Genesis of investment disputes in international law
DOI:
https://doi.org/10.34015/2523-4552.2025.1.20Keywords:
international investment law, investment disputes, economic decarbonization, investment treaties, diplomatic protection, expropriation, Hull formula, minimum international standard, technological transformations, economic imperialism, investment arbitration, international economic governanceAbstract
The article is devoted to a comprehensive analysis of the genesis of investment disputes in international law through the prism of the historical, legal, and institutional development of this phenomenon within the system of global regulation of economic relations. The focus of the study is the transformation of legal mechanisms for protecting foreign investors in the context of growing cross-border capital flows and the strengthening of the role of states as actors that not only host but also restrict investment activities through the exercise of their sovereign functions.
It is argued that investment disputes have deep historical roots, dating back to the trade relations of ancient times, evolving through the colonial practices of European powers, and finding modern expression in institutionalized mechanisms of international investment arbitration.
The study separately analyzes key international institutions that shape the architecture of investment dispute resolution: ICSID, and the Multilateral Investment Guarantee Agency (MIGA). The legal nature of bilateral investment treaties (BITs), which serve as the primary source of state obligations to uphold international standards in the treatment of foreign investors, is examined, and their impact on the legal status of investors under international law is determined. The article evaluates current practices in investment arbitration.
Attention is given to criticism of the modern investment arbitration system, particularly for its excessive protection of investors at the expense of states’ regulatory space, the absence of appeal mechanisms, lack of democratic oversight, and limited participation of third parties. The article emphasizes that challenges stemming from the digital economy, climate obligations of states, and the need to ensure sustainable development require a reorientation of the current paradigm – from the absolutization of capital interests toward a balance with public interests.
In the context of Ukraine, the article highlights the peculiarities of applying international arbitration as a tool for investor protection, considering the lack of trust in the national judiciary, limited enforcement effectiveness, and the urgent need to attract capital under conditions of legal certainty.
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