VIII Governing Law in Investment Disputes

Subject(s):

Investment ‘in accordance with host state law’ — Investor — Full protection and security — Relationship of international law & host state law — Treaty provisions — Conduct of proceedings

This chapter addresses the primary sources of substantive law pertinent to investment disputes: rules or contractual terms agreed to by the parties, if any; public international law, including the investment treaties themselves; and the law of the host state, and other relevant rules of national law. Various arbitral rules anticipate an important role for the parties’ agreement over substantive law. Article 42(1) of the ICSID Convention recognizes the principle of party autonomy, mandating that a tribunal shall apply any ‘rules of law’ that the parties have selected. Public international law also plays a major role in investment arbitration. Investment treaties are the main instruments by which states expressly consent to arbitrate and to grant substantive protections to foreign investors. Meanwhile, host state law manifests itself at several levels particularly where the parties to a dispute have selected it as the law governing their contractual relations, or where the relevant investment treaty contemplates a role for it.