Diplomatic protection was the usual form to settle investment disputes before the spread of investor-state arbitration. Investors would involve their home country’s diplomats to put pressure on the host state governments. This results in the politicisation of disputes which are not necessarily political in nature. What is more, the quality of the outcome may depend on issues entirely irrelevant to the actual dispute, such as any trade-offs between the governments, or the general quality of bilateral relations. In the worst case, bilateral relations will deteriorate as a result of what is essentially an issue between an investor and the host State, or, alternatively, in order for relations to remain intact, governments may decide to play down the dispute and ultimately fail to resolve it. Both fact patterns occurred frequently before the introduction of the investor-state dispute resolution system through arbitration clauses in BITs in the late 1950s.

Relevant Experience of BODENHEIMER Attorneys

Axel Benjamin Herzberg and Dr Rouven F Bodenheimer routinely advise both, investors and governments on international investment law issues. Mr Herzberg also handled a number of ISDS cases as Deputy Counsel at the Secretariat of the ICC International Court of Arbitration in Paris.

Dr Nicolas Klein worked for German Federal Constitutional Court Justice Professor Dr Andreas Paulus, himself a renowned public international law specialist who represented Germany, inter alia, before the International Court of Justice in the LaGrand case against the United States. Both, Dr Klein’s doctoral thesis and his LL.M. studies at Columbia University (New York) revolved around issues of international investment law, in particular the scope of application ratione personae of bilateral investment treaties.