In recent years, there has been a tension in international arbitration between legal stability and political change. This tension increases significantly when new governments face pressure to enact economic reforms that redress the perceived shortcomings of their predecessors. In doing so, new governments may have to renegotiate concession contracts, terminate monopolies and re-nationalise state assets that have been illegitimately transferred into private hands. However, when foreign investments are affected, foreign investors may claim that judicial, administrative or legislative measures have violated the core principles of international investment law under investment treaties. Indeed, foreign investors have previously raised claims against host states in relation to the implementation of treaty obligations. Such claims raise the question of how arbitral tribunals should address the tension between legal stability and political change.

The primary aim of this book is to effectively understand how international law deals with the tension between legal stability and political change. Specifically, this book seeks to address the vagueness that surrounds determinations on the international liability of new governments in relation to foreign investments under international law. Thus, the scope of the book covers three main areas of international law: 1) the law of state immunity; 2) the law of state responsibility; and 3) international investment law, which is a sub-field of international law that integrates both public and private international law.