Asymmetric Diffusion: World Bank 'Best Practice' and the Spread of Arbitration in National Investment Laws

Abstract

Globally, 74 countries have domestic investment laws that mention investor-state arbitration and 42 of these laws provide consent to it. That is, they give foreign investors the right to bypass national courts and bring claims directly to arbitration. What explains this variation, and why do any governments include investor-state arbitration in domestic legislation? We argue that governments incorporate arbitration into their domestic laws because doing so was labelled 'international best practice' by specialist units at the World Bank. We introduce the concept of asymmetric diffusion, which occurs when a policy is framed as international best practice but only recommended to a subset of states. No developed state consents to arbitration in their domestic law, nor does the World Bank recommend that they do so. Yet we show that governments who receive technical assistance from the World Bank's Foreign Investment Advisory Service are more likely to include arbitration in their laws. We first use event history analysis and find that receiving World Bank technical assistance is an exceptionally strong predictor of domestic investment laws with arbitration. Then we illustrate our argument with a case study of the Kyrgyz Republic's 2003 law.

Constraints and incentives in the investment regime: How bargaining power shapes BIT reform

“…Because the options available regarding international negotiations may shift depending on what is ratifiable domestically, state leadership as well as coalitions that provide them with political power can also shape the bargaining power of a government (Mattes et al, 2016). State capacity and bureaucratic quality of governments can also strongly shape negotiation outcomes, especially with regards to BITs (Berge & Stiansen, 2016;Berge, 2021). The opportunities for improving bargaining power might also vary depending on the institutional bargaining environment (Schneider, 2011).…”

“…The declining number of new BITs and the simultaneously increasing ISDS cases have led many to observe that the investment regime is currently undergoing a "backlash" against the dispute settlement mechanism, akin to wider challenges to globalization, international organizations, and liberal international order (Lake et al, 2021;Walter, 2021). Governments are increasingly pursuing efforts towards greater state regulatory space (Broude et al, 2017) by terminating, renegotiating, replacing BITs with investment provisions in new preferential trade agreements (PTAs), or even adopting alternative domestic legal arrangements (Berge & St John, 2021).…”

Artificial Intelligence and Nature-Inspired Optimization on Integrative Capacity of Renewable Energy in the Western Balkan

“…Besides, specific PV envelope design is often applied to commercial buildings in the last decade [12]. In the EU (especially in Germany, Italy, Spain, the United Kingdom, and the Czech Republic), between 2007 and 2014 [13], solar energy utilization increased considerably. Since 2014, however, investments in solar energy implementation decreased significantly [14].…”

“…One of the sustainability goals (goal number 7) requires affordable and clean energy as the basis of contemporary civilization development. This means (bearing in mind that electricity is not available to 840 million people, according to a World Bank's current report [13]) that sources of electricity should be expanded. In addition, bearing in mind that electricity production causes significant greenhouse gas emissions, it is necessary to find solutions for their reduction, while increasing electricity production.…”

Do Investor–State Dispute Settlement Cases Influence Domestic Environmental Regulation? the Role of Respondent State Capacity

“…The empirical literature on IIAs and ISDS has focused on why states sign IIAs (Elkins, Guzman, and Simmons 2006;Poulsen 2014) or consent to ISDS elsewhere (Berge and St John 2020;St John 2018), variations in IIA design (Allee and Peinhardt 2010; Alschner and Skougarevskiy 2016a), power in IIA negotiations (Allee and Peinhardt 2014; Simmons 2014), how states' IIA practices change after they experience ISDS claims (Haftel and Thompson 2018;Poulsen and Aisbett 2013), what drives outcomes of ISDS cases (Behn, Berge, and Langford 2018;Donaubauer, Neumayer, and Nunnenkamp 2018), and the issue of arbitrator bias (Langford, Behn, and Lie 2017).…”