Dr. Michael de Boeck:

I am not sure if anyone knows better on the answer to that question. The origin of international investment law is a little bit shrouded in alternative argumentations. The mainstream argumentation that is being given for the rise of international investment law is obviously the premise that offering investor-state dispute resolution clauses, and so dispute resolution independent from the national courts of the host member state where the investment is made, would offer a sense of security for an investor to go ahead and go abroad to regions where, at the time, there was not a strongly developed justice system in place. In that sense, offering these investor dispute resolution provisions also incentivised the flow of direct investment capital into a region that could really use that capital to start building its economy and building its know-how. The effectiveness of that premise is disputed and there are a lot of studies out there going both ways. There are a lot of studies that say there is absolutely no link between offering ISDS and increased foreign direct investment, and vice versa. It is a very debated premise.

An alternative argumentation that has been made by Lauge Poulsen, that I thought very good, is that it is a form of bounded rationality in the sense that everyone was doing this.

The World Bank started advancing these collateral investment treaties. They were perceived as being good for business, good for visibility and everyone hopped on the bandwagon, especially all of the least developed nations, to show themselves as liberalising their economy and welcoming foreign investment, etc. That is the origin. I do not know whether that is a sinister or deliberate attempt to resume colonisation in an economic way. I am not really a party to that interpretation of history because I am naive I still believe that people are not inherently sinister. There is, however, obviously some rationale for saying if we are dealing with a region where there is a lack of established justice, there are benefits to appointing a third party to make a determination. The question is whether that still applies to the European Union. I think the answer is quite obviously that it does not, but of course we are not without fault. We always have to be a little bit careful about that. Investment protection within the European Union is not yet really comprehensive and there are areas where we can improve.