Research on the Issue of Arbitral Precedent in International Investment Arbitration
International investment arbitration, while not formally bound by ‘stare decisis’, exhibits significant reliance on prior arbitral awards in practice. This article examines the ‘de facto’precedent effect of such awards, their legal implications, and resulting systemic challenges. Despite lacking mandatory authority, prior awards acquire "persuasive authority" through tribunals' pursuit of consistency, disputing parties' strategic citations, and legitimacy concerns.
This practice, however, generates critical issues: (1) Fragmentation and inconsistency in interpreting core standards (e.g., Fair and Equitable Treatment, indirect expropriation) due to the absence of hierarchy; (2) Legitimacy challenges regarding tribunals' law-making role and respect for state intent; (3) Risks of path dependency amplifying early or flawed rulings; and (4) Potential erosion of case-specific analysis.
Reform pathways are evaluated to balance precedent's value and risks: enhancing state control via precise treaty drafting and joint interpretations; establishing soft precedent mechanisms (e.g., non-binding digests); exploring appellate mechanisms (as in new-generation treaties); and promoting rigorous arbitral practice requiring clear reasoning when engaging precedents.
The study concludes that arbitral precedent remains indispensable yet contested, fostering efficiency and coherence while exacerbating fragmentation and legitimacy concerns. Sustainable evolution requires multilateral reforms, active state engagement, and disciplined arbitral practice to achieve greater transparency and consistency in investment law.