Investment Rules and the Denial of Change

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University of Toronto Law Journal. Volume 60 (2010), p. 893-904.


investment law; international arbitration; constitutionalization; neo-liberalism; self-determination


In his book Constitutionalizing Economic Globalization, David Schneiderman examines the relationships between international investment rules and constitutional principles of liberal democracy. He begins by examining the legal and ideological underpinnings of international investment rules, showing how key concepts under the treaties originate in some (but not all) domestic constitutions. He shows also how the regime has served as a vehicle for arbitrators to ratchet up the imposition of international discipline on states. Schneiderman reviews case studies showing the impact of the rules on governments. He also identifies how arbitrators have interpreted investment treaties in ways that take constitutionalist notions of limited government beyond their domestic trajectories and that promote versions of the 'rule of law' with a distinctly neo-liberal bent. Ironically, the portrayal of investment arbitration as an institutional hammer of neo-liberalism that is just now hitting its nails coincides with a resurgent Keynesianism and renewed regulation at the domestic level. My main criticism of the book is that its claim of 'constitutionalization' is open to doubt given that (1) the treaties can be abrogated, (2) the treaties lack the normative power of domestic constitutions, and (3) investment arbitration lacks integral components of a liberal constitutional structure, including institutional safeguards of judicial independence. Is the system constitutional or merely neo-liberal? Nevertheless, Schneiderman offers powerful insights on the capacity for alternative visions and resistance. It is also refreshing to see Schneiderman focus on national governments and their power to undo that which has been done.


This article was previously published as a research paper in the Comparative Research in Law and Political Economy series.

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