State-to-State Dispute Settlements in International Investment Agreements

In operating international investment agreements (IIAs), the old bi-polar framework, where an investor deals with the host state with the support of his home state, has been replaced gradually by a triangle relationship. A home state does not necessarily have a community of interests with investors. In this context, state-to-state dispute settlements (SSDS) should be a subject for discussion along with investor-state dispute settlements (ISDS). When a home state claims damages sustained by individual investors, such claim would be nothing else than an exercise of diplomatic protection. Some confusion, however, has been observed in practice. We can find no state-to-state case where a state could claim its own interests as a capital-exporting state to implement IIAs. It probably would be because their interpretation of IIAs could be invoked against them in possible future arbitrations. Host states might use SSDS procedures more frequently. Through such steps, an interpretation of IIAs could be agreed upon between the state parties. In such a way, SSDS has functions that are distinct from those of ISDS, or the former could be mobilized to restrain the latter.