Skip to main content
SpringerLink
Log in

Investor State Dispute Settlement and Host Country Regulation: Insights from Economic Theory

  • Living reference work entry
  • First Online:
Handbook of International Investment Law and Policy

Abstract

Investor state dispute settlement (ISDS) resolves disputes between foreign investors and host country governments about changes in regulation and other harmful measures. Economic theory provides a framework to evaluate the incentive and distributional effects of ISDS on the basis of game-theoretic models. These allow for an analysis of the role of information available to courts and its verifiability, the impact of ISDS on the amount of inward foreign investment, and the potential blocking of legitimate regulation. The chapter presents in a nontechnical way key elements of formal models and provides insights from selective articles in the theoretical literature on ISDS.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Institutional subscriptions

Notes

  1. 1.

    UNCTAD (2020) The changing IIA landscape: new treaties and recent policy developments. IIA issues note no. 1, July

  2. 2.

    UNCTAD (2020) Investor-state dispute settlement cases pass the 1,000 Mark: cases and outcomes in 2019. IIA issues note no. 2, July

  3. 3.

    Gerstetter C, Meyer-Ohlendorf N (2013) Investor-state dispute settlement under TTIP – a risk for environmental regulation? Ecological Institute, Berlin

  4. 4.

    Tienhaara K (2011) Regulatory chill and the threat of arbitration: a view from political science. In: Brown C, Miles K (eds) Evolution in investment treaty law and arbitration. Cambridge University Press, Cambridge, UK, pp 606–627

  5. 5.

    Hale G, Xu M (2016) FDI effects on the labor market of host countries, working paper series 2016-25. Federal Reserve Bank of San Francisco, revised 21 Sep 2016

  6. 6.

    Aisbett E, Karp L, McAusland C (2010) Police powers, regulatory takings and the efficient compensation of domestic and foreign investors. Econ Rec 86(274):367–383; Aisbett E, Karp L, McAusland C (2010) Compensation for indirect expropriation in international investment agreements: implications of national treatment and rights to invest. J Glob Dev 1(2):6

  7. 7.

    Felbermayr G (2018) Was wissen wir über den Effekt von Investitionsschutz- und –förderverträgen (IFV) auf ausländische Direktinvestitionen? ifo Schnelldienst 71(3):17–24

  8. 8.

    Bonnitcha J (2014) Substantive protection under investment treaties: a legal and economic analysis. Cambridge University Press, Cambridge

  9. 9.

    Download from Office of United States Trade Representative on July 15, 2020 https://ustr.gov/archive/assets/Trade_Sectors/Investment/Model_BIT/asset_upload_file847_6897.pdf

  10. 10.

    Employment and wages can be ignored if a flexible labor market is assumed and thus the workers would be employed at the same wage in any case. If the labor market is not flexible, the employment and wage effects from FDI need to be taken into account.

  11. 11.

    Konrad KA (2017) Large investors, regulatory taking and investor-state dispute settlement. Eur Econ Rev 98:341–353

  12. 12.

    Kohler W, Stähler F (2019) The economics of investor protection: ISDS versus national treatment. J Int Econ 121:103254

  13. 13.

    Janeba E (2019) Regulatory chill and the effect of investor state dispute settlement. Rev Int Econ 27(4):1172–1198

  14. 14.

    Horn G, Tangeras T (2019) Economics of international investment agreements, revised manuscript, October 4, 2019

  15. 15.

    Gaukrodger D, Gordon K (2012) Investor–state dispute settlement: a scoping paper for the investment policy community. OECD working papers on international investment, no. 2012/3). OECD, Paris

Author information

Authors and Affiliations

  1. Department of Economics, University of Mannheim, Mannheim, Germany

    Eckhard Janeba

Authors
  1. Eckhard Janeba
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Eckhard Janeba .

Editor information

Editors and Affiliations

  1. School of Law, City University of Hong Kong, Kowloon, Hong Kong

    Julien Chaisse

  2. School of Business and Law, University of Portsmouth, Portsmouth, UK

    Leïla Choukroune

  3. Institute of Malaysia and International Studies, National University of Malaysia, Bangi, Selangor, Malaysia

    Sufian Jusoh

Rights and permissions

Reprints and permissions

Copyright information

© 2020 Springer Nature Singapore Pte Ltd.

About this entry

Check for updates. Verify currency and authenticity via CrossMark

Cite this entry

Janeba, E. (2020). Investor State Dispute Settlement and Host Country Regulation: Insights from Economic Theory. In: Chaisse, J., Choukroune, L., Jusoh, S. (eds) Handbook of International Investment Law and Policy. Springer, Singapore. https://doi.org/10.1007/978-981-13-5744-2_119-1

Download citation

  • DOI: https://doi.org/10.1007/978-981-13-5744-2_119-1

  • Received:

  • Accepted:

  • Published:

  • Publisher Name: Springer, Singapore

  • Print ISBN: 978-981-13-5744-2

  • Online ISBN: 978-981-13-5744-2

  • eBook Packages: Springer Reference Law and CriminologyReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

Publish with us

Policies and ethics

Search

Navigation