Neo-Liberalism, Foreign Investment and the International Law of Development

Prof. M. Sornarajah,
CJ Koh Professor of Law,
National University of Singapore

Neo-liberalism has been the dominant theory in economic development and law, both domestic and international, and has been used as an instrument to implement neo-liberal policies. The use of law in domestic and regional legal systems to implement neo-liberal policies in the guise of the rule of law has been extensively studied. The instrumental role of international law in imposing neo-liberal rules has been seldom explored. This paper looks at the manner in which neo-liberal theories have influenced the normative structure of foreign investment protection in international law and how this structure in turn has been used to mandate prescriptions for domestic legal systems of developing countries, particularly through investment arbitration. But, the resurgence of a new international law on development contains resistance to these efforts and the conflict so generated will come to be played out in the future. The paper explores the possible outcomes of this conflict.