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Winning or losing in investor-to-state dispute resolution: the role of arbitrator bias and experience

Donaubauer, Julian, Neumayer, Eric and Nunnenkamp, Peter (2018) Winning or losing in investor-to-state dispute resolution: the role of arbitrator bias and experience. Review of International Economics, 26 (4). pp. 892-916. ISSN 0965-7576

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Identification Number: 10.1111/roie.12347

Abstract

When an investor sues a state for alleged breaches of its obligations under an investment treaty or a trade agreement with investment provisions, all that should matter for who wins the case are the merits of the claim itself. Alas, investor-to-state dispute settlement (ISDS) does not take place in a vacuum. Such cases are decided by a tribunal typically consisting of three arbitrators, one each nominated by the two parties while the president is mutually agreed upon. We demonstrate that the kind of involvement of these arbitrators in previous ISDS cases matters for the case under dispute. Specifically, we show that what we label the presidents' pro-investor appointment bias—the number of times they have previously been nominated by an investor minus the number of times they have represented respondent states—raises the likelihood that an investor wins an ISDS case. The same holds for the pro-investor appointment bias of state-appointed arbitrators. Given the president's crucial role, the main implication of our findings is that presidents should be drawn from among those who have not systematically represented more one side than the other in previous cases.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1111/(IS...
Additional Information: © 2018 John Wiley & Sons Ltd
Divisions: Geography & Environment
Subjects: H Social Sciences > HB Economic Theory
Sets: Departments > Geography and Environment
Date Deposited: 16 Mar 2018 14:23
Last Modified: 20 Oct 2019 00:08
URI: http://eprints.lse.ac.uk/id/eprint/87256

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