PluriCourts - The New Hub for Empirical Investment Law Research

With its new, unique databases, the investment team at PluriCourts has contributed to establishing the centre as a hub for empirical legal research on investment treaty arbitration – and is shining some empirical light on the contested issue of investment treaties.

International investment law is a highly contested field, with those who defend the system and those who want to change it firmly standing their ground against each other.

Until now, the debate has to a large extent been theoretical, based on the language of treaties and on discussions of individual cases.  As a result, the debate on investment arbitration has not been sufficiently grounded in empirical knowledge on the general use and effects of the legal regime. Simply put, it has been hard to tell how the system really works. 

The investment team at PluriCourts is shedding some much-needed empirical light on some of the more contested issues. The outcome of this will be the rejection or verification of general claims, which in turn will lead to a more empirically grounded debate.

Empirical myth-busters

PluriCourts postdoctoral research fellow Daniel Behn has recently verified one contested claim, namely that of the relationship between GDP and arbitration outcome. The debate has been whether or not the wealth of a country as measured by its GDP has any effect on the outcome of the case.

Professor Ole Kristian Fauchald coordinates the investment research at PluriCourts.
Professor Ole Kristian Fauchald coordinates the investment research at PluriCourts. Photo: University of Oslo.

- While a recent article claimed that a country’s development status did not affect their likelihood of success in investment treaty arbitration, we have recently shown that the outcome of cases correlates strongly with a country’s GDP. Behn explains that countries with a lower GDP not only have more chances of having a case brought against them, but the odds of them losing the cases are also higher. While some myths are verified, others are falsified. Coordinator for the Investment team, professor Ole Kristian Fauchald, mentions here the claim that the arbitration system is only used by large multinationals from a few sectors.

Postdoctoral fellow Daniel Behn. Photo: University of Oslo.

- It is no longer just the extractive industries and large infrastructure companies that are using this system.  Investment treaty arbitration is diversifying in terms of which sectors and investors are using the system as well as in terms of countries that are being sued. We are now increasingly seeing cases being brought against developed countries, he says.

However, without access to updated data, such developments would have been hard to trace. Nobody has a complete picture due to the secrecy surrounding many cases. The data collected by the PluriCourts team is currently the most extensive available.

Putting PluriCourts on the map

For the last two years, the team has put many hours into developing a database on investment treaty arbitration and a database on bilateral investment agreements. They are now starting to harvest the fruits of their hard labour. There are several potentially ground-breaking publications in the pipeline.

- PluriCourts is quickly becoming well-known among those interested in empirical research on investment law, explains coordinator Fauchald.

The centre is attracting reputable international scholars and the word on the database project has spread rapidly in relevant research circles on a global scale. In this sense, PluriCourts now functions as a hub for empirical research on investment arbitration.

- This is because of a tight-knit team that is up-to-date on the latest findings and research questions. We are now bringing new perspectives to the debate, says Fauchald.

- One of our chief advantages is that we do not have vested interests in investment arbitration; we remain independent researchers.

Not so secret after all?

Researching the outcome of investment cases can often be challenging as not all awards are made public. This has also been one argument of the opponents of the system.

Through diligent research, many of the cases do at some point reach the PluriCourts team. Fauchald estimates that at this point, the team knows of 90 percent of the investment arbitration cases.

- We know of law firms that have the cases. They will neither confirm nor deny the existence of the case, but we know that they are there, Behn adds.

- The days when investment treaty arbitration could be kept secret are slowly running out.

 

This article was originally published in PluriCourts' Annual Report 2015.

Tags: Investment By Hanna Karv
Published May 4, 2016 10:43 AM - Last modified May 12, 2016 10:01 AM