This is from Robert Basedow, a PhD candidate at LSE:
... It is helpful to distinguish between the substantive and procedural provisions under typical international investment agreements. The substantive provisions enumerate the rights of investors and states under these agreements, whereas the procedural provisions regulate how substantive provisions can be enforced. The substantive provisions are hardly controversial. They reflect core principles of the rule of law. The agreements stipulate, for instance, that states can only expropriate for public policy purposes, on the basis of non-discrimination, due process and against payment of an adequate compensation for losses.
The only grievance occasionally voiced regarding the standard substantive provisions of such agreements is that they are often spelled out in too little detail, which leaves arbitration tribunals significant room for interpretation. The term ‘indirect expropriation’ illustrates this concern. ...
When you put it like this, substantive international investment rules do sound fairly normal. The principles themselves are common in domestic law. In that sense, it may be true that they are "hardly controversial."
But I don't think that's the right way to put it. The fact that these principles are a routine part of domestic law does not mean it is uncontroversial to make them part of enforceable international law. In my view, a better way to explain what is going on here, in terms of its substance, is the following statement from Stephan Schill:
In reaction to a summary of five different paths for investment law reform made by the United Nations Conference on Trade and Development in June 2013, which focused on institutional reforms of investor-State dispute settlement, the present paper sketches out a sixth path for investment law reform that is based on a system-internal reconceptualization of investor-State arbitration as a form of public law-based judicial review.
To me, this is the key part of what is going on with investor-state: International judicial review of certain national government actions. The relevant substance isn't just the principles involved; it's also the allocation of power between national and international.
So is it controversial to have international courts reviewing domestic government actions? Maybe it depends who you ask. If you asked international lawyers, it might be close to 50-50, for and against. That's my impression anyway, based on a random sampling of conversations I've had over the years.
What kind of response would you get if you asked the general public whether there should be international judicial review of governments' treatment of foreign investors? I'm guessing you would have lots of "no opinions," many answers of no, and almost nobody saying yes.
But I'd love to see some real polling. Perhaps here's an example of a question that could be asked: "Should the ECJ's 'right to be forgotten' decision be reviewed by an international court?" That's from an opinion piece of mine. Here's an excerpt:
The important point to take from all this is the following. ISDS provides "constitutional" review of government actions, at all levels and for all branches of governments. Lower courts, appeals courts and high courts are all subject to review. Local governments, sub-federal governments, and national governments of all types (even the EU!) are also subject to review.
The question is thus not one of "corporate profits" or "promoting foreign investment". It is about the role of international courts in global governance. Are we comfortable with international tribunals acting as a global high court on matters traditionally within the domestic sphere? That is a big step, one that needs to be acknowledged and debated. To be clear, such a court would not have the same power as national high courts – it could not order governments to take particular actions or enjoin domestic laws. But it could impose liability for monetary damages where government actions violate international obligations. In this way, it could have a significant impact on national laws, regulations and courts.