Soft Law in International Investment Law

Abstract

This paper aims to analyze the concept of soft laws and its significance in international law with special emphasis on its effect on international investment law. In this paper, the authors have relied upon the works of legal scholars and arbitral jurisprudence to understand their observations about the role of soft laws and apply such observations to the present times to analyze the strengths and drawbacks of soft law in the current international investment law context. The paper argues that although formally non-binding, yet in practice soft law instruments do influence the behavior of states and foreign investors either directly or indirectly. They also play a significant role in the formulation of international law by serving as precursors to the formulation of binding rules by states or by developing the rights and obligations of the parties mainly through interpretation of vague or open-ended investment treaty provisions by arbitral tribunals.