Interview with Nicolás M. Perrone: Investment Treaties and the Legal Imagination – Part I: How we imagine international investment law

International investment law has been facing an increasing amount of negative publicity of late. Its detractors maintain that investment treaties constrain state regulatory space, affecting human rights and environmental measures, and exclude local communities from participating in decisions affecting them. On the other hand, proponents of investment treaties claim that they are necessary to facilitate development and that investment arbitration strikes a fair balance between investor rights and the public interest. In his monograph Investment Treaties and the Legal Imagination, recently published by Oxford University Press, Dr Nicolás Perrone contributes a historical perspective to this debate. Under the international investment law regime, foreign investors enjoy a privileged position; they have strongly enforceable rights, but no obligations. Perrone shows that the unusual status of foreign investors in international law is no accident, but rather the result of a “world-making project realized by a coalition of business leaders, bankers, and their lawyers in the 1950s and 1960s”. This world-making project, which is still alive and well in the legal imagination of investment lawmakers and practitioners today, maintains the power of corporate actors while silencing and making invisible those who are affected by investment projects.  

Dr Perrone is a Research Associate Professor at Universidad Andrés Bello, Chile, and has previously taught at Durham University and Universidad Externado de Colombia. Dr Perrone has been Visiting Professor at Universidad Nacional de San Martín, the International University College of Turin, and Università del Piemonte Orientale, a faculty member of the Institute for Global Law and Policy (Harvard Law School) and a Visiting Lecturer at Xi’an Jiaotong School of Law. Dr Perrone has also consulted for the OECD and worked as a legal fellow for UNCTAD. 

Dr Perrone joined Assistant Editor Stephanie Triefus for a conversation about his monograph and how academics and policymakers should reflect on the legal imagination of investment law as they engage in reform of the international investment law regime. 

ST: What are some of the problematic aspects of international investment treaties that prompted you to undertake this study?

NP: Thank you for your question, and for hosting this interview. I always had a sense that international investment law was about more than the specific investor-state dispute settlement (ISDS) cases. I am from Argentina and when I was in my twenties there were a lot of cases arising from the financial crisis, and I got the intuition that there is more at stake than just winning or losing. To me investment law was about the reorganisation of the government as part of a project in which foreign investment plays a very specific role in governance, and the way we see economic relations not only between states or states and investors, but involving the entire population. When I started my PhD, investment law scholarship was about the right to regulate and proportionality; the belief that if we find the right balance and get the right interpretation then everything will be fine. This line of argument remains very influential, by the way, although there is no such clear formula as decades of the discussions on US Takings Law show.

So there were very important distributive and normative questions at stake, but nobody was taking into account what was happening on the ground – there were other rights involved, individual and community rights. If we look at investment law as just the tension between the right to regulate and foreign investor rights, it’s like there is nothing else there, no other actors, no other rights. But when you start looking at the situation on the ground you see that states most of the time are promoting the investment, whereas the unprotected rights are those of local groups. Most of the time these communities don’t want to get a piece of the cake, they just want things to be organised differently, and that was completely out of the spectrum. I thought that the way people were thinking about investment law was very narrow and minimal whereas the consequences of investment were much broader.

ST: Could you describe what you mean by ‘the legal imagination’?

NP: The notion of legal imagination is quite important for the book because I was trying to hit at something that is neither the worldmaking project of the norm entrepreneurs, nor how lawyers talk about law before an ISDS tribunal. I’m inspired by Charles Taylor’s idea of social imaginaries – a broader concept than legal imaginaries. Taylor talks about how the way we think about things affects the way society is organised. He focuses on the parameters within which people imagine their social existence. The legal imaginary sits in the mess of things between the idea of a grand narrative (such as capitalism) and the dry way in which lawyers talk about the law in everyday practice. It’s the way in which lawyers and norm entrepreneurs were thinking about how investment law should be organised, having in mind the worldmaking project they had – which was about empowering multinational corporations and promoting foreign investment as the best thing that could ever happen to an economy. According to this worldmaking project, a world governed by business would be a better world. So for example, the lawyers were talking about undertakings and indirect expropriation not only as mechanisms to resolve a dispute, but also as a means to organise the way foreign investors and states relate to each other. 

Particularly in the Abs-Shawcross Draft, foreign investors and states don’t relate to each other the way that most people go into a country – i.e. by accepting the rules of the country. Rather, for an investment they relate through a contract or through a transaction, even if there is no specific contract – and this, for me, was key to their way of thinking. An investor wants to invest in a state, the state gives them a representation, those representations count as an undertaking, which is a broader idea than a contract – they relate, generally speaking, through a transaction, even when there is no contract. For lawyers, the fact that there is a transaction moves us to the imagination of contracts, implied contracts, legitimate expectations and reliance. So for me, that’s not just a pattern of interpretation, they were talking in these legal terms because they wanted to have impact in real life, to reorganise and consolidate how states and foreign investors were talking to each other. This symbol of the transaction is not just a pattern of interpretation to resolve a particular case, it was a way in which we would organise foreign investment relations, it’s in the background when arbitrators are resolving cases. If you read most ISDS awards, the facts of the dispute are couched in transactional terms. 

The legal imagination is something that you can identify through analysis of historical archives and documents, but I’m not so sure it can be empirically tested. It is a condition of possibility of making certain things happen in the real world and that’s why ideas and practice are very important to make the legal imagination have a solid impact on practice – to try to use it as a mechanism to make the world making project possible, so to create a condition of possibility for that worldmaking project, in which businesses and particularly multinational corporations operating in the natural resource sector relate to states as equals through transactions. 

This interview is continued in Part II.

Stephanie Triefus is a PhD Candidate at Erasmus University Rotterdam in the field of human rights and international investment law and an Assistant Editor of the ILA Reporter.

Suggested citation: Stephanie Triefus, ‘Interview with Nicolás M. Perrone: Investment Treaties and the Legal Imagination – Part I: How we imagine international investment law’ on ILA Reporter, 13 April 2021, <>