Investor-state arbitration (ISA) is a treaty-based form of arbitration by which a state agrees, in advance, to be the object of a claim in arbitration by a private investor who claims to have suffered financial loss as a result of violation of one or more standards set out in the treaty. Proponents of ISA argue that it is key to protecting the interests of foreign investors and foreign investments against the possible failure of the host country to respect treaty standards, and that this protection encourages the flow of foreign investment. Critics of ISA argue that it privileges foreign investment over a country’s right to protect its domestic industries, its people and the environment. Is ISA ever appropriate between developed democratic countries?
