Are Investment Treaties Redundant? Evidence from Investor-State Disputes.

This article examines whether international investment treaties truly matter by analyzing a novel data set of 633 ICSID (International Centre for Settlement of Investment Disputes) investment treaty arbitrations from 1987 to 2019. It finds that 60 percent of treaty disputes arise from investments involving contracts with State entities—such as concession contracts or joint ventures—that could have replicated treaty protections at little or no additional cost, and these disputes account for 89 percent of approximately US$30 billion in damages awarded. The study suggests that investment treaties matter less than commonly believed because for many investments, investor-State contracts serve as effective substitutes, while treaties are more significant for protecting investments lacking such contractual relationships (e.g., equity investments). The findings imply that reform efforts should not only reconsider the scope of treaty protections—potentially excluding investments already governed by State contracts—but also address the transparency and governance challenges posed by investor-State contracts and commercial arbitration, which are likely to grow in importance if treaty protections are limited or abolished.