NAVIGATING THE CAPACITY CONUNDRUM: UNRAVELLING STATE SUCCESSION’S IMPACT ON INVESTOR-STATE DISPUTE SETTLEMENT
—Sai Srijan Neti
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State succession in investment arbitration has been a relatively unexplored topic until recently. A few tribunals faced such issues in the context of cession, secession, accession, dissolution, and other forms of state succession. The approaches followed by these tribunals can be expressed on a spectrum which, on one side, favours automatic succession and, on the other, considers a clean slate to apply for all successors. In the middle lies the contemporary practice of treaty negotiations on succession issues. However, no approach on this spectrum has been proven to be flawless. The result is a fragmented field of law with complexities involving controversial questions such as sovereign competence and statehood gained upon independence. Its jurisprudence has undergone constant evolution, and the issues finally came to a head when the tribunals of a few landmark cases dealt with these issues comprehensively. Only upon a closer examination of the history and the context of these cases can one fully understand the scale of addressing these nuanced problems. The present article delves into the issues of state succession in the context of investment arbitration, including any inadequacies in the approaches followed by tribunals while balancing conflicting considerations. It analyses these differing approaches in cases with a background of state succession instances to understand the corresponding theories and concepts that tribunals may apply. Brief comments are made on the contemporary practice of states, along with a hypothetical case being examined for a possible solution.