Essays in the Economics of Litigation: An Application to Investor-State Disputes.

Summary International investment treaties often allow the foreign investor to sue the host country before an international arbitration tribunal in the event of a breach of the treaty provisions. The number of investor-state disputes is growing so rapidly that some countries are expressing unease with the current international investment law regime. The first chapter provides readers with an overview of the effectiveness and spillover effects of international investment arbitration. Drawing on a broad interdisciplinary literature, we revisit recent criticisms and identify the underlying cause of the crisis in international arbitration. We conclude that it is possible for countries to adapt the current international law regime to new situations rather than leave it. The second chapter examines the amicable settlement of investor-state disputes. Drawing on the rich economic literature and a new database of treaty violation disputes, we find that the host state's experience, the prospects of the dispute, the nature of the regulatory measures, the identity of the investors, and the Dutch investment treaties significantly influence the likelihood of early dispute resolution. The third chapter focuses on an institutional dimension of arbitration: the effectiveness of ICSID in resolving disputes. Time to resolution and the quality of the final judgment, as represented by the likelihood of post-sentence appeals, are used as indicators of efficiency. We highlight how the biographical and professional characteristics of arbitrators affect ICSID's effectiveness.