Contractual Renegotiations and International Investment Arbitration

A Relational Contract Theory Interpretation of Investment Treaties


In Contractual Renegotiations and International Investment Arbitration, Aikaterini Florou explores the sensitive issues of renegotiating state contracts and the relationship between those contracts and the overarching international investment treaties. By introducing novel insights from economics, the author deconstructs the contract-treaty interaction, demonstrating that it is not only treaties that impact the underlying contracts, but also that those contracts have an effect on the way the open-textured treaty standards are interpreted. The originality of the argument is combined with an innovative interpretative methodology based on relational contract theory and transaction cost economics. Departing from the traditional emphasis of international lawyers on the text of investment contracts, Florou shows instead that such contracts are first and foremost “economic animals” and the theory of obsolescing bargaining does not paint a full picture of the contract-treaty interaction.

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Aikaterini Florou obtained her PhD from Sciences Po Law School in 2017. She is currently a visiting scholar and visiting lecturer at Bologna Law School. Previously, she worked for several years as a legal and policy officer with the European Commission in the fields of international energy and investment law.
Contractual Renegotiations and International Investment Arbitration is a strong addition to the burgeoning literature on international law and economics. The book offers a fresh perspective in the analysis of international investment law that was long overdue! The key innovation the book offers is a novel analytical framework that marries relational contract theory with transaction cost economics. Dr Florou’s work shows a deep understanding of the economics of investor-state contracts under the lens of relational contract theory. It then combines this analysis with the examination of the role of law in addressing international investor-state economic disputes broadening tour reading of the Treaties beyond the positivist approach. The combined analysis opens up new interpretation possibilities of the Treaties which could be useful in a number of investor-state disputes. Academics, investment arbitration practitioners and post-graduate students with an interest in International arbitration will find this book an enlightening read!
- Professor Emilios Avgouleas (

The book is a timely and innovative addition to the scholarship on international investment law and an interesting perspective from which to observe the changing approach to investment protection. The interactions with concession agreements in investment protection are increasingly important as an element of energy law. This subject matter is well-chosen for its ability to reveal the instability in the system; there are significant changes as a result of laws on renewable energy and changing environmental regulations. However, it also represents an essential element of the public interest element to foreign investments.
Emily Sipiorski, Tilburg School of Law, Department of Public Law and Governance, published in "Transnational Dispute Management" (2021)
Introduction – The Good, the Bad, and the Ugly?  1 Renegotiating in the Shadow of Investment Treaties: the Inherent Dilemma between Commitment and Flexibility
 2 Defining Public-Private Partnerships in Infrastructure: a Complex Balance between Conflicting Interests
 3 The Need for the Renegotiation and Adaptation of Concession Contracts
 4 Contractual Renegotiations and the Fair and Equitable Treatment Standard
 4.1 Presentation of the Research Question
 4.2 Overview of the Literature and Novelty of the Argument
 4.3 Analytical Framework
 4.4 Methodology

1 Concession Contracts as Relational Contracts  1 Why the Nature of Concession Contracts Matters
 2 The Three-Way Classification of Contracts
 2.1 Classification of Contracts and Legal Realism
 2.1.1 Classical Contracts
 2.1.2 Neoclassical Contracts
 2.1.3 Relational Contracts
 3 The Characteristics and the Governance of Relational Contracts
 3.1 Characteristics
 3.2 Governance and Judicial Strategies
 3.2.1 The Role of the Law in the Governance of Relational Contracts
 3.2.2 The Role of the Courts in the Governance of Relational Contracts
 4 Concession Contracts as Relational Contracts
 4.1 Relational Contract as the New Public Contracting
 4.2 The Tension between the Stability and the Adaptability of Concession Contracts
 4.3 Empirical Evidence of the Relational Character of Concession Contracts
 5 Concluding Remarks: the Need for an International Law Response to Renegotiation

2 The Relationship between Concession Contracts and Investment Treaties  1 The Impact of International Investment Treaties on Investment Contracts
 2 The Relationship between Contract Claims and Treaty Claims
 2.1 The Blurred Distinction and the VivendiI Case
 2.2 Umbrella Clauses
 2.3 The Different Interpretations of the Fair and Equitable Treatment Standard and the Doctrine of Legitimate Expectations
 3 The Use of the UNIDROIT Principles in International Dispute Resolution
 3.1 The Application of the UNIDROIT Principles in International Arbitration
 3.2 The Relevance of the UNIDROIT Principles in Investor-State Dispute Settlement
 3.2.1 The UNIDROIT Principles as General Principles of International Law
 3.2.2 The Application of the UNIDROIT Principles in Investment-Treaty Arbitration
 3.2.3 Contractual Renegotiations, Treaty Disputes, and the UNIDROIT Principles on Hardship
 3.2.4 The Case Law on Hardship in Investment-Treaty Arbitrations
 4 Concluding Remarks

3 Case Law Review  1 The Argentine Cases
 1.1 EDF International S.A., Saur International S.A. and Leon Participaciones Argentinas S.A. v. Argentina
 1.2 Enron Corporation Ponderosa L.P. v. Argentina
 1.3 LG&E v. Argentina
 1.4 CMS v. Argentina
 1.5 Sempra Energy International v. Argentina
 1.6 Siemens A.G. v. Argentina
 1.7 BG Group P.L.C. v. Argentina
 1.8 Total S.A. v. Argentina
 1.9 National Grid P.L.C. v. Argentina
 1.10 Hochtief AG v. Argentina
 1.11 Suez, Sociedad General de Aguas de Barcelona S.A., and Vivendi Universal S.A. v. Argentina
 1.12 El Paso Energy International Company v. Argentina
 1.13 Azurix Corp. v. Argentina
 2 Other Renegotiation Cases
 2.1 Biwater Gauff Ltd. v. Tanzania
 2.2 Fraport AG Frankfurt Airport Services Worldwide v. the Philippines

Appendix: Categorization of ISDS Cases along the Contract-Theory Interpretative Spectrum
BibliographyCase Law IndexSubject Index
Arbitrators and all other practitioners of international investment arbitration, as well as academics in the fields of international investment law and economic contract theory.
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