The Multilateralization of International Investment Law: Emergence of a Multilateral System of Investment Protection on Bilateral Grounds

Abstract

This article advances the paradoxical thesis that international investment law is developing towards a multilateral system of investment protection on the basis of bilateral treaties. Despite the formal fragmentation of substantive investment law in bilateral treaties, coupled with arbitration as a decentralized dispute settlement and compliance mechanism, international investment law does not constitute a disintegrated and unstructured body of law. Instead, one can observe convergence rather than divergence in this field of international law. Unlike genuinely bilateral treaties, bilateral investment treaties (BITs) do not stand isolated in governing the relation between two States; they rather develop multiple overlaps and structural interconnections that create a relatively uniform and treaty-overarching legal framework for international investments based on uniform principles with little room for insular deviation. The article therefore argues that BITs in their entirety function largely and increasingly analogously to a truly multilateral system. Elements of this thesis are the inclusion of most-favored-nation clauses, the possibilities of treaty-shopping through corporate structuring and the functioning of investor-State dispute settlement through the intensive use of precedent and other genuinely multilateral approaches to treaty interpretation.