Coherence, Reflective Thinking, and Investment Arbitration

Abstract

Discussions regarding the methodological and epistemological aspects of adjudication have always been largely absent from the domain of investor-state dispute settlement (ISDS). Even during the currently ongoing ISDS reform debate, emphasis is placed only on reforming the procedural aspects of the regime. The lack of discussion on methodology and epistemology is critical, considering that there exist certain causes for concern — notably, the lack of coherence in arbitral awards — that are unlikely to be addressed via procedural reform alone. This paper makes a preliminary claim that coherence bears a close link to methodology in decision-making. The main claim is that achieving coherence in ISDS also depends upon it being regarded by the arbitrators themselves as a goal to actively strive towards in their reasoning process. This could have important implications for the way we understand matters such as, the character and format of legal reasoning, the nature of the adjudicator’s interpretative work, and the arguable character of law.

In making this claim the paper relies on two kinds of presuppositions. First, that, contrary to conventional wisdom, coherence is not synonymous to mere consistency (absence of contradictions) between awards but a broader concept. Coherence is an ideal, depending, among others, on agreement about frames, ends, and institutional roles. This further implies that achieving coherence is a goal that also bears on the process of judicial reasoning, as opposed to merely being a test for just the outcome of it (i.e., the award).

The second presupposition are the ideas of ‘reflective thinking’ and ‘reflective equilibrium’, as the methods for deliberating about frames, ends, institutional roles and methods, and for justifying conclusions reached on that basis. Both describe iterative processes of problem-setting, identifying possible solutions, and testing them for their congruence with one’s background theories. Transposed to adjudication, this implies that judicial reasoning involves a constant process of experimentation in practice, by way of posing hypotheses (framing), testing them, and assessing their consequences for their congruence with the decision-maker’s considered judgments regarding the regime’s ends and his or her institutional role in it.

Drawing on the above, the paper identifies three interconnected levels of judicial analysis that can have a bearing on the coherence of an outcome, namely: framing the issue(s) in dispute; reflection on the arbitrator’s institutional role and juridical consequences; reflection on the system’s ends. The paper showcases the practical relevance of each of these levels of analysis towards the goal of coherence by critically examining ISDS cases.