Latest review of my 2005 book International Investment, Political Risk, and Dispute Resolution: A Practitioner’s Guide, by Anne Hoffman, an international commercial and investment arbitration attorney with Python & Peter:
International Investment, Political Risk and Dispute Resolution – A Practitioner’s Guide by Noah Rubins and N. Stephan Kinsella. Published by Oceana Publications, a Division of Oxford University Press (2005), 769 pp. Price £90 [$155], ISBN 0-379-21522-5
The proliferation of arbitration proceedings conducted on the basis of BITs, and in particular the auspices of ICSID, naturally led to an increase of publications addressing this issue and the changing landscape of arbitration over the last years. Books dealing with this issue are often commentaries, basic introductions to the procedure of investment arbitration or reviews of investment awards.
The present book is different. It integrates the important issue of dispute resolution into the broader scope of international investment, explains the risks, in particular the political risk, associated with international investment and the legal framework of investment protection at large. It thus broadens the perspective of the reader and allows him to see beyond the everyday issues of the interpretation of the effect of an umbrella clause or the meaning of fair and equitable treatment in a BIT by placing these specific issues into a broader context and showing their interaction with others.
The book commences by analysing the role and effect of foreign direct investment on the global economy of the modern world. Thereafter, it is composed of three parts. Part I deals with the assessment and pre-investment management of political risk. Part II addresses the international law framework of investment protection and political risk and part III covers the issue of dispute resolution and political risk. Each of these three parts is subdivided into chapters and sub-chapters. When reading the first part, the reader, inter alia, is introduced to the various types of political risk and their measurement, is shown features which will help minimising the political risk, such as stabilisation and arbitration clauses as well as clauses guiding tribunals with regard to damages and interest rates. Lastly, he is familiarised with the various types of investment insurances existing. In part II, the authors explain the international law framework of investment protection and political risk, i.e. issues of international law in general, of state sovereignty, state responsibility and state immunity. The authors address the remedies for both states and investors under international law and their prerequisites before shedding some light on history and development of the customary international law of expropriation and investment protection, and thus those today often-used terms like indirect and creeping expropriation or national treatment. Finally, they deal with the substantive law of contemporary international investment protection. The lawyer who deals with investment arbitration will be familiar with this chapter as here – after introducing the network of modern bilateral and multilateral treaties – investment standards such as prohibition of expropriation without compensation, fair and equitable treatment, full protection and security, the umbrella clause, compensation methods etc. and their application are discussed. Lastly, in part III, the reader will be introduced to the jurisdictional particularities of investment arbitration, such as nationality requirements, exhaustion of local remedies or “forks in the road”, to the various arbitration rules relevant in this context as well as some of their prominent features. In the final chapters, the authors address the rather seldomly discussed topic of conciliation of investment disputes as well as the intervention of states in investment disputes. At the back, the book contains a variety of useful appendices, e.g. bilateral investment treaties of selected countries, an OPIC insurance contract, the Washington Convention as well as a compilation of online resources.
Thus, the first part of the book focuses mainly upon “practical” issues, namely on identifying political risk and reducing the chance that these risks will materialise. The second part addresses first general legal issues relevant to investments before focusing upon dispute resolution. It therefore is both a useful practical guide and competent source for newcomers and experienced practitioners alike in relation to international law and investment treaty arbitration where it explains general principles as well as concrete case law which has developed over the past years. Naturally, the book addresses the main cases which had an impact upon a certain issue, but will not discuss all cases decided in the context of investment arbitration – it is not a case commentary. Nevertheless, it contains vast footnotes which permit the interested reader to follow up on certain problems easily. At the same time, it explains to the practitioner less familiar with the running of an international arbitration proceeding the necessary steps from the notification of a dispute up to oral argument, including the difficult situation of the defaulting party – all of this with a view to the specificities of an ICSID arbitration and easier to access as other writings on this topic.
This book is not a lightweight and does not make for good bedtime-reading. Not being a classic law book, it is a guide which should find its place on the shelf of the person dealing with foreign investment who is interested to explore the various aspects of foreign investment and political risk in their broader context and with a particular emphasis on the legal aspects of this field. This will include, but not be limited to, the issue of dispute resolution. It is thereby well-suited for beginners in the area of investment arbitration attempting to find their way around a relatively new area of law as it covers the relevant issues comprehensively without getting lost in a degree of detail which will be the next step on the ladder of investment protection.
The authors described their goal as to write a guide which would “enable the investor to appreciate the risks associated with government interference in property rights, to minimize those risks and deal effectively with their consequences. But we also hope to promote understanding within host governments about investors’ expectations and concerns, to allow them to avoid conflict and maximize the benefits of foreign direct investment for their countries and constituencies.” The authors succeeded and thereby made a valuable contribution to exploring this topic.