Resolving Concerns of Treaty Shopping in International Investment Arbitration

A key source of controversy in the international investment arbitration system is the widespread practice of ‘Treaty Shopping’, whereby investors incorporate in a foreign jurisdiction to gain access to favourable investment protection treaties. This has multiplied the volume of claims brought against increasingly dissatisfied states. This article explains these concerns and explores the legal limits of this practice. It discusses a range of tribunal decisions considering the scope of investment treaties and the emergence of the principle of abuse of process in the arbitral jurisprudence. The article takes a holistic approach to the issue, by placing these arbitral decisions in the wider political, legal and diplomatic environment. It is argued that a uniform and concerted effort by tribunals and governments is required to adequately address this problem. This is unlikely to be achieved in the short run, however, due to the numerous obstacles to reform on this scale.