Abstract:

 More than 3000 international investment agreements (IIAs) provide foreign investors with substantive protections in host states and access to binding investor-state dispute settlement (ISDS). In recent years, states increasingly have sought to change their treaty commitments through the practices of renegotiation and termination, so far affecting about 300 IIAs. The received wisdom is that this development reflects a “backlash” against the regime and an attempt by governments to reclaim sovereignty, consistent with broader anti-globalization trends. Using new data on the degree to which state regulatory space (SRS) is restricted by IIA provisions, this article provides the first systematic investigation into the effect of ISDS experiences on state decisions to adjust their treaties. The empirical analysis indicates that, indeed, exposure to investment claims leads either to the renegotiation of IIAs in the direction of greater SRS or to their termination. This effect varies, however, with the nature of involvement in ISDS and with respect to different treaty provisions.