'Bargaining in the Shadow of Awards' by Taylor St John, Malcolm Langford, Yuliya Chernykh, Øyvind Stiansen, Tarald Gulseth Berge and Sergio Puig in (2024) European Journal of International Law argues
International investment disputes occupy a curious place in the research programme on compliance. On the one hand, there is a widespread presumption that respondent states generally pay the compensation that they are ordered to pay in adverse awards because not doing so risks reputational consequences such as less foreign investment or further litigation using the system’s transnational enforcement architecture. On the other hand, international investment disputes frequently continue long after awards are handed down, there are visible instances of non-payment and there is little available evidence about if or how most disputes are actually resolved.
It has long been difficult to study what happens after an investor-state dispute settlement (ISDS) award is handed down. First, many post-award dynamics remain opaque or even confidential. Recent publications on compliance with ISDS awards have started to address these challenges by selecting tractable samples of the ISDS universe and collecting available evidence, including insights from counsel, claimants or state officials. Another reason why compliance with ISDS awards has been difficult to study is because much of what occurs falls outside traditional understandings of compliance processes. This is a conceptual issue. The concept of compliance focuses scholars’ attention narrowly, usually on payment, and thus misses the variety of strategies and events that occur in the process of resolving an international investment dispute.
Therefore, in this article, we introduce a broader term – resolution – and look beyond payment at a wider landscape of post-award dynamics. It may be difficult to understand how or why a dispute was resolved without looking at domestic regulatory changes, contract renegotiations, pressure exerted through multilateral lending or other dynamics that are not formally related to compliance. To bring these dynamics into view and enable more research on what happens after ISDS awards, we introduce a bargaining framework. The first step in our framework places awards in the context of longer-term bargaining. The second step articulates how bargaining is different when it occurs in the shadow of an award. We present three mechanisms through which awards can shape outcomes, before arguing that the third mechanism is most common.
There is much to be gained from broadening our expectations of how investment disputes may be resolved. Our framework enables researchers to see more of the dynamics occurring in practice and to appreciate the sophistication of actor strategies. The next section describes a variety of post-award dynamics, using both specific examples and aggregate data. The examples illustrate why we need a new framework to make sense of what is happening after ISDS awards. The third section develops the framework, a fourth section considers the role of enforcement architecture within a bargaining framework and a fifth section concludes.
