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Beyond Credible Commitments: (Investment) Treaties as Focal Points

Poulsen, L; (2019) Beyond Credible Commitments: (Investment) Treaties as Focal Points. International Studies Quarterly , Article sqz079. 10.1093/isq/sqz079. (In press).

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Abstract

Why do states enter into treaties? In literature on the investment treaty regime, the dominant answer is that investment treaties provide credible commitments to foreign investors. This narrative provides valuable insights but cannot account for the historical origins of the treaties, where drafters explicitly decided to exclude “strong” dispute settlement provisions. Unlike modern-day investment treaties, the early investment treaty regime did not allow investors to file claims against host states through investor-state dispute settlement (ISDS). Using historical evidence from three major capital-exporting states—the United States, the United Kingdom, and Germany—the article shows that this was a conscious design choice. Rather than providing formal dispute settlement, sanctions, and penalties to make credible commitments, Western states intended investment treaties to serve as salient focal points for the informal resolution of investment disputes. The substantive obligations were expected to fulfil their coordinating role without the shadow of judicialized dispute settlement. The argument is not just of historical interest but has broader implications for literature on international economic law dominated by the credible commitment narrative, as well as the current political backlash against ISDS.

Type: Article
Title: Beyond Credible Commitments: (Investment) Treaties as Focal Points
DOI: 10.1093/isq/sqz079
Publisher version: https://doi.org/10.1093/isq/sqz079
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Political Science
URI: https://discovery.ucl.ac.uk/id/eprint/10081302
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