What Are We Talking About When We Talk About Deference in Investment Treaty Arbitration?

Abstract

Abstract In Philip Morris v Uruguay, the tribunal split on the standard of review applied to determine a fair and equitable treatment claim. Despite heavy contestation, arbitrators have not identified their root of divergence, missing the opportunity to elaborate on how to accord an appropriate level of deference to sensitive public interest regulations. More than an isolated instance, this problem reflects the conceptual and analytical ambiguities in standards of review analysis in investment arbitral jurisprudence in general. In response, this article identifies and distinguishes three different notions of deference in investment arbitration, in efforts to help clarify standards of review analysis and bridge the divergence in the current debate. This typology of deference can provide analytical guidance for tribunals to determine the appropriate standards of review with respect to complex legal and factual determinations. To enhance analytical clarity, investment tribunals could disaggregate the seemingly unitary, all-encompassing notion of standards of review into various concrete inquiries, instead focused on whether, and to what extent, specific legal or factual determinations at issue may warrant a measure of deference. In this way, arbitrators could improve their reasoning quality, analytical transparency as well as jurisprudential consistency, which are instructive to achieving a more coherent and principled approach to standards of review analysis in investment treaty arbitration.