Citizen Shareholders: The State as a Fiduciary in International Investment Law

International investment law provides stability for investors, helps capital flow across the globe, and can be a critical tool for sustainable development. This regime, however, has become increasingly controversial, in part due to its inability to reconcile investor obligations with competing human rights obligations. International investment treaties provide substantive guarantees to investors, including submission to binding arbitration in the event of breach. When found in breach of one of these guarantees, international investment arbitral tribunal awards are often in the hundreds of millions of dollars, potentially creating “regulatory chill” for states that may otherwise take affirmative action to protect human rights out of concern that regulation may run afoul of their treaties’ international investment provisions.

Some legal scholars have posited a fiduciary theory of statehood, whereby a state owes a fiduciary duty to its people, much like that in domestic corporate law. This Note proposes looking to the fiduciary theory of statehood for a path forward. It then advocates for its implementation through three approaches: (1) the contractual approach (treaty drafting), (2) the judicial approach (interpretative methods for existing treaties), and (3) the atmospheric approach (norm diffusion among stakeholders). The fiduciary theory not only provides a principled method to prioritize human rights but also enhances the legitimacy of the international investment legal regime.

This framework offers a timely, pragmatic solution as the international community actively reconsiders the balance between investor protection and state sovereignty.