• Nicolás Perrone

Book symposium - a reaction from nicolás perrone

Reimagining International Investment Law

I am thankful to Ely, Vivian, Marco, Sarah, and Daniel for their reviews and for seriously engaging with the book's project. I should start by saying that I cannot do justice to all their reflections here. I have decided instead to dedicate my response to a topic that cuts across all the reviews: whether or not we must re-imagine international investment law to address the investment treaty regime's asymmetries and the governance challenges posed by foreign investment. Answering this question positively, as I do in Investment Treaties and the Legal Imagination, brings us face-to-face with the issue of possible futures and how to get there. The book touched indirectly on these futures, but, as these reviews reminded me, it is a discussion which I cannot avoid that easily.


After my journey through the origins and evolution of investment treaties, I concluded that ISDS practice operates against a canon that is remarkably similar to the project of some bankers and lawyers in the 1950s and 1960s. These individuals had close links with MNCs operating in the natural resource business during decolonization. My concern with this finding is not only that the resulting legal regime renders local communities and some of the tools that host states need to make the best of foreign investment invisible. It is also that this regime misrepresents what is at stake in foreign investment relations. Namely, beyond the balance between foreign investor rights and states' right to regulate that most of the literature affirms, there are distributive tensions around benefits, costs and risks as well as recognition conflicts over how society should be organized. These competing values are often incommensurable, and, crucially, disputes cannot be resolved by balancing or proportionality techniques.


Of course, not everybody agrees that the investment treaty regime is not fit for purpose. But few of those who defend ISDS engage with this kind of arguments. Vivian Rocha is a remarkable exception. She starts from the premise that my pessimism is exaggerated, claiming that new treaty models, such as the Brazilian or the Moroccan models can address most public concerns related to investment treaties. ISDS problems can also be resolved, she claims, if states appoint different people to arbitral tribunals.


Her points are relevant, but I wonder how fundamental our disagreement is if these mechanisms proved to be either unsatisfactory or actually part of a different imagination. The Brazilian model is so different that it can be rightly described as an alternative approach to foreign investment governance. Notably, it does not provide for ISDS. The Moroccan model would change the dynamics of foreign investment relations by adding foreign investor obligations. This is promising, just as the Legally Binding Instrument on Business and Human Rights (LBI). Still, we should distinguish between clear and enforceable obligations and vague standards or principles that cannot be enforced. In Chapter 3 of the book, I show that the idea of CSR or ESG comes from investors, firms like Royal Dutch Shell, who realized that the best companion to strong rights are weak or voluntary obligations. This conception of obligations is within their canon of imagination; an LBI is not. Of course, there is still the possibility that ISDS arbitrators will reinterpret investment treaties if different people are appointed to resolve investment disputes. The question is whether this change is likely in a field dominated by a few law firms in which states appoint arbitrators to win specific cases, not to change the regime.


Others may agree with my analysis of the investment treaty regime but believe the problem lies in its infancy. Daniel Uribe shares my view that the canon of ISDS practice is deeply problematic; however, he observes that the legal imagination that dominates this field is not fixed but in constant evolution within international law's full contours. Drawing an analogy from Borges' work, he notes that imaginaries are 'unavoidably incomplete' as every new edition 'forms the basis of future editions, which themselves may grow on endlessly'. His hope is that the new editions of investment treaty law would be informed by other sources of international law, human rights or the environment, or Global South countries' contribution. Ultimately, there is some ambivalence in his remarks, perhaps, a tension between an optimistic linear trajectory to "adulthood" and the need to "re-design" international investment law.


I am sceptical about the "age" of the investment treaty regime. I do not think that this regime's vocabulary, the way it misrepresents foreign investment relations, can outgrow the dominant canon of imagination. I am also unsure about how long we are supposed to wait: years, decades? It occurs to me that we have already witnessed the future: new editions have included voluntary obligations; the next ones may probably include an arbitral jurisdiction to resolve local community claims. I wonder then if Borges would agree with me that some human enterprises can grow oppressive, as he illustrates in El Congreso, and then our best hope is to burn them down and start all over.


Naturally, there is no certainty that a new framework would be any better, and it is tempting to end the discussion here. From a research or intellectual standpoint, we probably do not have to discuss specific proposals. As Koskenniemi warns, proposals—particularly coming from academics—tend to be ‘terribly weak and vulnerable to all kinds of objections from alternative rules or policies’. And, yet, I think Ely is right to ask for more, to demand some concrete directions for changing paths. In a world of so much inequality and precarity, we may have a moral or pragmatic obligation to do so; the times when this was choice, if there ever was one, may be gone.


I ended Investment Treaties and the Legal Imagination suggesting a shift of imaginaries, a shift from investments to social relations. Let me now pick it up from there. A first obstacle to moving away from investment treaties are the conflicting normative projects and the always limited empirical evidence. There are good reasons to criticize ISDS, but most of these reasons do not translate into a new international regime. Someone could argue that phasing out ISDS would be just enough; personally, I think we need more. MNCs operate transnationally, and Global South countries face challenges to deal with the costs and risks of foreign investment individually. My suggestion is to proceed based on intuitions, which should be tested as much as possible by social facts, conversations and debates. Empirical evidence is central, but it will never amount to certainty. The investment treaty regime was possible because empirical questions were bracketed while bankers and lawyers' intuitions occupied the space of international investment law. And now we are trapped.


Following our intuitions requires a vocabulary that can encompass issues of distribution and recognition. I have argued, and Marco Velásquez-Ruiz agrees in his review, that transnational law offers us a place to start. Legal realism, critical legal studies, transnational law allow us to escape the trap of the binaries. There is no such thing as the private or the public, the global or the local (of which Ely reminds us). Instead, these pairs are in constant tension and accommodation. It is a mistake to claim that investment treaty law is either private or public; this regime affects how we represent the private as much as the public. The same occurs with the tension between global and local. Foreign investor rights are neither completely global nor local; there is always accommodation. For those favouring a view of natural resources from the locality, the problem is that investment treaties and ISDS tilt the balance in favour of the global by misrepresenting or making the local invisible. Bringing into the conversation other ways of arranging the private and the public, the global and the local, is a way to begin escaping the dominant canon of imagination.


Finally, some words about the role of the state in this process of re-imagination. States are not the book’s protagonists. They represent part of the context that the norm entrepreneurs in question navigated, a context of former colonial powers, national extractive elites and developmental projects. Importantly, though, the 1970s reactions against foreign investors' imagination were mainly state reactions. Ely is right that more could have been said about the reactions in Global South countries; more could have also been said about the discussions in the Global North. I think the question is less about enumerating previous cases of resistance. Instead, as Sarah Marinho rightly claims, it is about gaining awareness that most Global South countries have "lost" a genuine voice in international investment law.


Normative and policy reasons suggest that Global South states should push for a new imagination, one including exhaustion of local remedies, performance requirements, transfer of technology, and foreign investor obligations. Working with states, engaging with public officials, is therefore a central task to re-imagine international investment law. Uribe is absolutely right in this regard. Developing new imaginaries is about ideas as much as practice, and any progressive practice needs to involve civil society as much as states. I hope he is correct, and my book makes a modest contribution in this direction.



Nicolás M. Perrone

Research Associate Professor, Facultad de Derecho, Sede Viña del Mar

Universidad Andres Bello






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