Reforming the International Investment Regime: Lessons from International Trade Law

International trade law underwent a profound paradigm shift during the 1990’s and into the 21st century as a response to globalization, and to a legitimacy crisis sparked by unresolved structural issues from the General Agreement on Tariffs and Trade (GATT) era and tensions surfacing in GATT case law around ‘trade and’ issues. Investment law today is undergoing a similar legitimacy crisis for similar reasons, particularly with respect to Bilateral Investment Treaties and investor–State arbitration. We argue that investment law is ripe for a similar paradigm shift, away from the dominant view of investment law as a private ordering system to protect capital, with roots in contract law and commercial arbitration, and towards recognition of the fact that investment law today is part of a comprehensive global economic governance system meant to ensure justice and the rule of law in one aspect of international economic relations, the allocation of investment capital. This paradigm shift has normative, structural and doctrinal implications, which we explore, and promises to help restore legitimacy to investment law as it also improves substantive outcomes.