Partisan Governments and International Economic Dispute Settlements

• In Event: FDI and Domestic Politics

Abstract

Why do some states settle investor-state dispute settlement (ISDS) claims more frequently than others? This study examines how government partisanship influences the settlement of different types of ISDS claims, arising from either major or minor property rights infringements. Specifically, I argue that left-leaning governments, which are closely aligned with labor interests generally favoring foreign investment, are more inclined to settle ISDS claims arising from serious infringements on property rights than right-leaning governments. Conversely, the preference of left-leaning partisans for state regulatory autonomy leads such governments to be less likely to settle claims emerging from minor breaches, such as policy regulations affecting foreign investment values, compared to right-leaning governments. Utilizing original hand-coded data on the level of international investment agreement (IIA) breaches, I find that left-leaning governments are more likely to settle ISDS claims arising from major IIA breaches, while being less likely to conclude ISDS claims associated with minor IIA breaches by settlement.

Author

• Seung-Uk Huh, University of Illinois Urbana-Champaign