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To Settle or to Fight to the end? Case-level Determinants of Early Settlement of Investor-State Disputes

Author

Listed:
  • Duy Vu

    (Université Côte d'Azur
    GREDEG CNRS, France)

Abstract

International investment arbitration is a third-party dispute resolution mechanism, for the purpose mainly of depoliticizing investment disputes and maintaining efficient investment flows among countries. Almost one third of treaty-based investor-State disputes brought before this system are settled before the final ruling. Given the classical debate about "Against Settlement" in the legal literature, we build an original database of treaty-based arbitrations from 1996 to 2016 in order to empirically test the determinants of early settlement. We find that the probability of settlement will increase if the host State has no experience in resolving this kind of dispute but decrease if it anticipates a favorable outcome. In addition, the nature of regulatory measures applied by the host State and the identity of foreign investors are also important determinants of settlement. Interestingly, we find strong evidence of a Dutch effect in dispute resolution.

Suggested Citation

  • Duy Vu, 2018. "To Settle or to Fight to the end? Case-level Determinants of Early Settlement of Investor-State Disputes," GREDEG Working Papers 2018-36, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  • Handle: RePEc:gre:wpaper:2018-36
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    File URL: http://www.gredeg.cnrs.fr/working-papers/GREDEG-WP-2018-36.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Investor-State dispute settlement; international investment treaties; law and economics; applied econometrics;

    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
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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