Domestic courts’ engagement with foreign investment law

Despite their proliferation, international courts and tribunals stand in the shadow of domestic courts when it comes to the number of cases rendered with a public international law dimension. This observation also applies to disputes between foreign investors and host states.

The present project examines the engagement of domestic courts with foreign investment law. In particular, it aims to systematize domestic jurisprudence and to draw larger conclusions as concerns the respective roles of the domestic and international judiciary in the field of foreign investment law and the relationship between international, European Union and domestic law. Aspects include potential for normative synergy and the overlap/division of competence, also from a rule of law perspective.

International law imposes obligations on host states as concerns their treatment of foreign investors. These obligations may be stipulated in international investment agreements (IIAs) between the host state and the investor’s home state. In addition to substantive standards of protection such as fair and equitable treatment, IIAs often provide for investor-state arbitration (ISDS).

Partly in light of criticisms raised against ISDS, several states have sought to bolster the role of their courts in disputes involving foreign investors, inter alia by imposing the requirement that investors first seek a remedy before domestic courts; by narrowing the dispute settlement clause in IIAs; excluding recourse to ISDS in these treaties; or withdrawing from IIAs. This development is likely to increase the number of cases in which domestic courts are confronted with investor-state disputes. Without recourse to arbitration, the question arises as to what level of protection awaits foreign investors in the courts of the host state. The exercise by the European Union of its competence over foreign direct investment acquired through the Lisbon Treaty raises new and related issues. For instance, the EU-Canada Comprehensive Trade and Economic Agreement (CETA) excludes the possibility for domestic courts to directly apply its provisions.

The research also examines the existence of a normative overlap between international and domestic standards of investment protection. For this reason, relevant jurisprudence includes decisions rendered on the basis of domestic constitutional law, domestic foreign investment codes, customary international law, general principles of international law, and human rights law, as well as international investment agreements.

  • dr. H.E. (Hege Elisabeth) Kjos


    Assistant Professor
    H.E.Kjos@uva.nl
    T: 0205253553
    T: 0205252951

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Published by  ACIL

4 April 2018