This article is originally from The American Review of International Arbitration (ARIA)

PREVIEW

Not long ago, the success and expanding use of international courts and tribunals were optimistically predicted to be a “one-way ratchet” toward ever greater influence and impact.  Today, that optimistic prognosis has been replaced with considerable pessimism as States are increasingly withdrawing from compulsory jurisdiction, blocking appointments of international judges, and refusing to comply with their decisions.  This phenomenon has been dubbed “dejudicialization” and “non-judicialization” in international law.  This essay offers a renewed, though bounded, optimism about the future of international adjudication based on a closer, original analysis of international investment arbitration.

Debates over what constitutes “legitimate” international adjudication have played out most publicly in the context of investment arbitration. Critics have derided investment arbitration as an illegitimate form of international dispute resolution, at least when State sovereignty and public interests are involved.  In response to this legitimacy crisis in investment arbitration, reform efforts have coalesced around calls to replace investment arbitration with a more conventional international investment court. In this debate, the WTO dispute-settlement system is most commonly cited as the ideal model for a future investment court. Given the focus on the WTO, debates over the future of investor-State dispute settlement are an almost perfect microcosm of larger debates over system design and sources of legitimacy in international adjudication.

This essay challenges the prevailing view among public international lawyers that the legitimacy of international adjudication rests with conventional models premised on top-down, government-created standing tribunals that feature tenured judges and centralized institutional authority. Preference for these conventional models was built in part on a rejection of decentralized, ad hoc, party-appointed tribunals as regrettable and illegitimate deviations, which lack the dignity and discipline of “real” courts.  This essay argues that these very features, long portrayed as defects in investor-State arbitration, instead make it more resilient than the conventional institutional models that critics idealize and seek to replicate. Far from representing a challenge to the rule of law, international arbitration’s decentralized, ad hoc structure has enabled it to persist and reform while many standing international courts are faltering.

In contrast to institutionally fixed standing courts, international arbitration has demonstrated a unique capacity for real-time evolution. Procedural innovation has developed precisely as a result of the pluralizing effects of party-appointment. Differently situated, differently socialized arbitrators and counsel can introduce distinct proposals in response to individual case circumstances. Lessons learned from procedural experimentation eventually crystallize into established rules, best practices, and published guidelines. Meanwhile, decentralized enforcement through national courts has enabled investment arbitration to not only survive but thrive in a geopolitically fragmented world where States seek to evade jurisdiction and resist complying with awards.

The argument is not that investment arbitration is beyond critique. Some outcomes and practices warrant substantial reform. Many of those reforms, however, are already emerging in the innate processes, referenced above, and hastened by the work of UNCITRAL Working Group III. The deeper claim of this essay is that the backlash against investment arbitration has obscured its institutional strengths and its capacity for structural evolution in service of an international rule of law.