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In substantive terms, the fact that arbitral awards contribute to public international law and in particular to standards that are binding on states and that impact their ability to regulate requires that the law thus developed be fair and just both to the parties before the tribunal and to the broader constituencies that may be impacted by the decision. Effects on National Law: The effect of investment arbitration is not limited to international law; it affects national law as well.While restrictive measures have become more common in recent years,“[t]he overall policy trend towards continuous liberalization and promotion of investment” continues.In 2011, close to 80 percent of foreign investment policy measures adopted by states were favorable of foreign investment.The system of international treaties and international dispute settlement creates “a powerful incentive for the host state to live by the rules of an investment-friendly climate.”Any government interested in attracting foreign investment must recognize these principles. The effects are not only felt by foreign investors, however. Once a government agrees to certain minimum standards of treatment by signing a BIT or a FTA, nationals start to expect the same, and in the words of Jose Alvarez, “it may be too politically costly to explain to local constituencies why only foreigners are entitled to property rights, the rule of law or politically neutral dispute settlement.”IV. State-to-state arbitration There has also been a resurgence in state-to-state arbitration. While the Permanent Court of Arbitration (“PCA”) has been in existence for more than a century, it is only recently that it has been fully utilized. The case load has expanded from a single case in the late 1990s to a current docket of 65 pending cases, which includes state-to-state arbitrations as well as arbitrations between states and non-state actors.These cases address a variety of vital issues for states, including boundary disputes and disputes concerning sovereignty over
maritime resources, water rights, and the environment.Perhaps the most notable recent example of the PCA’s potential to promote the rule of law is the Abyei Arbitration of 2009, which was an intra-state dispute between the Government of Sudan and the Sudan People’s Liberation Movement/Army. The PCA was actually able to play an effective role in resolving a serious armed conflict within the boundaries of a single State.This is an impressive accomplishment. I hope that in the future state to state arbitration can play a greater role in settling controversies between states. The extent to which state-to-state arbitration can complement the BIT/ICSID arbitration system by providing a forum for resolving disputes concerning the scope of investment protections remains to be seen, however. Despite the fact that BITs generally include interstate dispute settlement clauses, these “have so far been largely ignored.”A couple of