Governance of the global economy has been at the centre of extensive and often polarised debates. International arbitrations to settle investment disputes between businesses and states – a system commonly referred to as ‘investor-state arbitration’ – have come to crystallise wider concerns about the balance of public, corporate and third-party interests in economic governance (IISD 2004, Peterson 2009, Johnson and Bernasconi-Osterwalder 2013, Robinson 2015, Public Citizen 2015 and BHRRC et al. 2016).

One such arbitration – Pac Rim Cayman LLC v. Republic of El Salvador¹ – recently attracted extensive public and media attention (Westerveld 2015, Taylor and Paul 2016, Provost...

This section discusses the diverse configurations of community perspectives that surfaced in the review of investor-state arbitrations. It also explores the channels through which these perspectives were advanced in the arbitral proceedings.

Historically, the investor-state relationship was at the centre of initiatives to establish international arrangements for settling investment disputes (for example, Shihata 1986). That relationship is very important in investment processes.

The state is responsible for aligning investments with the country’s best interest – for example, by setting and enforcing tax or environmental requirements. At the same time, the investor may expect the state to uphold the rule of...

This section discusses the ways in which arbitral tribunals considered community perspectives in the cases reviewed. It identifies four interlinked problems that affect the arbitration process, and discusses them in the following sections:

1. Community perspectives tend to receive little attention in arbitral awards.

2. This is partly because the arrangements for communities to make submissions to tribunals do not ensure effective participation.

3. Arguably, it also reflects a gulf between the tribunals’ legalistic approach and the complex sociopolitical reality of community relations.

4. This situation can create problems where tensions arise between protecting investments and enabling communities to have their demands met.

In...

Commercial investments can have far-reaching implications for the rights and interests of affected communities. The 20 cases reviewed in this report highlight how community rights and interests can be at stake in investor-state arbitration.

In several of the arbitrations reviewed, community action to articulate perspectives, advance interests or protect rights appears to have prompted public authorities to take measures, which in turn triggered the investor’s claim. In other cases, the investor claimed that the authorities failed to protect their investment in the face of local mobilisation, or to assume liability for environmental litigation the communities initiated.

This situation raises questions...