Applying principles of administrative law to investor-state treaty arbitrations

  • Cesar R. Mata-Garcia

    Student thesis: Doctoral ThesisDoctor of Philosophy


    The aim of this research is to assess an emerging public-law concern: the review of the administrative actions of a host state in investment arbitration. This research examines the extent to which the principles of domestic administrative law can be used as a legal reference for investment arbitrators to address and resolve the legal issues presented in regulatory disputes that are resolved by means of investor-state treaty arbitrations (ISTAs). In arriving at an answer to this particular question, two factors are considered: (i) the use of administrative law principles as a part of the unitised nature of the law that governs the ‘state of law’ of any democratic society; and (ii) the current crisis of legitimacy that the investor-state treaty arbitration system is facing.The thesis begins with a comparative analysis of the French and British administrative legal systems as representatives of the two most important legal traditions of the Western world (civil law and common law, respectively). This comparison identifies the common institutions and principles that are domestically used by host states to determine the legal and regulatory relationship between private actors and their public administrations (i.e., the state). It continues with conceptual and critical assessments of international investment treaties (IITs) and ISTAs, respectively, and identifies and analyzes the legal principles that have been developed in the international arena and have been used to settle international (regulatory) disputes between host states and private investors/actors. Additionally, this thesis continues with an arbitral practice review to identify the factual statements that arbitral tribunals have included in their arbitral awards and which can be framed within the scope of the main principles of administrative law previously identified. This is achieved by taking into consideration one of the main features of the current investor-state arbitration system which is the use of this mechanism to settle regulatory disputes at an international level. This latter feature is considered to be (i) analogous to domestic administrative adjudication that provides (ii) legal mechanisms to resolve regulatory disputes between host states and private individuals when (iii) the public authority of the host state is compromised. Finally, this thesis reflects upon the current investor-state arbitration system and identifies the current political, international and academic concerns that are affecting the legitimacy of this arbitral system.Given the analogy between the public law functions of the ISTA mechanism and the domestic administrative review mechanisms, both parallel levels of state regulatory review have been designed to protect private individuals from the unlawful or arbitrary conduct of the (host) state. The investment arbitration system has been designed as a temporary forum to provide private individuals with a special tool to challenge the domestic rights and privileges of the host state at the international level. This particular point shows, amongst other aspects, that investment arbitrators are arbitrators of law rather than arbitrators of equity since they are mainly required to assess the domestic regulation of the host state in accordance with the international standards of treatment contained in an IIT and in accordance with the applicable law chosen by the IIT’s contracting parties in order to determine the state’s international responsibility.This study finds that neither Bilateral Investment Treaties (BITs), the International Centre for Settlement of Investment Disputes (ICSID) nor the Arbitration Rules of the United Nations Commission on International Trade Law (UNCINTRAL) impedes or prevents investment arbitrators from applying some principles of domestic (administrative) law to ISTAs when domestic regulatory issues are at stake. A guideline as to what domestic (administrative) law principles should be applied to international regulatory investor-state disputes in conjunction with some international investment obligations has not been adequately studied in international law. Hence, the application of these principles to international regulatory disputes has been left to the discretion of investment arbitrators.Finally, due to the current concerns and questions surrounding the current arbitral system, it could be affirmed that now is the right time to initiate the practice of referring to these domestic (administrative) law principles in international regulatory disputes. Conversely, the reluctance of investment arbitrators to refer to this particular source of law can be regarded, in the long-term, as a contribution to the current crisis of legitimacy that the international investment arbitration system is facing.
    Date of Award2012
    Original languageEnglish
    SupervisorPeter Cameron (Supervisor) & Melaku Desta (Supervisor)

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