Legitimacy of Investment Arbitration

This chapter does not provide an argument for or against the legitimacy of investment arbitration, but analyzes the discourse on legitimacy from a conceptual standpoint. Rather than offering an abstract analysis of different theoretical conceptions or concepts of legitimacy, it focuses on the concrete aspects addressed by different participants in the debate under the heading of legitimacy and the differences in underlying assumptions. It explains that because of similarities between investment arbitration and mechanisms of public law and governance, the legitimacy critique of investment arbitration in essence results from the observation of a mismatch between the private-law-inspired rationale of investment arbitration and the demands of principles of constitutional law that are generally used to assess the legitimacy of governance mechanisms. The chapter then turns to how states and policy-makers, arbitral tribunals, and scholarship can and in parts do react to the legitimacy critique of investment arbitration and how they aim at reestablishing legitimacy.