Substantive Law In Investment Treaty Arbitration

The difficult coexistence of municipal law and international law is nowhere more evident than in the context of investment treaty disputes. Investment treaty arbitral tribunals commonly address, as a matter of international law, an alleged breach of a contract (or other legal obligation concerning an investment) that is often regulated by municipal law. However, there is no selfcontained legal system that provides substantive rules of direct applicability for these tribunals. In practice, approaches range from complete exclusion of municipal law to complete reliance on municipal law. While the former has no defensible foundation in international law, an absolute renvoi to municipal law runs afoul of the principle that international law governs the characterization of an internationally wrongful act.