Article 32 of the VCLT and Precedent in Investor-State Arbitration: A Sliding Scale Approach to Interpretation

While international investment law lacks any formal system of precedent or stare decisis, in practice the use of prior decisions by arbitral tribunals is extensive. This chapter considers the use of prior awards in investment arbitration through the lens of treaty interpretation, focusing in particular on Article 32 of the Vienna Convention on the Law of Treaties (VCLT), to explore the reasons behind such reliance in the absence of any structural hierarchical framework. The chapter adapts a methodology devised in an earlier article by the same authors to analyse past investment awards with a view to identifying the rationale behind this practice. In the context of Article 32, the chapter argues that past decisions can be a form of ‘supplementary means’ of interpretation, and proposes a sliding scale approach to treaty interpretation whereby the citation or otherwise of past decisions varies according to their weight or persuasiveness. Under this approach, the chapter contends that there is scope to develop a more principled and predictable use of prior decisions by arbitral tribunals. The chapter centres its discussion around the interpretation of investment treaties in investor-state arbitration, but also draws broader conclusions and offers comments on the likelihood and appropriateness of global systems of precedent appearing in international adjudication more widely.