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Investor-State vs. State-State Dispute Settlement

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  • Horn, Henrik
  • TangerÃ¥s, Thomas

Abstract

International investment agreements have been intensely criticized, and in particular the “ISDS” mechanisms that enable foreign investors to litigate against host countries. This paper examines the common claim that host countries benefi…t from state-state dispute settlement (SSDS), since this yields less litigation. It assumes the standard rationale for ISDS, that SSDS causes political litigation costs. It shows how a host country might indeed bene…fit from SSDS, but that there is no presumption that these conditions will prevail. Furthermore, negotiations regarding dispute settlement will plausibly yield ISDS, regardless of the distributional consequences for host countries, since SSDS is Pareto inefficient.

Suggested Citation

  • Horn, Henrik & TangerÃ¥s, Thomas, 2020. "Investor-State vs. State-State Dispute Settlement," CEPR Discussion Papers 14480, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14480
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    1. Guttorm Schjelderup & Frank Stähler, 2021. "Investor‐state dispute settlement and multinational firm behavior," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 1013-1024, September.
    2. Emma Aisbett & Larry Karp & Carol Mcausland, 2010. "Police Powers, Regulatory Takings and the Efficient Compensation of Domestic and Foreign Investors," The Economic Record, The Economic Society of Australia, vol. 86(274), pages 367-383, September.
    3. Kohler, Wilhelm & Stähler, Frank, 2019. "The economics of investor protection: ISDS versus national treatment," Journal of International Economics, Elsevier, vol. 121(C).
    4. Dolzer, Rudolf & Schreuer, Christoph, 2012. "Principles of International Investment Law," OUP Catalogue, Oxford University Press, edition 2, number 9780199651801.
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    1. Horn, Henrik & Tangerås, Thomas, 2021. "Economics of international investment agreements," Journal of International Economics, Elsevier, vol. 131(C).

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    More about this item

    Keywords

    Idsd; Expropriation; International investment agreement; Regulatory chill;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law

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