Tai-Heng Cheng


This Article's thesis is that, although arbitrators in investment treaty arbitration are not formally bound by precedent in the same manner as common-law judges, there is an informal, but powerful, system of precedent that constrains arbitrators to account for prior published awards and to stabilize international investment law. This informal system, however, imperfectly supports the relevant policy goals. It is additionally being tested by an increasing diversity of arbitrators, who are themselves facing pressures from investors and host States to meet conflicting demands. This Article proposes that the structure of investment treaty arbitration can absorb such stresses if: (a) the system of precedent is clarified and publicized to enable the global community to appraise awards and the arbitrators who render them; (b) investors and States exercise care in their selection of arbitrators; and (c) the community of international arbitrators exercises sufficient informal self-regulation and self-selection. This thesis is developed in three Parts. Part I discusses the concept and policies of precedent as it has developed in courts. Part II examines the extent to which these policies apply to investment treaty arbitration, and whether investment treaty arbitration has a system of precedent that promotes the relevant policy goals. Part III makes recommendations to further refine the system of precedent in response to emerging global trends, such as the economic growth of the People's Republic of China and an increasing diversity of arbitrators from both developed and developing States.