Swords, Shields and Other Beasts: The Role of Countermeasures in Investment Arbitration

Extract

I. INTRODUCTION: OLD AND NEW, SWORDS AND SHIELDS

Our topic can be thought of as a meeting of the old and the new, and it can be approached via a straightforward question: is there room, in the contemporary world of investment arbitration, for countermeasures, that traditional means of self-help?

Countermeasures—and more so the concept’s traditional label, reprisals—evoke an era of interstate international law of limited reach: an era which, for lack of adequate institutions, accommodated ideas of ‘private justice’ to a significant extent, notably by accepting the right of one State to respond to another State’s wrongful conduct by means of coercion. This right permitted the State to respond to wrongful conduct affecting State rights as well as rights of nationals, despite the obvious risk of abuse. As investment lawyers with a measure of historical awareness know full well, in the field of foreign investment, the risk of abuse regularly materialised, as ‘home States’ (in the contemporary parlance) reacted coercively against host States accused of having interfered with rights of foreign investors. Newcombe and Paradell’s summary account is matter-of-factly, yet eloquent: