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Hastings Business Law Journal

Authors

Julien Chaisse

Abstract

This article analyzes the magnitude of the treaty shopping practice and draws relevant theoretical and policy implications for proper rule-making. This fills the gap in the literature, as it is based on a comprehensive survey of tribunal awards to assess the real prevalence of treaty shopping. Also, observing that in all systems of law, whether domestic or international, there are concepts framed in order to avoid misuse of the law; reference may be made in this respect to "good faith" ("bonne foi"), "détournement de pouvoir" (misuse of power) or "abus de droit" (abuse of right), this Article seeks to identify the legal principles used by international tribunals to address the issue of treaty shopping. On this basis, this article more specifically discusses three critical issues. First, whether treaty shopping is good or bad from various angles (from both the state and investor perspectives). Second, what is the implication of having a different type of investment treaty (non-harmonized investment treaties), given that the treaty shopping problem exists? Third, how to mitigate the negative aspects of the treaty shopping problem? What type of provisions and clauses are necessary to prevent treaty shopping or to reduce the negative side of treat shopping?

The article presents in Part II the recent evolution of international investment law and identifies the legal determinants of treaty shopping. Part III goes on to review the practice and reality of treaty shopping. Subsequently, Part IV provides a mapping of the cause of treaty shopping. Part V then presents an account of existing provisions designed to control treaty shopping. Finally, policy conclusions are drawn in the conclusion.

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