Do investment treaties unduly constrain regulatory space?

International investment law (IIL) is at a crossroads. A large number of investment treaties and investor-state arbitrations, and rapidly expanding scholarly writing, have made IIL one of the most dynamic branches of international law. However, the proliferation of treaties and arbitrations has also made IIL a contested field, with campaigners and some experts questioning substantive standards and dispute settlement mechanisms, and commentators warning of a ‘legitimacy crisis’. Controversy about the interface between investment promotion and regulatory space has been central to these developments.

This article, published in the journal Questions of International Law, argues that investment treaties, even of the ‘recalibrated’ type, can have far-reaching implications for regulatory space, requiring careful thinking through. This is particularly the case in low and middle-income countries, where room for tightening regulatory frameworks may be greater, constraints on public finances harder, and capacity gaps more challenging. Ultimately, choices on whether to sign investment treaties, and in what form, are eminently political, and a key challenge ahead is increasing democratic participation in international treaty making.