(s) is likely to fundamentally undermine the regime?