Democracy and International Investment Law

Abstract

A current critique in international investment law is the presumed lack of democratic legitimacy: Investment tribunals exercise public authority and take indirect influence on public law-making. Awards might create a ‘regulatory chill’ on the respondent’s parliament in enacting legislation; the adjudicatory powers of investment tribunals might affect policy options and thereby democratic space. This contribution highlights different aspects to improve the legitimacy of international investment law. The need for legitimization refers to persons and institutions as well as to measures adopted by these persons or institutions. All of this results in different reference points of democratic legitimization which are examined separately: international investment agreements; investment contracts especially with stabilization clauses; adjudicators as well as tribunal’s powers and decisions adopted; appointment procedures of arbitrators; the consent to arbitration as well as the determination of the applicable law are generally based on agreements or contracts - these requiring inter alia democratic legitimization. Moreover, in the ongoing reform debate a further institutionalization of investment law, the appointment of permanent judges, a concretization of protection standards, a higher personal legitimization to counter a lack of material legitimacy are discussed.