How is the economic crisis changing international investment law? Professor Titi analyses the state of affairs.

In her essay, Professor Titi explores the reform of international investment law in the light of economic crises. Indeed, international investment law has been on a trajectory of reform especially in this last decade. The reason for reform has been recent economic crises and, in Europe, the recent global downturn. Focusing specifically on the post-crisis EU-led reform, the chapter examines novel formulations of substantive and procedural standards, including provisions and policy Statements explicitly referring to the financial sector and economic crises, in order to better understand the new face of international investment law and the new generation of international investment agreements. The elaboration and refining of the EU’s international investment policy mark a distinct break with the traditional European treaty model. the EU is setting its own standard. It is not to be underestimated the fact that the EU is exercising its competence in the aftermath of a severe economic and financial crisis and with the hindsight of the arbitrations relating to the Argentine crisis and debt restructurings. It is therefore not surprising that in its investment agreements the Union expressly wishes to safeguard the host economy’s right to regulate in the face of economic crises (e.g., in the public consultation on the Transatlantic Trade and Investment Partnership negotiations with the United States, the Union clearly demonstrated its intention not only to guarantee host economies the right to take measures for prudential reasons, but also to allow measures ‘taken in time of crisis in order to protect consumers or to maintain the stability and integrity of the financial system). With its new investment policy, the Union seeks to achieve a ‘better balance’ between the State’s right to regulate and investment protection and to design ‘clearer and better standards.’ In seeking to achieve a ‘balance’ between investment protections and the host economy’s right to regulate, the European Commission has stressed that treaty standards must be drafted in a ‘detailed and precise manner.’ On another note, the EU’s first policy goal in this respect has been to increase transparency in ISDS. Other amendments to the investor-State dispute settlement system include preventing investors from engaging in multiple or frivolous claims. The EU further aims to incentivize investors to launch their claims in local courts or resort to amicable settlements or other alternative dispute resolution methods. Another novel EU suggestion concerns the introduction of a code of conduct for arbitrators, including specific provisions to address conflicts of interest. Also, EU investment agreements may leave outside the scope of their arbitration clause measures adopted in times of crisis in order to protect consumers or to maintain the stability and integrity of the financial system.