Recueil des cours, Collected Courses, Tome 429


The mechanism of international investment arbitration developed within public international law, as one of its oldest and most central disciplines. In recent decades, much attention has been paid to the astonishing evolution of the field. By contrast, the relationship between international investment arbitration and private international law (including private law in general) has received relatively little consideration.
The modern international investment claims regime faces several proposals for reform, mainly directing their criticism toward the current practice of arbitration. However, a core issue remains unaddressed in most of these reform discussions, namely: the nature of the substantive law applicable to foreign investments. An adjudicator, whoever and however appointed, is limited in their ability to produce reliable precedent in the absence of an appropriate substantive regulatory framework.
This book takes no position regarding the question of the optimal dispute resolution mechanism or the avenues of reform for international investment claims, and instead focuses on the critical matter of the applicable substantive law, with its intricacies, complexities and nuances. Given that there is no realistic hope for the negotiation, much less the ratification, of a universal instrument to comprehensively deal with this matter, focus can and must shift to current evolution in relevant areas of law related to foreign investments.
Impressive developments in public and private international law, and in international arbitration, already exist today that, taken as a whole, are conducive to a more appropriate handling of the substantive law applicable to foreign investments. However, better interdisciplinary dialogue is needed. Hopefully, this book will make a case in favor of that necessity.

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José Antonio Moreno Rodríguez was born on 14 November 1966, in Asunción, Paraguay. He studied at the National University of Asunción (1990, Law Degree; 1995, Doctor in Law summa cum laude) and at Harvard University (1993, LLM, thesis supervised by Professor Emeritus Arthur Taylor von Mehren).
Dr Moreno Rodríguez is a Founding Partner of Altra Legal, and is President of the Centro de Estudios de Derecho, Economía y Política (CEDEP), co-organizing the International Academy of Comparative Law General Congress (2022) and the Hague Academy External Programme (2023).
He is a member of the Arbitration Court of the International Chamber of Commerce (ICC), the Permanent Court of Arbitration (PCA), the International Centre for Settlement of Investment Disputes (ICSID) Panel of Arbitrators and the Court of Arbitration for Sport (CAS) in the general and football lists. He acts regularly as an arbitrator before these bodies.
Dr Moreno Rodríguez is the President of the Inter-American Juridical Committee of the Organization of American States (OAS), Rapporteur of its Guide on the Law Applicable to International Commercial Contracts in the Americas (2019) and Rapporteur of its future Guide on the Applicable Law to Investment Arbitration.
He is also a member of the UNIDROIT Governing Council and Chair of the UNIDROIT Working Group on the topic of Agricultural Land Investment Contracts. Dr Moreno Rodríguez was a delegate at the Thirty-Ninth Session of the United Nations Commission on International Trade Law (UNCITRAL, 2006), at which the amendments to the Model Law on International Commercial Arbitration were approved. He was also a delegate before the OAS for the VII Inter-American Specialized Conference on Private International Law (CIDIP VII), the expert of the Working Group on the Hague Principles on Choice of Law in International Commercial Contracts (2010-2015), acted as a representative before the Special Commission of the Hague Conference on Private International Law, where he led the drafting of the instrument on the applicable law to international contracts, and authored and introduced to the legislature Paraguay’s pioneering Law 5395/2015
(“Regarding the Applicable Law to International Contracts”).
Dr Moreno Rodríguez has been a Professor at Heidelberg University in the International Law, Investments and Trade LL.M program and a Visiting Professor at Paris Pantheón-Assas University, among other institutions. He continues to teach undergraduate and graduate courses in Paraguay and lectures at numerous conferences on dispute resolution and international commercial and financial law.
Dr Moreno Rodríguez is the former President and Secretary-General of the American Association of Private International Law (ASADIP), former President of the Instituto Paraguayo de Derecho Bancario (IPDBS) and the former ad honorem Legal Advisor to the Ministry of Foreign Affairs of Paraguay in matters of public international law related to the National Boundary Commission. He is the recipient of the Rosalba Medal, awarded by the Secretariat of the Permanent Tribunal of Revision of the MERCOSUR, for his work on international law.
Chapter I. Introduction
A. Preliminary remarks
B. Scope of this book
C. Structure of this book
Chapter II. Fundamental notions on international investment protection .
A. An area in dramatic flux
B. The protection of international investments
C. Definition of international investments
D. International investment contracts and other foreign investments generating State responsibility
Chapter III. Evolution of foreign investments under public international
law until the nineteenth century
A. Introduction
B. Medieval lex mercatoria and arbitration
C. Medieval arbitration in matters among sovereigns
D. The emergence of the theoretical foundations for the protection of aliens
E. Friendship, Commerce and Navigation Treaties
F. International mixed claims commissions
G. Gunboat diplomacy
H. Diplomatic protection in the nineteenth century
Chapter IV. Customary international law and foreign investments after
the nineteenth century
A. Scenario
B. Creation of the first world arbitration court
C. The Drago Doctrine, the Porter Convention and the equality of States
D. The creation and consolidation of the world’s court of justice
E. Sources of law in the Court’s statute
F. Customary international law in the ICJ Statute
G. Customary international law of foreign investments at the dawn of
the twentieth century
H. Diplomatic protection from the twentieth century onward
I. Mixed claims commissions in the twentieth century
J. Multilateral efforts for a global instrument on State responsibility
K. UN initiatives on international investments
L. Efforts for a multilateral instrument in the 1990s
M. Draft Articles on State Responsibility
N. Evaluation and recent developments in customary international law.
Chapter V. Treaties and foreign investments
A. Developments in the twentieth century
B. Treaties
C. Treaties and international investments
D. Investment treaty regime
E. Bilateral investment treaties
F. Multilateral and regional investment treaties
G. Recent developments in relation to investment treaties
Chapter VI. General principles and public international law
A. Legal theory considerations
B. Some preliminary remarks on the term “principles” and the law
C. Principles and customary international law
D. Principles and policies
E. Categories of general principles in public international law
F. Functions of principles in public international law
G. Terminology
H. General principles and Article 38 of the ICJ Statute
I. Article 38 of the ICJ Statute and non liquet
J. List of general principles of law
K. Proof of general principles
Chapter VII. General principles of public international law and compa- rative law
A. General principles of private law, public law or public international
B. Unanimity or principles recognized by the majority of judicial systems?
Chapter VIII. General principles and international investment claims
A. Principles in old international investment claims
B. Internationalization in the early natural resources’ cases through the
use of general principles
C. Recent evolution of general principles within investment arbitration Chapter IX. Other sources of public international law and investment law
A. Plurality of legal sources in foreign investments
B. National legislation
C. Teachings of the most highly qualified publicists
D. The role of precedents
E. Other sources? A terminological conundrum
Chapter X. Evolution and recent changes within private international law.
A. Introduction
B. Brief historical note
C. The first private international law treaties
D. Legislation
E. Modern international instruments
F. Private international law in investment claims related to contracts
G. Capacity
H. Torts and other international conflict of laws instruments
I. The problems with “orthodox” private international law
J. Recent developments
Chapter XI. Toward a uniform private international law
A. Uniform law for international contracts
B. Tools to achieve a uniform law
C. Relevant uniform law instruments
D. Uniform interpretation
E. Non-State law and uniform law
1. The applicability of non-State law in other private international law instruments
Chapter XII. The UNIDROIT Principles and investment arbitration
A. Limited role of the UPICC in investment arbitration?
B. UPICC and public international law
C. UPICC and private international law
D. UPICC as an interpretive aid
E. UPICC as corroboration of national law
F. The supplementary or corrective function of the UPICC
G. UPICC as invoked by the parties
H. Aspects of investment contracts in which the UPICC may be useful
I. The UPICC and ex aequo et bono arbitrations
J. UPICC and the COVID-19 crisis
K. Evaluation and future prospects of the UPICC
Chapter XIII. Public and private international law relationships in investment law
A. Private and public law notions
B. The distinction between public and private international law
C. The influence of private law in the development of public inter- national law
D. The evolving notion of public international law itself
E. Public international law influences in private international law
F. A blurring distinction
G. Public and private law concepts in foreign investments
Chapter XIV. Particularities of foreign investment contracts and the public private relationship
A. A particular legal regime for State contracts
B. Differences between international investment contracts and domestic
or commercial contracts
C. Absence of a public international law corpus applicable to inter- national contracts
D. The “internationalization” of contractual obligations?
E. The difference between contract and treaty claims
F. Law applicable to contract claims
G. Breaches of contract violating public international law
H. Additional factor for considering breach of contract a breach of international law
I. Non-contractual investment claims
J. Public international law governs the violation of international obli- gations
K. A private law approach to investment contracts?
Chapter XV. Investment arbitration tribunals
A. Foreign investment disputes
B. Arbitration
C. The ICSID revolution
D. The UNCITRAL Rules and international investment claims
E. Permanent Court of Arbitration
F. Iran-United States Claims Tribunal
G. Investment arbitration under other institutional rules
H. International investment ad hoc arbitrations
I. Internationalized and territorialized tribunals distinction
J. Jurisdictional overlaps
Chapter XVI. Arbitration and the applicable law

A. Arbitration as a sui generis alternative to State or international courts
B. Arbitrators’ broad discretion
C. A neutral forum for international matters
D. Private international law and arbitration
E. “Orthodox” conflict of laws rules in the nascent stages of the inter- national arbitral system
F. Current trends of conflict of laws in arbitration
G. Peculiarities of international investment arbitration
H. Choice of law in investment arbitration
I. Applicable substantive law in the ICSID Convention
J. Conflict of laws before the Iran-United States Claims Tribunal
K. Applicable law in investment arbitrations under the UNCITRAL Arbitration Law and Rules
L. Determining the applicable law under different treaties
Chapter XVII. Choice of law in investment claims
A. Party autonomy in private international law
B. Evolution
C. Party autonomy in private international law instruments
D. Party autonomy in arbitration
E. Party autonomy in arbitral instruments
F. Party autonomy in arbitration laws and rules
G. Party autonomy and the legitimate expectations of the parties
H. Party autonomy in investment arbitration
I. Choice of law mechanisms in investment arbitration
J. Choice of State or non-State law in investment arbitration
K. Formalities for the choice of law
L. Dépeçage
M. Reasonable connection of the law chosen
N. Renvoi
O. Supervening choice of law
P. Severability
Q. Express and tacit choice of law in international contracts
R. Tacit choice in commercial arbitration
S. Express and tacit choice in investment arbitration
T. Stabilization clause
U. Pactum de lege utenda
Chapter XVIII. Absence of choice of law in investment law
A. Absence of choice of substantive law in international commercial transactions
B. Absence of choice in international commercial arbitration conventions
C. Absence of choice in the Arbitration Model Law
D. Approaches for absence of choice in UNCITRAL arbitration
E. Voie directe
F. The absence of choice in international investment law
G. Conflict of laws mechanisms in investment arbitration
Chapter XIX. The applicable substantive law in investment arbitration
ex aequo et bono
A. Equity in the law
B. Equity in arbitration
C. Express agreement for ex aequo et bono arbitration
D. Conflict of laws in ex aequo et bono arbitrations
E. Mandatory rules and ex aequo et bono arbitration
F. Observance of the terms of the contract in ex aequo et bono arbi- tration?
G. Is there a duty to motivate or decide equitably in ex aequo et bono
H. Equity in international law
I. Equity in investment arbitration
Chapter XX. The corrective and supplemental role of international law
A. A “broader brush” in international transactions
B. Corrective formulas in private international law instruments
C. Broader brush in international arbitration
D. The “brooding omnipresence” of public international law in invest-
ment arbitration
E. Supplemental application of international law or national law
F. Corrective application of international law or national law
G. Direct application of public international law
H. Combined application of national and international law
I. Can minimum public international law standards be waived?
J. Controversy regarding the ICSID Convention absence of choice provision
K. Uniform law for supplementary and corrective purposes?
Chapter XXI. Public policy and investment arbitration
A. Introduction
B. Notion of public policy
C. Public policy and private international law
D. Public policy and public international law
E. Mandatory rules
F. Public policy and arbitration
G. Public policy in investment arbitration
Chapter XXII. Concluding remarks
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