I've always had doubts about certain aspects of substantive international investment law and the investor-state dispute mechanism. I know it has strong support in the business community, but in terms of free market/trade liberalization type policies, I'm not sure how it fits in. Via Luke Peterson, I see this letter from the U.S. Council for International Business in support of including an investor-state mechanism in the TPP. The letter makes a number of points in support of investor-state, some of which raise specific questions for me, as follows. The letter is quoted in bold; my questions follow in italics.
"Prior to the adoption of [the investor-state mechanism], investors could seek to address their grievances by going to local courts or seeking a “deal” with the host government."
Why are local courts a problem? Is the problem with using local courts limited to particular countries, or is it all countries? Are local courts in the United States sufficient to deal with issues arising from foreign investors? What about Australian courts? Or Chilean courts? What exactly about these countries' courts makes them insufficient? Is investor-state only needed if the local courts can't handle the issues fairly?
"... enlisting the services of an investor’s home country is no guarantee that the home country will espouse the investor’s claim. Rather, the home country must take into consideration not only the investor’s interests, but also the interests of the government – both offensively and defensively. From the perspective of investors, relying solely on the government to espouse their claims will most often lead to no claim being brought."
Why do home countries sometimes not take the investor's case? Are there good reasons they might not do so? If so, is this an argument that investor-state is a mistake, because cases that probably shouldn't be brought are now more likely to be brought?
"For host countries, consent to investor-state dispute settlement serves as a signal of the country’s openness to foreign investment."
Wouldn't a better signal be a commitment to a fair and just domestic judicial system?
"Provides investors overseas with ability to seek justice for bad acts by foreign governments."
How can we define "bad acts" in a useful way? Are the current substantive investment rules that elaborate on these "bad acts" (e.g., fair and equitable treatment, regulatory expropriation) appropriate?
"Provides investors abroad legal protections similar to those found under advanced legal systems, including due process, fair and non-discriminatory treatment and compensation for expropriation."
If investor-state is simply trying to match what exists in "advanced legal systems," is investor-state necessary for countries with such legal systems? How does one define "advanced legal systems"? Which countries have them and which do not?