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To Settle or to Fight to the End? Case-level Determinants of Early Settlement of Investor-State Disputes

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  • Vu Duy

    (VNU-University of Economics and Business, Hanoi, Viet Nam)

Abstract

International investment arbitration is a third-party dispute resolution mechanism aimed mainly at depoliticizing investment disputes and maintaining efficient investment flows among countries. Almost one-third of treaty-based investor-state disputes brought before this system are settled before the tribunal’s final ruling. Given the classical “Against Settlement” debate in the legal literature, we build an original database of treaty-based arbitrations from 1996 to 2016 to empirically test the determinants of early settlement. We find that the probability of settlement increases if the host state has no experience of resolving those kinds of disputes but decrease if it anticipates a favorable outcome. The nature of the regulatory measures applied by the host state and the identity of foreign investors are additional important determinants of settlement. Interestingly, we find strong evidence of a Dutch effect in dispute resolution.

Suggested Citation

  • Vu Duy, 2021. "To Settle or to Fight to the End? Case-level Determinants of Early Settlement of Investor-State Disputes," Review of Law & Economics, De Gruyter, vol. 17(1), pages 133-166, March.
    • Handle: RePEc:bpj:rlecon:v:17:y:2021:i:1:p:133-166:n:9
    DOI: 10.1515/rle-2019-0046
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    References listed on IDEAS

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    More about this item

    Keywords

    investor-state dispute; arbitration; settlement; economic analysis;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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