This book outlines the principles behind the international law of foreign investment, focusing on the law governed by bilateral and multilateral investment treaties. The book traces the purpose, context, and evolution of the clauses and provisions characteristic of contemporary investment treaties, and analyses the case law interpreting the issues raised by standard clauses. Particular consideration is given to broad treaty-rules whose understanding in practice has mainly been shaped by their interpretation and application by international tribunals. In addition, the book introduces the dispute settlement mechanisms for enforcing investment law, outlining the operation of State vs. State and Investor vs. State arbitration. Combining a systematic analytical study of the texts and principles underlying investment law with a jurisprudential analysis of the case law arising in international tribunals, this book introduces the principles of international investment law and arbitration.

This unique compendium offers an article-by-article commentary to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. Providing a comprehensive explanation of the functioning of this important mechanism for the settlement of investor–host State disputes, it incorporates the preparatory work, the Convention's text, various rules and regulations adopted under the Convention, the practice of arbitral tribunals under the Convention and academic writings on the subject. The first edition of this work has been relied upon by numerous arbitral tribunals. This second edition follows the same system and approach, but extensive updates reflect the vast increase in arbitral practice since the publication of the first edition. A number of novel issues that have emerged through this practice are now addressed, making this practice-oriented guide an indispensable tool for anyone dealing with the ICSID Convention.

Most investment treaties contain provisions granting full protection and security for investments. The wording of these clauses suggests that the host State is under an obligation to take active measures to protect the investment from adverse effects. The adverse effects may stem from private parties or from actions of the host State and its organs. More recently tribunals have found that provisions of this kind also guaranteed legal security enabling the investor to pursue its rights effectively. Tribunals have disagreed on whether full protection and security merely reflects the broader, fair and equitable treatment standard and customary international law or offers an independent and additional standard. Arbitral practice is generally agreed that this standard of protection merely requires due diligence and does not create absolute liability.

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The concept of an international community made up of sovereign States is the basis of our intellectual framework for international law. A look at history, however, tells us that conceptions of world order have by no means always been shaped by the model of sovereign co-equal actors with a territorial basis. Although there are old historical precedents for relations between territorial communities on an equal footing, the imperial conceptions of Roman times and of the Middle Ages were based on entirely different ideas. They were strongly hierarchical and paralleled religious or secular concepts of subordination and dependence. Sixteen forty-eight, the year of the Peace of Westphalia, is usually given as the decisive date for the transition from the vertical imperial to the horizontal interState model.' Needless to say, in historical terms this is an oversimplification. The Empire existed until 1806 and the process towards sovereign equality was gradual. It culminated with the collapse in the early twentieth century of the Austro-Hungarian and Ottoman Empires, and the displacement of the Concert of Europe as the most important international arena by an open global community of States. Colonialism was not really a deviation from this movement The existence of different forms of social organization in other parts of the world was a welcome excuse for European powers with colonial ambitions to deny statehood to these communities and to annex the territory inhabited by them. 2 Decolonization consisted basically of the extension of European political structures to these