Once a symbol of global cooperation on international investment protection, the international investment law system has become a glutton for criticism culminating in widespread terminations of investment treaties and withdrawals from many of its marquee institutions and agreements. Investor-state disputes present a highly lucrative business in which hundreds of cases have been filed by law firms on behalf of multinational companies against States. The payouts made by respondent States in terms of compensation are sometimes in billions and legal fees in the tens of millions of dollars.
Given that investment arbitrations are normally handled by a team of lawyers and the arbitration process takes more than two years to complete, the legal bill can be staggering. The average cost of hiring a panel of arbitrators stands at 400,000 US dollars and based on ICSID’s schedule of fees, arbitrators are entitled to a fee of 3000 US dollars per day of meetings or other work performed in connection with the proceedings.
Such high rewards have given lawyers the incentive to find means of maximizing business either by keeping the business community, particularly in transitional governments such as Libya, Syria, Zimbabwe and Egypt, constantly informed about the possibilities of litigation, regardless of the ethical concerns. The practice of informing potential clients and pursuing disputes despite the ethical challenges suggests a new breed of international ‘ambulance chasers’. This was a term coined in the late nineteenth century to describe lawyers that profited from the injured by vigorously pursuing any form accident in order to get clients. Investment lawyers have even taken advantage of multinational corporations multiple domiciles by suing the same country under multiple international agreements for the same thing.
This manifested in CME v. Czech Republic and Lauder v. Czech Republic, parallel cases decided by two different arbitral tribunals in 2001 in what has been described as “the ultimate fiasco in investment arbitration.” Within days of each other, the Czech Republic was ordered by an ICSID tribunal to pay 270 million US dollars plus interest while the UCITRAL case dismissed the case on merit. Thus international investment lawyers are fuelling an investor-state dispute boom, with potential for social, environmental and budgetary devastation to sovereign States and their people.