Down the Rabbit Hole of Investment Arbitration and Ethics

This  article  addresses  the  role  of  arbitrators  and  the  everlasting tension  amongst personal  morals  and  interpretive  rigour.  Critiques  of  investment  law  have  traditionally underscored the lack of balance in power between foreign investors and host states under BITs and FTAs  and Zave  especially  emphasized  how  investment  arbitration  is  a  mechanism  that aggravates imbalances and engenders inequitable outcomes. Frequent appeals for the reform of investment arbitration resonate amongst scholars, states, and international organizations, with the appointment of arbitrators and their conduct facing intense scrutiny. Arbitrators, endowed with powers akin to those of adjudicators, demonstrate at times a concerning attitude towards the rigorous interpretation of applicable laws, often overlooking the public international law nature of BITs and FTAs and, on occasion, approaching investment disputes as though they were merely  commercial  arbitration  cases.  The  conflation  of  the  two  types  of  arbitration  has  had adverse effects, resulting in dubious awards and decisions. The increasing number7 of so-called mega-awards exacerbates the problem, as their significance for host states is not necessarily commensurate with the rigor of the legal reasoning underpinning them. This has progressively led to an erosion of trust in investment arbitrators and numerous calls for greater accountability of arbitrators. However, one may argue that even the most rigorous interpretations of BITs and FTAs unavoidably favour the interests of foreign investors due to the inherent nature of such agreements, which prioritize the rights and protections of foreign investors over the interest and welfare of host states and their populations.