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Regulatory Chill and the Effect of Investor State Dispute Settlements

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  • Janeba, Eckhard

Abstract

Legal conflicts between multinational firms and host governments are often decided by international arbitration panels known as Investor State Dispute Settlements (ISDS). Critics fear that ISDS favors multinational firms, and make s governments reluctant to adopt appropriate policies (regulatory chill). I develop an economic model to analyze regulatory chill and show under which conditions a move to ISDS is beneficial.

Suggested Citation

  • Janeba, Eckhard, 2017. "Regulatory Chill and the Effect of Investor State Dispute Settlements," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168255, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc17:168255
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    6. Eric Neumayer & Peter Nunnenkamp & Martin Roy, 2016. "Are stricter investment rules contagious? Host country competition for foreign direct investment through international agreements," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 177-213, February.
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    8. Kohler, Wilhelm & Stähler, Frank, 2019. "The economics of investor protection: ISDS versus national treatment," Journal of International Economics, Elsevier, vol. 121(C).
    9. Axel Berger & Matthias Busse & Peter Nunnenkamp & Martin Roy, 2013. "Do trade and investment agreements lead to more FDI? Accounting for key provisions inside the black box," International Economics and Economic Policy, Springer, vol. 10(2), pages 247-275, June.
    10. David Gaukrodger & Kathryn Gordon, 2012. "Investor-State Dispute Settlement: A Scoping Paper for the Investment Policy Community," OECD Working Papers on International Investment 2012/3, OECD Publishing.
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    Cited by:

    1. Guttorm Schjelderup & Frank Stähler, 2021. "Investor‐state dispute settlement and multinational firm behavior," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 1013-1024, September.
    2. Richardson, Martin & Stähler, Frank, 2019. "International agreements, economic sovereignty and exit," European Economic Review, Elsevier, vol. 120(C).
    3. Ralph Ossa & Robert W. Staiger & Alan O. Sykes, 2020. "Disputes in International Investment and Trade," NBER Working Papers 27012, National Bureau of Economic Research, Inc.
    4. Kohler, Wilhelm & Stähler, Frank, 2019. "The economics of investor protection: ISDS versus national treatment," Journal of International Economics, Elsevier, vol. 121(C).
    5. Horn, Henrik & Tangerås, Thomas, 2021. "Economics of international investment agreements," Journal of International Economics, Elsevier, vol. 131(C).
    6. Thow, Anne Marie & Garde, Amandine & Winters, L. Alan & Johnson, Ellen & Mabhala, Andi & Kingston, Paul & Barlow, Pepita, 2022. "Protecting noncommunicable disease prevention policy in trade and investment agreements," LSE Research Online Documents on Economics 114937, London School of Economics and Political Science, LSE Library.
    7. Konrad, Kai A., 2017. "Large investors, regulatory taking and investor-state dispute settlement," European Economic Review, Elsevier, vol. 98(C), pages 341-353.
    8. Ossa, Ralph & Staiger, Robert W. & Sykes, Alan O., 2023. "Standing in international investment and trade disputes," Journal of International Economics, Elsevier, vol. 145(C).
    9. Horn, Henrik, 2022. "Investment Treaty Reform when Regulatory Chill Causes Global Warming," Working Paper Series 1450, Research Institute of Industrial Economics, revised 23 Apr 2024.
    10. Horn, Henrik & Norbäck, Pehr-Johan, 2018. "A Non-Technical Introduction to Economic Aspects of International Investment Agreements," Working Paper Series 1250, Research Institute of Industrial Economics.
    11. Frank Stähler, 2023. "An optimal investor-state dispute settlement mechanism," Journal of Economics, Springer, vol. 138(1), pages 1-16, January.
    12. Curran, Louise, 2024. "Investor state dispute settlement (ISDS) and the social licence to operate of international business: An analysis of controversial cases," International Business Review, Elsevier, vol. 33(2).
    13. Haufler, Andreas & Mardan, Mohammed & Schindler, Dirk, 2018. "Double tax discrimination to attract FDI and fight profit shifting: The role of CFC rules," Journal of International Economics, Elsevier, vol. 114(C), pages 25-43.

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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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