Development matters: Emerging trends in investment treaty arbitration

Development matters: Emerging trends in investment treaty arbitration Todd Tucker Vale Columbia Center / Ecuadoran Embassy Conference on Investment, Washington, DC – April 8, 2014

Outline of talk 1. Outline basic trends in investment treaty arbitration, using new dataset 2. Trace influential ideas in arbitration 3. Suggest areas for future research

More treaties‌

‌ more arbitration.

Notes and Definitions • Some cases settle, never start, or are discontinued • Some cases are not public • Some awards are annulled or set aside • Cases are finalized at diverse stages • But we have at least 231 finalized cases

Data on 231 IIA Cases by Phase Jurisdiction

Case proceeds to merits: 169

State wins at jurisdiction: 62

Merits

Case proceeds to quantum: 101

Quantum

State loses at quantum: 80

No public quantum: 14 State wins at merits: 68

State wins at quantum: 7

Does “development matter”?

It depends…

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On how “developing countries” are defined What period you are looking at On case stage you are comparing Whether you adjust for ability to pay

Who are the respondents?

Argentina(23) Mexico(15) Ecuador(10) Egypt(9) Kazakhstan(9) Ukraine(9) Turkey(7) Romania(6) Venezuela(5)

Congo(3) El Salvador(3) Guatemala(3) Peru(3) Sri Lanka(3) Algeria(2) Costa Rica(2) Georgia(2) Jordan(2)

Albania(4) Hungary(4) Moldova(4)

Kyrgyzstan(2) Lebanon(2) Malaysia(2)

Paraguay(2) South Africa(2) Tanzania(2) Uzbekistan(2) Armenia(1) Azerbaijan(1) Bangladesh(1) Bulgaria(1) Burundi(1) Central African Republic(1) Ethiopia(1) Ghana(1)

Czech Chile(3) Trinidad and Republic(15) Lithuania(3) Tobago(1) Poland(8) Croatia(2) United Arab Russia(5) Estonia(2) Emirates(1) Slovak Latvia(2) Uruguay(1) Republic(5)

Grenada(1) India(1) Indonesia(1) Libya(1) Macedonia(1) Mongolia(1) Morocco(1) Myanmar(1) Pakistan(1) Panama(1) Philippines(1) Serbia(1) United States (8) Canada (7) Spain (1)

Tajikistan(1) Thailand(1) Tunisia(1) Yemen(1) Zimbabwe(1)

Jurisdiction wins (62) Developed, 5, 8%

Swing, 11, 18%

Development difference, by stage Merits wins (68)

Developing, 46, 74%

Developed, 7, 10%

Merits losses (101) Swing, 17, 25%

Developed, 4, 4% Developing, 44, 65%

High income “non-Western countries�

Swing, 20, 20%

Developing, 77, 76%

P<.05,OR=2.18, since 2006

P<.05,OR=7.1, since 2006

p<.001, r=.75; medium to large effect.

Persuasive precedent

Most cited cases • • • • • •

Metalclad Tecmed Mondev SD Myers Azurix CMS

Word choice, by development status Developed countries

Developing countries

Word choice, by case outcome Winners

Losers

State concepts in arbitration

Areas for future research • • • •

What is optimal win-loss rate?

What influences arbitrators’ decision-making?

Use of “good governance” indicators And the big question…

Do cases change development policy?

Information High information and low risk aversion – political exit or willingness to litigate

High information and risk aversion – Potential for chill or policy change.

- Causation or convenience?

- Are cost-benefit calculations equal?

Risk aversion

Low information and risk aversion – treaties have no impact

Low information and high risk aversion – may not know own chances of success and prematurely settle

Thanks! www.toddntucker.com