Research Note: Emerging Bilateral Investment Treaty Arbitration and Sustainable Development

The document analyzes the rise of investor-state arbitration under Bilateral Investment Treaties (BITs), noting a significant increase in cases compared to NAFTA's Chapter 11. Using ICSID data, it highlights pending cases that challenge government emergency measures in Argentina, tax policies in Burundi, and environmental regulations in Mexico and Peru. It also examines disputes over water privatization in Bolivia and Argentina, and the risks of using opaque, ad-hoc arbitration rules (like UNCITRAL) which can lead to conflicting rulings and a lack of public transparency, potentially undermining the legitimacy of the process and hindering the ability of developing nations to manage foreign investment.

• There has been a rapid increase in the negotiation of Bilateral Investment Treaties (BITs), with 158 new treaties negotiated in 2001 alone, bringing the total to approximately 2,099 by the end of that year.
• Investment disputes under BITs are rising sharply; at ICSID, BITs cases accounted for 5 of 12 new arbitrations in 2000, 12 of 14 in 2001, and 15 of 19 in 2002.
• Many investment arbitration avenues are opaque, particularly those using International Chamber of Commerce (ICC), Stockholm Chamber of Commerce (SCC), or ad-hoc UNCITRAL rules, which often maintain confidentiality and lack public records of proceedings or final awards.
• The lack of a mechanism to consolidate related BIT proceedings can lead to contradictory rulings on the same government measures, as seen in two UNCITRAL cases against the Czech Republic where one tribunal vindicated the state and another ordered it to pay 360 million US dollars in damages.
• Pending BIT arbitrations frequently challenge sensitive public policy and sustainable development measures, including Argentina's emergency financial measures (such as a 25% tax on oil and gas exports), tax exemptions in Burundi, and environmental permits for hazardous waste in Mexico.
• Arbitrations related to the privatization of water and sewage services, such as those involving Vivendi and Azurix in Argentina and Aguas del Tunari in Bolivia, often center on critical regulatory issues like water quality, tariffs, and access to resources.
• Investment claims can conflict with other international policy goals, such as when a claim by Booker PLC against Guyana was criticized for potentially jeopardizing Guyana's eligibility for an IMF debt-relief initiative.

APA

Peterson, L. E. (2003). Research Note: Emerging Bilateral Investment Treaty Arbitration and Sustainable Development. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/trade_bits_disputes.pdf

Chicago

Peterson, Luke Eric. Research Note: Emerging Bilateral Investment Treaty Arbitration and Sustainable Development. International Institute for Sustainable Development, 2003. https://www.iisd.org/system/files/publications/trade_bits_disputes.pdf.

Wikipedia

{{cite report |last1=Peterson |first1=Luke Eric |title=Research Note: Emerging Bilateral Investment Treaty Arbitration and Sustainable Development |publisher=International Institute for Sustainable Development |date=August 2003 |url=https://www.iisd.org/system/files/publications/trade_bits_disputes.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{peterson2003research, author = {Peterson, Luke Eric}, title = {{Research Note: Emerging Bilateral Investment Treaty Arbitration and Sustainable Development}}, institution = {International Institute for Sustainable Development}, year = {2003}, month = aug, url = {https://www.iisd.org/system/files/publications/trade_bits_disputes.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }