Introduction

The question of whether investor-state arbitration is broken, which this author posed in a 2012 article, is being increasingly answered with a resounding "yes," and no longer just by a few countries in Asia, Africa and Latin America, the traditional victims of claims that contracting states under investment treaties never imagined possible when they signed up for investor-state dispute settlement ("ISDS") mechanisms. In recent years, India, Indonesia, South Africa, Bolivia, Ecuador and Venezuela have all taken steps to terminate investment treaties, some more radical than others, but all the result of frustration with treaties that did not fulfill the promise of increased foreign investment and seemed to bring nothing but headache and the risk of catastrophic awards. Now the dissatisfaction with investor-state dispute settlement mechanisms seems to run as deep, if not deeper, in the heart of Europe.

The rise of anti-ISDS sentiment in Europe is hardly surprising, but it is not exclusively attributable to altruism. Rather, it is best described as a long overdue acknowledgment of the failings of a system that was designed to protect U.S. and European enterprises doing business in developing nations but had suddenly turned against the designers. In the last few years, scores of arbitrations under investment treaties have been instituted by investors against Western European countries that used to be and still are the traditional homes of investors bringing claims against countries in Asia, Africa or Latin America. Now the European countries are under fire and, ironically, the fire is coming from investors in Europe, a development that has Europeans up in arms, especially when the investors meet with some success. The moral of the story is that it is one thing to defend and even promote a flawed system when you are the beneficiary, quite another to do so when you are the victim.

Footnotes omitted from this introduction.