Private enforcement of international monetary law: Arbitration of investment treaty claims relating to foreign exchange restrictions

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International economic activity depends on the cross-border flows that characterize economic globalization—principally of goods, services, capital and labour. These flows all have in common that they involve some element of transnational transfers of funds. The international regulation of trade, investments and other economic activities is therefore inextricably linked to the regulation on the international plane of the transfer and currency conversion such funds, i.e. on international monetary law. A closer look at the political reality of international monetary affairs offers scant reason to presume that the existing liberal paradigm of free capital mobility and market-responsive exchange rate flexibility is beyond challenge or a potential reversal. Yet, rules exist on the international plane to ensure that exchange rates and capital flows remain free from restrictions, manipulation and distortion. In the Post-War international economic order and global institutional set-up, the task of enforcing the rules of international monetary law fell upon the International Monetary Fund. This role was enshrined in GATT 1947 and remains essentially intact. Nonetheless, in recent years, the efforts of the Fund to enforce such rules has not been sufficient to quell allegations against States of exchange-rate misalignment and currency manipulation.

This paper, which builds on the author’s ongoing PhD research, looks at private enforcement of international monetary law and asks whether investment arbitration of exchange-rate disputes may offer an alternative enforcement mechanism that might result in positive externalities, benefitting all investors, traders and other non-disputing third parties, and thereby may help restoring trust in trade and investment. The paper seeks to confirm the availability, practicality and functionality of arbitral process to resolve disputes relating to currency convertibility.

The paper first explores whether investment disputes relating to exchange rate restrictions are arbitrable for reasons of public policy and the political sensitivity of the interests concerned and, if so, whether and under what conditions any resulting arbitral awards nonetheless may be refused recognition and enforcement. In a second step, the enquiry interprets the scope of application and manner of application of substantive international investment law to determine whether such disputes fall within the scope of investment treaty protections and whether such protections should be restrictively applied to such disputes.
Original languageEnglish
Number of pages11
Publication statusPublished - 2018
Event7th Conference of the Society of International Economic Law / Postgraduate, Early Professionals & Academics Network (SIEL/PEPA) - European University of Cyprus, Nicosia, Cyprus
Duration: 13 Apr 201814 Apr 2018


Conference7th Conference of the Society of International Economic Law / Postgraduate, Early Professionals & Academics Network (SIEL/PEPA)
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