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When do states renegotiate investment agreements? The impact of arbitration

Author

Listed:
  • Yoram Z. Haftel

    (The Hebrew University of Jerusalem)

  • Alexander Thompson

    (Ohio State University)

Abstract

Given that their main function is to forge durable commitments, it is notable that many international treaties change over time through the practice of renegotiation. While some agreements have remained intact after their initial conclusion, others are amended, updated, or replaced. Why are some international agreements renegotiated while others remain stable? This paper offers a systematic analysis of treaty renegotiation by presenting theoretical propositions and testing them in the context of bilateral investment treaties (BITs). We argue that states renegotiate when they learn new information about the legal and political consequences of their treaty commitments, and that such learning is most likely to take place when states are involved in investor-state dispute settlement cases. Employing an original data set on renegotiated BITs, we find robust empirical support for the learning argument. We conclude by discussing implications for the study of institutional change and the evolving investment regime.

Suggested Citation

  • Yoram Z. Haftel & Alexander Thompson, 2018. "When do states renegotiate investment agreements? The impact of arbitration," The Review of International Organizations, Springer, vol. 13(1), pages 25-48, March.
    • Handle: RePEc:spr:revint:v:13:y:2018:i:1:d:10.1007_s11558-017-9276-1
    DOI: 10.1007/s11558-017-9276-1
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    3. Huikuri, Tuuli-Anna, 2024. "Terminating to Renegotiate? Strategic Exit from International Investment Treaties," OSF Preprints ascmh, Center for Open Science.
    4. Renee Bowen & Manfred Elsig, 2018. "Trade and investment: Introduction to the special issue," The Review of International Organizations, Springer, vol. 13(2), pages 137-142, June.
    5. Tuuli-Anna Huikuri, 2023. "Constraints and incentives in the investment regime: How bargaining power shapes BIT reform," The Review of International Organizations, Springer, vol. 18(2), pages 361-391, April.
    6. Charlotte De Bruyne & Itay Fischhendler & Yoram Z. Haftel, 2020. "Design and change in transboundary freshwater agreements," Climatic Change, Springer, vol. 162(2), pages 321-341, September.
    7. Duy Vu, 2019. "Reasons not to exit? A survey of the effectiveness and spillover effects of international investment arbitration," European Journal of Law and Economics, Springer, vol. 47(2), pages 291-319, April.
    8. Timm Betz & Amy Pond & Weiwen Yin, 2021. "Investment agreements and the fragmentation of firms across countries," The Review of International Organizations, Springer, vol. 16(4), pages 755-791, October.
    9. Simon Hartmann & Rok Spruk, 2023. "The impact of unilateral BIT terminations on FDI: Quasi-experimental evidence from India," The Review of International Organizations, Springer, vol. 18(2), pages 259-296, April.
    10. Florence Dafe & Zoe Williams, 2021. "Banking on courts: financialization and the rise of third-party funding in investment arbitration," Review of International Political Economy, Taylor & Francis Journals, vol. 28(5), pages 1362-1384, October.
    11. Tarald Gulseth Berge & Øyvind Stiansen, 2023. "Bureaucratic capacity and preference attainment in international economic negotiations," The Review of International Organizations, Springer, vol. 18(3), pages 467-498, July.
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    13. Elsig, Manfred & Ganeson, Kirthana & Jusoh, Sufian & Lugg, Andrew, 2024. "Why is there no investor-state dispute settlement in RCEP? Bargaining and Contestation in the Investment Regime," Papers 1436, World Trade Institute.
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    15. Anne Marie Thow & Wolfgang Alschner & Faisal Aljunied, 2023. "Public health clauses in international investment agreements: Sword or shield?," Global Policy, London School of Economics and Political Science, vol. 14(2), pages 260-269, May.

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