Towards Arbitral Path Coherence & Judicial Borrowing: Persuasive Precedent in Investment Arbitration
Title: Towards Arbitral Path Coherence & Judicial Borrowing: Persuasive Precedent in Investment Arbitration
Author: VADI, Valentina
Citation: Transnational Dispute Management, 2008, 5, 3
Along with the unprecedented bloom of investment arbitration, arbitrators and scholars have increasingly faced the challenge of systematizing the growing body of case law. The difficult task is complicated by the fact that there is no single investment agreement to apply, but a panoply of bilateral and regional instruments, with sophisticated clauses and technical specificities. Lawyers recur to a different methods to analyse and systematize the congeries of decisions. Traditionally in common law legal systems, a precedent or authority is a decision establishing a principle or a rule that courts will follow when deciding subsequent cases with analogues issues. Civil lawyers theoretically have a different approach as previous case law is not formally considered as a source of law. However, as a matter of fact civil lawyers do look and study previous jurisprudence. As every civil lawyer well knows, judges show reverential consideration for national supreme courts decisions. Cases are relevant and have to be cited in the course of proceedings. This paper analyses the question whether the doctrine of binding precedent can be transplanted to investment arbitration. A traditional feature of arbitration is that tribunals are not bound by precedents. Thus, similar issues may be treated in an entirely different way with the consequent potential to generate conflicting rulings, and contribute to considerable uncertainty for investors and host states alike. As arbitral panels have not a permanent nature, the issue of consistency becomes even more problematic. This paper argues that the doctrine of binding precedent should not be viewed as a panacea or an end in itself. On the contrary, it should be considered as a tool for creating consistency and predictability. Thus, this paper will argue that, due to the intrinsic characteristics of investment arbitration, the doctrine of persuasive precedent is a more attuned tool to achieve consistency and justice in concrete cases. This paper argues that precedents should not be binding, but considered as persuasive. The difference between the two concepts is subtle, but important. To clarify the idea a few metaphors may help. As a philosopher once put it, 'law is like art in that typically it is made to be interpreted.' a binding precedent is like copying a statue. A persuasive precedent is very much like using the master's tools to create something new. Indeed, the most recent awards seem to validate the theory of persuasive precedent: on the one hand, arbitrators do analyze previous cases, on the other, they reaffirm their independence and lack of institutional subordination. This approach has to be welcomed as it can provide flexibility and high quality awards. The paper will thus focus on judicial reasoning and legal methodology with a look at the recent case law
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