I. Introduction

  In recent decades, there has been a notable shift in focus regarding international investment law and its associated dispute settlement mechanisms: from an internal orientation to the external perspective. It is well recognized that, at the outset, both academic and practical debates primarily revolved around how to strike a nuanced and effective balance between the parties in investment arbitration, with conclusions oscillating between favoring one side or the other. These discussions have been approached from various perspectives. From a simple power-based viewpoint, foreign investors were initially considered the weaker party relative to a sovereign host state, leading to suggestions that tribunals should lean in favor of investors when rendering awards. However, this assessment can change when considering the structural design of international investment arbitration and the substantive content of international investment agreements. As the host state is inherently positioned as the defendant, and the majority of bilateral investment treaties (BITs) predominantly impose obligations and responsibilities on the host state, some scholars and arbitrators have argued that the interpretation of certain provisions should instead prioritize the preservation of domestic policy. The thought of balance just works as a pendulum wavering between the investor and the host state. However, the reality increasingly reminds the international community that ISDS never functions as a two-players game. Transnational capital flow leads to more and more global issues including environmental degradation, labor exploitation as well as climate change. Therefore, the international society comes to realize that as a matter of fact more participants are involved into the international investment, especially the local community of the host state. Albeit the international investment does not necessarily directly involve their engagement, it is undeniable that local residents on most occasion are the indispensable stakeholders of investment rules and regulatory policies. Since their voices are often missing in the negotiation process, BIT could hardly stand for their substantial interests, which frustrates the fundamental purpose of international investment governance in terms of the promotion the farewell and prosperity.

Recent research no longer confines itself to the bilateral distribution of rights and obligations between investors and host states; it increasingly examines how to mitigate the negative spillover effects on other affected constituencies. Correspondingly, current ISDS reform debates have shifted the focal point beyond the disputing parties, highlighting the legitimate concerns of host communities. Indeed, international investment law has already taken some steps toward addressing local interests. For instance, the legality requirement clause disqualifies investments made in violation of domestic law, thereby incorporating host state regulatory prerogatives into the admissibility of claims. Yet, this mechanism remains fundamentally state-centered. While it bridges domestic law and international adjudication, its essential drawback lies in empowering the host state to invoke its own interests while simultaneously disposing of the basic rights of its citizens. Even if there exists a partial overlap between state regulatory concerns and community welfare, the two cannot be treated as coterminous. The state cannot be assumed to be the sole or exclusive guardian of local interests.

To redress this gap, given the necessity for local people to possess a series of independent rights to seek for a more appropriate way to foster a better life. A novel perspective is proposed: the right to development. Unlike indirect methods that merely integrate “community interests” into arbitral reasoning through state action, the right to development directly entitles local communities as rights-holders in their own capacity. By conceptualizing development not as a derivative interest mediated through government but as a social right belonging to individuals and communities, this framework opens space for ISDS to internalize broader legitimacy concerns. It thereby explains why the right to development, despite its abstractness, is increasingly invoked in investment disputes as a normative bridge between international adjudication and affected societies.

     Nonetheless, the right to development and international investment law do not fit with each other as smoothly as expected. Firstly, the right to development was not originally designed for the international investment arena. Instead, it was initially articulated as a benchmark to address the economic imbalance between the developed and developing worlds, thereby aiming to reconstruct the international economic order. Consequently, whether it is reasonable to transplant this idea into arbitral practice remains a matter of uncertainty for tribunals. Secondly, the content of this concept is difficult to delineate, since the right to development is too ambiguous to serve as concrete judicial guidance. More concretely, even if a tribunal decides to invoke the right to development when adjudicating a dispute, the standards and obligations it entails are often elusive, leaving arbitral reasoning largely unsupported and inconsistent. Thirdly, even if the right to development could be linked to certain related principles such as sustainable development, self-determination, or the possession of natural resources, most of these remain non-binding norms or “soft law.” In other words, they can rarely be incorporated into contractual clauses or treaty provisions as operative rules. Tribunals can therefore only seek support, if any, from international declaratory instruments, which at best provide indirect evidence of states’ intentions or general normative guidance, rather than binding obligations enforceable in arbitration. As a result, the practical effect of the right to development in international investment arbitration is limited, leaving its role largely aspirational rather than legally determinative. Nevertheless, arbitral practice demonstrates that tribunals have occasionally attempted to draw inspiration from the developmental dimension. For instance, they have invoked development-related considerations when evaluating whether an investment qualifies as “protected,” when distinguishing indirect expropriation from legitimate regulatory measures, or when interpreting treaty provisions with reference to public policy objectives. However, in these instances, the right to development is treated merely as a supplementary interpretive tool to enhance the existing rules or principles rather than as a normative framework in its own right.

The challenge thus lies not only in the aspirational and abstract nature of the right to development but also in the mode of its application within ISDS. Traditional scholarship, adhering to a “legality” approach, tends to frame the right to development as a potential direct source of legal obligations even if on most occasion in the indirect method. This approach, while normatively appealing, has proven doctrinally fragile: absent hard-law entrenchment, tribunals are reluctant to treat the right as determinative in resolving disputes. Admittedly, the legality approach may provide persuasive rhetoric to convince disputing parties of the relevance of developmental concerns, but it cannot overcome the structural limits of ISDS as a consent-based adjudicatory system. In recent years, the right to development continues to function primarily as a broad, generic guidance within the international community, showing little tendency to crystallize into clear, specific rules that could be incorporated into investment treaties as binding obligations.  This gap between normative appeal and practical application foreshadows enduring controversies over the right to development if tribunals adhere strictly to a legality-based assessment.

Therefore, an alternative methodology is required. Rather than attempting to elevate the right to development into binding obligations, this article advocates a legitimacy-based approach, whereby the right functions as a mediating framework to strengthen the perceived legitimacy of ISDS. In this view, the right to development does not operate as a formal legal rule but as a normative benchmark capable of guiding tribunals in enhancing procedural fairness, cognitive inclusiveness, and substantive balance in arbitral decision-making.

The major contribution of this article, as compared with existing scholarship, lies in its innovative shift of the analytical framework. By introducing a legitimacy test, the scope of ISDS is broadened into a more pluralistic and nuanced framework, where third parties including local communities can be meaningfully considered through both sociological insights and procedural mechanisms. This approach reflects more accurately the realities of transitional investment and the operational logic of ISDS. Furthermore, revealing the dynamic role of legitimacy in ISDS offers valuable guidance for ongoing discussions on its reform. The article is structured as follows. Part II revisits arbitral practice to examine the invocation of the right to development. Part III delves into the reasons for its limited effectiveness within ISDS, adopting a sociological perspective. Part IV explores how development can function as a legitimacy-building norm rather than a directly enforceable right. Finally, Part V proposes a functional approach to incorporating social norms, demonstrating how the right to development can be operationalized through legitimacy considerations.

II. The Right to Development in ISDS: Between Normative Invocation and Practical Inapplicability

A. Normative Uses of the Right to Development in Arbitral Practice

The right to development has undergone a notable transformation over the past decades. Initially proclaimed as a political slogan or aspirational declaration, it has gradually evolved into a widely acknowledged objective that states regard as worth pursuing. This evolution is particularly salient in the field of international investment law. In its earlier phases, host states often prioritized the attraction of foreign capital at all costs, sacrificing domestic environmental protection, labor rights, and other social interests in the hope of rapid economic growth. Such practices, however, frequently failed to deliver the promised developmental outcomes and instead generated enduring social challenges, ranging from environmental degradation to the marginalization of local communities. Against this backdrop, the recognition of development as a human right has gained greater prominence, shifting the focus from mere economic expansion to a more holistic understanding of social welfare and sustainability.

Within international investment arbitration, this broader understanding has gradually shaped arbitral discourse. While tribunals remain bound by treaty texts and party consent, the normative appeal of the right to development has influenced interpretive practices, encouraging tribunals to accommodate considerations of legality, regulatory autonomy, and sustainable development. Thus, even though the right to development has not yet crystallized into a binding standard, it increasingly serves as a background norm through which arbitral practice seeks to balance investment protection with the host state’s developmental policies.

 First, the right to development has been gradually integrated into the test concerning the qualification of a protected “investment.” For instance, the Morocco–Nigeria BIT (2016) explicitly requires that an investment contribute to sustainable development, thereby elevating developmental objectives from policy aspirations to treaty-based standards. In addition, dozens of contemporary BITs condition the protection of investments upon their being made “in accordance with the host State’s domestic law and policy.” Such provisions enable arbitral tribunals to interpret the notion of a “qualified investment” in light of the host State’s developmental priorities, reflecting an implicit recognition of its sovereign right to pursue economic, social, and environmental objectives. Arbitral jurisprudence has reinforced this interpretative approach. In Alasdair Ross Anderson v. Costa Rica, the tribunal underlined the importance of public policy, stressing that every State has a “fundamental interest in securing respect for its law” and that denying protection to illegally obtained investments “reflects both sound public policy and sound investment practice.” This reasoning reflects the principle of legality, which is a key component of the right to development, since respect for domestic law is indispensable for channeling investment in a manner consistent with national developmental strategies. Similarly, in Inceysa Vallisoletana v. El Salvador, the tribunal refused to extend treaty protection to an investment obtained through fraudulent misrepresentation. By excluding fraudulent investments, the tribunal safeguarded the requirement of good faith and fairness in economic relations, thereby ensuring that foreign capital contributes positively rather than disruptively to the host State’s development process. In World Duty Free v. Kenya, the tribunal declined protection for an investment procured through bribery, holding that corruption is incompatible with international public policy. Here, the tribunal implicitly reinforced the anti-corruption dimension of the right to development, recognizing that sustainable development cannot be achieved where public resources are diverted through corrupt practices. Finally, in Phoenix Action v. Czech Republic, the tribunal explicitly linked the concept of investment protection to developmental considerations, holding that a valid investment must include “a contribution to the economic development of the host State.” This statement most directly echoes the developmental contribution requirement of the right to development, suggesting that international protection is not intended for purely speculative or abusive transactions but rather for projects that genuinely foster the host State’s progress. these cases demonstrate that, even without explicit references to the right to development, arbitral tribunals have incorporated its constitutive elements, legality, fairness, anti-corruption, and contribution to sustainable development. into the threshold determination of a “protected investment.” The right to development thus operates as a normative filter: investments inconsistent with domestic legal frameworks or detrimental to developmental objectives may be denied treaty protection, embedding developmental concerns within the very architecture of international investment law.

Second, arbitral practice reflects an indirect recognition of developmental concerns through the preservation of host States’ regulatory space. Recent treaty practice provides explicit confirmation of this tendency: the Canada–Mongolia BIT (2016) and the Georgia–Japan BIT (2021), for instance, safeguard the capacity of States to regulate in areas such as public health and environmental protection. While these clauses do not explicitly invoke the right to development, they make clear that foreign investment cannot be insulated from legitimate policy interventions that serve collective welfare. Tribunals have also reinforced this understanding. In Philip Morris v. Uruguay, the tribunal upheld comprehensive tobacco-control measures as a legitimate exercise of regulatory power, thereby recognizing public health as a dimension of the right to development. Environmental concerns were likewise acknowledged in S.D. Myers v. Canada, where the tribunal accepted that Canada’s restrictions on hazardous waste exports pursued genuine ecological objectives, an affirmation of the environmental protection component of developmental rights, even though the specific measure was ultimately found inconsistent with NAFTA. A similar logic was applied in Methanex v. United States, where the tribunal held that non-discriminatory regulations enacted for environmental purposes could not constitute expropriation, thereby embedding the principle of regulatory autonomy as part of sustainable development. Overall, these treaty provisions and arbitral decisions illustrate that developmental values, such as public health, environmental protection, and regulatory autonomy, function as guiding considerations in investor–State arbitration. While they rarely operate as explicit rules of decision, they shape tribunals’ reasoning and reinforce the host State’s ability to pursue its broader developmental objectives, demonstrating that the right to development serves as an underlying framework for balancing investment protection with public welfare.

Third, procedural developments have opened new avenues for recognizing developmental and social concerns in investment arbitration. A notable example is Urbaser S.A. v. Argentina, where the tribunal, for the first time, acknowledged that the host State could bring a counterclaim against the investor for alleged violations of human rights obligations. Although the specific counterclaim was ultimately rejected, the tribunal’s reasoning marked a significant step toward integrating social rights into ISDS, highlighting the human-rights dimension of the right to development and demonstrating that community interests can be factored into procedural mechanisms. Other cases further illustrate this trend. In Burlington Resources Inc. v. Republic of Ecuador, Ecuador successfully counterclaimed for breaches of domestic environmental law and contractual obligations, resulting in the investor being ordered to pay $41.7 million. This outcome reflects the environmental and regulatory accountability aspect of development rights, showing that procedural tools such as counterclaims can enforce host State priorities. Similarly, in Copper Mesa Mining Corporation v. Republic of Ecuador, the tribunal reduced the investor’s award by 30 percent to account for the investor’s unlawful actions against anti-mining protestors, even though Ecuador had violated certain BIT provisions. This adjustment demonstrates the principle of fairness and community protection within the right to development, ensuring that investors cannot undermine social or environmental objectives without consequences. Collectively, these cases indicate that, while the right to development has not yet crystallized into enforceable obligations in ISDS, it influences procedural innovation by enabling tribunals to consider human rights, environmental protection, and community welfare in determining investor liability. In this way, procedural mechanisms such as counterclaims provide concrete avenues through which developmental considerations are operationalized, complementing the normative framework that shapes substantive interpretations of investment obligations and host State regulatory authority.

B. Obstacles to Its Practical Application in ISDS

Despite these promising developments, significant obstacles remain to the effective operationalization of the right to development within investment arbitration. These difficulties can be grouped around the same three avenues through which developmental concerns have entered ISDS practice.

First, with respect to the qualification of an investment, tribunals have so far applied legality and contribution requirements inconsistently. A key difficulty lies in the inherent vagueness of the standard “contribute to sustainable development” itself, which is commonly included in modern BITs. Tribunals are left without clear criteria to evaluate what constitutes a meaningful contribution, whether measured in terms of economic growth, social welfare, environmental protection, or the equitable distribution of benefits. While some decisions, such as Phoenix Action, have emphasized the developmental function of investment, others have deliberately avoided imposing additional requirements beyond those expressly provided in the treaty. This inconsistency reflects tribunals’ reluctance to transform the right to development into a binding threshold criterion, partly due to the conceptual indeterminacy of sustainable development and partly out of concern for expanding interpretive discretion and introducing legal uncertainty. As a result, developmental elements remain peripheral and subject to selective application, rather than forming a coherent standard.

Second, regarding the preservation of regulatory space, the scope of public policy exceptions is still limited and contested. Although treaties increasingly include clauses safeguarding the host State’s ability to regulate, tribunals often interpret such clauses narrowly, balancing them against strong protections for investors’ legitimate expectations. This creates a structural tension: even when States invoke public health, environmental, or social welfare objectives, arbitral tribunals tend to subject such measures to strict proportionality or necessity tests, which dilutes the deference owed to developmental priorities. For example, in Eco Oro v. Colombia, the tribunal closely scrutinized Colombia’s environmental mining ban under proportionality standards. While the measure was ultimately upheld, the case illustrates that tribunals routinely examine regulatory actions in detail, signaling a cautious approach that often limits the leeway States might expect when pursuing developmental or environmental objectives. The right to development, therefore, functions merely as a background principle rather than a decisive justification for regulatory measures. Moreover, the absence of explicit references to the right to development in most BITs weakens its normative authority, leaving States vulnerable to claims that developmental regulations amount to indirect expropriation or unfair treatment. Even in treaties that contain safeguard clauses, such as the Canada–Mongolia BIT (2016), tribunals must still weigh these provisions against broadly drafted investor rights, which are often interpreted expansively. This imbalance means that States bear the burden of proving that their measures are “genuinely” developmental and not disguised protectionism, a standard that is difficult to satisfy in practice. As a result, the developmental dimension of regulatory space is acknowledged rhetorically but remains fragile in application, exposing host States to continued litigation risks when pursuing legitimate social, economic, or environmental policies.

Third, on the procedural level, although counterclaims and related procedural innovations have opened theoretical space for host States to invoke developmental and social concerns, their practical effectiveness remains limited. A primary obstacle is jurisdictional: most investment treaties are asymmetrical, granting investors the right to initiate claims but not expressly authorizing States to pursue counterclaims. In Urbaser v. Argentina, for example, the tribunal accepted in principle that human-rights-based counterclaims were possible, yet it ultimately rejected Argentina’s claim due to the absence of a sufficiently specific legal obligation owed by the investor. This illustrates that, without clear treaty language, counterclaims grounded in the right to development remain largely symbolic. Another difficulty lies in the evidentiary and substantive thresholds imposed on host States. In Burlington v. Ecuador, Ecuador was successful in advancing an environmental counterclaim, but this required extensive proof of ecological damage, and even then the award ($41.7 million) was framed as compensation for contractual and statutory breaches rather than recognition of broader developmental obligations. Similarly, in Copper Mesa v. Ecuador, the reduction of damages was justified as a consequence of the investor’s misconduct, not as an affirmation of Ecuador’s right to safeguard community welfare. In both cases, developmental considerations were acknowledged only indirectly and subordinated to conventional liability analysis.

Therefore, the three pathways through which the right to development has entered ISDS are all marked by significant constraints. The qualification of investments is weakened by the vagueness of “contribution to sustainable development” and tribunals’ inconsistent application of legality requirements. Regulatory space remains fragile, as exceptions are narrowly construed and developmental objectives lack explicit treaty recognition. Procedural innovations such as counterclaims face jurisdictional limits and judicial reluctance. Together, these obstacles prevent the right to development from operating as a binding standard, confining it to the status of a background principle with limited practical effect.

III. Why the Right to Development Fails in ISDS: A Sociological Turn

A. Conventional Explanations: Legal and Institutional Constraints

Much of the existing scholarship attributes the limited role of the right to development in ISDS to structural barriers rooted in law and institutions. On the one hand, the right lacks the qualities typically required for transformation from soft to hard law, making it normatively weak in arbitral proceedings. On the other hand, the institutional design of ISDS, with its asymmetrical access, narrow consent-based mandates, and self-referential professional culture, further restricts the right’s operational relevance. These conventional explanations are important, as they reveal why development concerns rarely translate into enforceable rights within arbitral reasoning. The following sections unpack these legal and institutional dimensions in turn.

1. Legal dimension

  As noted above, one widely cited reason for the right to development’s limited impact in ISDS is its soft-law character: treaties and declarations recognize the right normatively but do not impose binding obligations, leaving tribunals with little guidance. The normative vagueness and lack of enforcement mechanisms, discussed earlier in relation to the inconsistent qualification of investments and the narrow scope of regulatory space, illustrate this point in practice. To systematize these limitations, Abbott and Snidal’s framework, distinguishing soft law from hard law by reference to obligation, precision, and delegation, is useful. Applying this framework clarifies why, despite broad recognition and normative appeal, the right to development has not been transformed into a directly enforceable standard in investor–state arbitration.

First, the obligation element is weak. Unlike hard law, which creates clearly enforceable duties, the right to development has been formulated primarily through UN General Assembly declarations, resolutions, and soft-law frameworks such as the 1986 UN Declaration on the Right to Development and subsequent Human Rights Council reports. These instruments are politically significant but do not bind states in the way treaty-based obligations do. As a result, states retain wide discretion to interpret, implement, or deprioritize the right in domestic policy and treaty practice. For example, while some states, such as in Africa and Latin America, have occasionally invoked the right in diplomatic fora or in submissions before international institutions, others have treated it as aspirational rhetoric with little direct impact on investment treaty drafting or arbitration pleadings. This contrasts sharply with core investment protections such as fair and equitable treatment (FET) or expropriation standards, which are treaty-anchored and regularly operationalized by tribunals. In the absence of binding force, arbitral tribunals cannot compel states or investors to comply with developmental obligations, even where such obligations resonate with broader legitimacy concerns.

Second, the precision element is low. The right to development is framed in broad, aspirational terms emphasizing participation, equity, and distributive justice, but without measurable benchmarks or clear state duties. Unlike provisions on most-favored nation treatment or expropriation, which tribunals have distilled into doctrinal tests through decades of jurisprudence, the right to development lacks operational standards for what counts as compliance or violation. For example, there is no consensus on whether it requires specific redistributive policies, quantifiable developmental outcomes, or merely a process-oriented commitment to participatory governance. This vagueness leaves tribunals with little doctrinal footing to apply the right consistently. Even in cases where arbitrators have considered related values, such as in Suez and Vivendi v. Argentina, where the tribunal acknowledged the public importance of water services, or in Parkerings v. Lithuania, where urban planning and environmental protection were emphasized, the reasoning remained ad hoc and avoided explicit articulation of developmental standards. Without precision, tribunals risk accusations of judicial activism or inconsistency if they attempt to operationalize the right, which in turn discourages them from invoking it directly.

Third, the delegation element is fragmented and ambiguous. States do, insofar as they consent to arbitration, delegate adjudicatory authority to ISDS tribunals, particularly under ICSID, UNCITRAL, and other treaty-based fora. But that delegation is typically confined to resolving disputes under the specific treaty wording between the disputing parties. Tribunals are not vested with a system-wide, authoritative mandate to interpret or enforce broad socio-economic norms such as the right to development. There is no centralized interpretative organ comparable to the WTO Appellate Body or the ICJ’s general jurisdiction, and no appellate body within ISDS with an expressly conferred competence to settle the scope of developmental rights across the system. The result is a patchwork of ad hoc decisions that operate case-by-case, often narrowly construing or avoiding reference to the right. For instance, in Eco Oro v. Colombia, the tribunal addressed tensions between investment protection and environmental regulation, but framed the matter within the confines of the specific FET clause, rather than invoking broader developmental rights. Similarly, in Bear Creek v. Peru, the tribunal confronted indigenous participation issues but stopped short of grounding its reasoning in the right to development, leaving the issue at the level of contested social legitimacy rather than legal obligation.

Hence, these deficiencies, weak obligation, low precision, and limited delegation, explain why, despite its normative salience and frequent political invocation, the right to development remains difficult for tribunals to operationalize within ISDS. It continues to function as a soft law instrument, signaling developmental aspirations and shaping expectations, but lacking the hard-law features that would enable consistent, binding application. In the short term, this structural softness means the right is more likely to influence ISDS indirectly—through interpretive reasoning, considerations of legitimacy, or as part of balancing exercises—rather than as a directly applicable, enforceable legal norm.

2. institutional dimension

Beyond its legal limitations, the right to development also faces structural obstacles within the institutional design of ISDS. Even if the norm were expressed with greater precision, the adjudicatory framework of investment arbitration offers little space for its effective operationalization. First, the historical design of ISDS produces a foundational misfit. The ICSID-centered system was conceived to depoliticize and individualize investor–State conflicts, offering a neutral, bilateral, investor-initiated forum for resolving private claims. This adversarial, dyadic structure inherently marginalizes collective and societal claims. For instance, in Aguas del Tunari v. Bolivia, local communities challenged water privatization measures that threatened access to essential services, yet they lacked formal standing within arbitration. Development-related concerns appeared only indirectly through governmental defenses, demonstrating how ISDS procedures systematically exclude the very actors whose interests are central to the right to development. Similarly, in Parkerings v. Lithuania, the tribunal acknowledged urban planning and cultural heritage considerations in Vilnius but ultimately subordinated these public interests to investor protection, illustrating that even acute societal concerns are treated as peripheral compared to property claims. These cases highlight that the system’s origin as a bilateral, investor-focused forum structurally channels developmental concerns to the margins.

Second, the mandate and jurisdictional footing of tribunals are narrowly consent-based, further limiting the operational potential of the right to development. Arbitrators are empowered to adjudicate only within the scope of parties’ consent and treaty wording. Absent explicit treaty incorporation of development norms, tribunals frequently decline to treat them as freestanding claims. The case of Lao Holdings v. Laos illustrates this point: although government measures had significant redistributive and social consequences, the tribunal’s analysis remained confined to contractual interpretation and investor entitlements, sidelining broader social and developmental impacts. In Pey Casado v. Chile, even decades-long disputes involving media investment during Chile’s authoritarian period revealed that procedural formalism and treaty-centered reasoning largely eclipse collective or societal interests, regardless of the broader historical or political significance of the dispute. These examples demonstrate that consent-based jurisdiction creates a structural containment, limiting the tribunals’ ability to engage with collective social claims inherent to the right to development.

Third, professional culture and institutional incentives reinforce a conservative, investor-centric approach. Arbitration is administered by a relatively small epistemic community of counsel and arbitrators whose expertise is focused on predictable doctrines and precedent in investor protection. Opportunities to systematically incorporate developmental perspectives, through participatory mechanisms, advisory panels on social impact, or non-monetary remedies, remain rare. Perenco v. Ecuador provides a partial exception: the tribunal recognized a limited counterclaim for environmental remediation, signaling potential responsiveness to social considerations. Yet, such cases are exceptional rather than normative, illustrating that institutional habits and professional norms favor traditional remedies (principally monetary compensation) over participatory or redistributive solutions. Consequently, structural and cultural factors jointly inhibit the effective operationalization of the right to development within ISDS.

Together, these dimensions—historical design, consent-limited jurisdiction, and professional culture—constitute a coherent institutional barrier. They do not merely complicate the application of the right to development; they systematically channel ISDS away from the participatory, redistributive, and collective solutions that the norm envisions. Addressing the marginalization of development concerns therefore requires not only textual reform but also a deeper reconsideration of ISDS institutional structures, procedural design, and cultural practices to accommodate social and collective norms alongside traditional investor protections.

B. An Overlooked Explanation: The Sociological Nature of the Right to Development and the limitation of legality-based approach

While legal and institutional explanations shed light on some obstacles, they do not fully account for why the right to development consistently fails to gain traction in ISDS. A deeper difficulty lies not only in the sociological character of the right itself but also in the mismatch between its social logic and the legality-based approach that tribunals typically adopt. The right to development is fundamentally a product of collective struggles, social contestation, and political mobilization, rather than a purely legal entitlement. Its authority stems from shared social norms, political recognition, and collective aspirations for equity, rather than from formal codification alone. The typical legality-focused reasoning of arbitral tribunals, which prioritizes precise treaty language and bilateral obligations, is ill-equipped to capture these broader sociopolitical dynamics.

1. Historical evolution demonstrates its sociological roots

The right to development emerged as part of a broader historical struggle for global justice. Its intellectual and political origins can be traced to the UN Charter (1945), which linked peace, human rights, and social progress, and to the Universal Declaration of Human Rights (1948), which incorporated economic and social rights alongside civil and political entitlements. The wave of decolonization in the 1960s brought a new bloc of states into the UN system, pressing for development to be recognized as a fundamental human right rather than a matter of discretionary aid. Instruments such as the 1968 Tehran Conference on Human Rights and the 1969 Declaration on Social Progress and Development explicitly tied human rights to collective economic and social advancement, framing development as a global responsibility rather than a national policy choice.

During the 1970s, debates over the New International Economic Order (NIEO) and the 1974 Charter of Economic Rights and Duties of States provided the political backdrop for a juridical articulation of the right to development. Senegalese jurist Keba M’Baye famously described it as a “new human right” grounded in sovereignty, distributive justice, and international solidarity. These aspirations were consolidated in the 1986 UN Declaration on the Right to Development, which defined development as “an inalienable human right” and emphasized participation, equity, and fair distribution of benefits as its constitutive principles.

Subsequent instruments and summits further embedded the right within international discourse. The 1993 Vienna World Conference on Human Rights reaffirmed the universality and indivisibility of the right to development. In the early twenty-first century, global governance frameworks such as the Millennium Development Goals (2000) and the Sustainable Development Goals (2015) operationalized many of its principles, translating its collective aspirations into measurable benchmarks for states and international institutions. Scholars such as Amartya Sen enriched its conceptual foundation by linking development to human capabilities and agency, thereby broadening its resonance beyond redistributive claims toward empowerment-oriented understandings.

These historical developments demonstrate that the right to development was never conceived merely as a formal legal entitlement but rather as a collective, redistributive, and socially legitimized norm designed to address structural inequalities in the international system. It derives normative force from broad recognition across states, institutions, and civil society, positioning itself as a sociological benchmark of justice. Yet, the text-focused and bilateral-oriented legality paradigm of international investment arbitration struggles to accommodate such collective aspirations, often reducing them to peripheral or rhetorical considerations in arbitral reasoning. This disconnect highlights the need for alternative frameworks of legitimacy capable of incorporating the social and developmental dimensions inherent in the right to development.

2. Its operational logic depends on social recognition and collective support

The right to development functions primarily through social, political, and institutional interactions, rather than through strict legal enforcement. Its effectiveness depends on recognition and reinforcement by a constellation of actors, including states, international institutions, civil society organizations, and transnational coalitions, as well as sustained political mobilization. States play a central role, as their acknowledgment of the normative claims embedded in the right shapes the integration of these principles into domestic development strategies, distributive justice objectives, and broader societal expectations. For instance, countries such as Bolivia and South Africa have incorporated development-oriented policies into national legal frameworks, emphasizing participatory planning, equitable resource allocation, and indigenous consultation, reflecting the relational embedding of the right.

International institutions function as intermediary agents, translating normative aspirations into actionable programs, monitoring mechanisms, and capacity-building initiatives. Entities such as the United Nations Development Programme (UNDP), the Office of the High Commissioner for Human Rights (OHCHR), and regional development banks, including the African Development Bank and the Inter-American Development Bank, contribute to norm dissemination by providing guidelines, technical assistance, and accountability frameworks. For example, the UNDP’s Human Development Reports and associated projects operationalize developmental goals in ways that create measurable policy benchmarks, while regional development banks often attach funding conditions that reinforce participatory and equitable practices.

Civil society organizations, advocacy networks, and transnational coalitions amplify these norms by exerting political pressure, framing public debates, and monitoring compliance. Initiatives such as the Global Call to Action Against Poverty or indigenous advocacy in Latin America demonstrate how social mobilization shapes both domestic and international policy agendas, creating a sociological environment in which the right to development gains practical force. These multi-level interactions generate both normative authority and tangible outcomes, including policy reforms, resource redistribution, and institutional capacity-building, highlighting that the right operates through social and relational processes, rather than formal adjudication or codified legal enforcement.

Within the context of Investor-State Dispute Settlement (ISDS), this sociological mechanism encounters structural mismatches. ISDS privileges bilateral, investor-initiated claims, which inherently narrow the scope of arbitration to treaty-specific investor protections. Developmental concerns, therefore, rarely achieve independent standing and are often relegated to a defensive or contextual role, as seen in cases like Bear Creek Mining v. Peru and Copper Mesa v. Ecuador before mentioned, where tribunals acknowledged social opposition or indigenous claims but confined their reasoning to investor rights and narrow regulatory interpretations. Even procedural innovations, such as amicus curiae submissions, cannot replicate the complex multi-actor dynamics that imbue the right with normative and practical force. Consequently, tribunals operating under a legality-based framework are ill-equipped to recognize or enforce the relational and collective dimensions that constitute the core sociological strength of the right to development. This gap underscores the need for a legitimacy-based approach that can operationalize the right’s social logic, bridging the divide between abstract normative principles and practical adjudicatory contexts.

3. Its embeddedness in broader social and international relations underscores its sociological character

The right to development is deeply embedded in social, political, and institutional networks extending far beyond any single adjudicatory forum. Its authority is generated through collective action and multilateral cooperation, manifesting in coordinated initiatives on poverty reduction, debt relief, sustainable development, and capacity-building.Recognition of structural inequalities between states, particularly between the Global North and South, has been central to its discourse, positioning the right as a corrective to systemic imbalances rather than a mere individual entitlement.

Concrete mechanisms demonstrate this embeddedness. Participatory development programs, in which communities actively engage in decision-making, embody inclusive growth. International monitoring frameworks, such as UN working groups or periodic reviews, generate pressure on states to uphold developmental commitments even when formal enforcement is weak. Policy coordination between donor and recipient countries, often facilitated by institutions like the World Bank or UNDP, shows how the right relies on dense networks of transnational relations, shared norms, and cooperative practices.

Investment arbitration, by contrast, is individualized, bilateral, and depoliticized, confined to the specific consent of two parties. It lacks the institutional capacity to capture the collective recognition, multi-stakeholder cooperation, and structural reform that give the right to development its normative strength. Development concerns are reduced to background considerations, often framed as “public interest” exceptions rather than treated as core rights. The legality-based approach cannot accommodate the relational, collective, and socially embedded nature of the right, leaving it marginalized in ISDS.

4. The Limitation of the Legality-Based Approach in Capturing the Sociological Nature of the Right to Development

The right to development is fundamentally sociological, deriving its authority from collective struggles, social recognition, and coordinated engagement among multiple actors, rather than solely from codified legal instruments. Its operational logic relies on relational networks encompassing states, international organizations, civil society, and transnational coalitions, which together reinforce both normative authority and practical implementation. The legality-based approach dominant in ISDS, by contrast, privileges textual precision, bilateral consent, and narrowly enforceable duties, creating a structural and cognitive misalignment between law and social practice.

First, the reliance on consent and bilateral arbitration systematically sidelines the multi-actor processes that sustain development norms. While institutional critiques focus on procedural limitations, the sociological perspective emphasizes the normative consequences of this exclusion. Key actors, such as local governments, community representatives, and international advocacy networks, often shape the content and enforcement of developmental principles, yet they lack formal access to the arbitration process. Even when tribunals allow procedural innovations like incorporating expert evidence on social impact or commissioning independent assessments, these mechanisms remain insufficient to reproduce the iterative, collective processes that give the right to development its practical force. For instance, disputes concerning extractive industries in Sub-Saharan Africa or Southeast Asia have highlighted how community consultation and participatory planning at the national level are critical to development outcomes, but such processes rarely translate into the bilateral framework of ISDS.

Second, the legalistic focus on precise, enforceable obligations conflicts with the flexible, context-dependent nature of the right to development. Unlike treaty provisions on expropriation or fair and equitable treatment, which have been doctrinally refined, the right to development is intentionally adaptable to local social, economic, and political circumstances. Arbitration tribunals, operating under a legality-focused paradigm, struggle to interpret and apply norms that rely on collective deliberation or iterative social processes. As a result, developmental principles often receive only marginal acknowledgment, and their collective, participatory content remains underdeveloped in arbitral reasoning. This reflects a cognitive mismatch: tribunals assess compliance against fixed legal standards, while the right to development gains authority through fluid, multi-level social interactions.

Third, the effectiveness of the right to development depends on relational enforcement and collective accountability, which the bilateral and investor-centered structure of ISDS cannot replicate. Normative influence is generated through sustained engagement among states, regional organizations, development agencies, and civil society, creating feedback loops that strengthen compliance and legitimacy. For example, regional human rights mechanisms and transnational environmental networks often monitor implementation of development-oriented policies, providing incentives for states to uphold participatory and redistributive commitments. In arbitration, however, the tribunal’s mandate is narrowly confined to the parties’ consent, and professional norms prioritize monetary compensation over participatory or redistributive remedies. Consequently, development concerns are relegated to background or contextual consideration, with tribunals rarely equipped to translate multi-level social processes into binding findings.

In sum, the limitations of the legality-based approach are deeply tied to the social character of the right to development. Its collective, participatory, and relational features are fundamentally incompatible with the text-bound, consent-driven, and bilateral logic of investor–state arbitration. Recognizing this tension underscores the need for legitimacy-based approaches capable of integrating social recognition, collective participation, and multi-actor coordination, bridging the divide between abstract normative principles and their operational realization.

IV. From Right to Resonance: The right to Development as a Legitimacy-Building Benchmark in Investment Arbitration

A. Legitimacy vs. Legality: Reframing the Right to Development in ISDS

Before highlighting the importance of a legitimacy-based approach for the right to development in ISDS, it is crucial to distinguish between legality and legitimacy as complementary standards for evaluating state behavior and institutional authority in international law. Although the two concepts are often conflated in everyday discourse, they differ fundamentally in sources, function, evaluative scope, and implications.

Legality is grounded in formal structures of international law, deriving authority primarily from state consent, treaties, customary norms, and other binding legal instruments. It operates in a binary mode: an act either complies with or violates the law. This provides clarity, predictability, and enforceable outcomes, forming the foundation of judicial authority. Courts and tribunals derive legitimacy to adjudicate precisely from their adherence to these binding norms. The main strength of legality lies in securing formal compliance and certainty, but its application is limited when rules are indeterminate, incomplete, or fail to address complex collective or social concerns, such as those embedded in the right to development.

Legitimacy, by contrast, operates on a broader normative and sociopolitical plane. It evaluates whether actions, institutions, or decisions are perceived as appropriate, justifiable, and socially acceptable by relevant communities, even in the absence of clear legal rules. Stacie Strong characterizes legitimacy as “a psychological property of an authority, institution, or social arrangement that leads those connected to it to believe that it is appropriate, proper, and just.” Unlike the binary logic of legality, legitimacy is scalar and contextual: degrees of legitimacy vary according to procedural inclusiveness, substantive equity, and the extent to which decisions resonate with shared norms and values. While legality secures enforceable authority, legitimacy secures social acceptance, normative resonance, and political credibility.

The distinction carries several important implications. First, the sources differ: legality derives from binding rules and consent, whereas legitimacy derives from broader social, political, and moral acceptance. Second, the evaluative logic differs: legality functions in a static, binary mode, while legitimacy is contextual, fluid, and sensitive to social perceptions. Third, the focus and purpose differ: legality assesses compliance with formal obligations, whereas legitimacy evaluates the justifiability and broader social acceptability of actions and decisions. Finally, the strengths and weaknesses are complementary: legality provides clarity and enforceability but may be rigid and insufficient for norms that are socially and politically constructed, whereas legitimacy offers flexibility and normative guidance but is inherently contested and contingent on perception.

In the context of ISDS, this distinction becomes especially consequential. Investment arbitration largely operates under a consent-based, legality-focused framework: tribunals are empowered to adjudicate only claims explicitly authorized by treaty or contract and are constrained to narrow interpretations of legal standards such as regulatory space. This structure systematically excludes actors central to the social legitimacy of development, particularly local communities and broader societal stakeholders. Many development-oriented claims reflect collective interests and societal goals, yet the individualized, bilateral architecture of ISDS precludes their independent expression. Consequently, an action may be legally compliant within ISDS yet fail to achieve legitimacy among affected communities, while socially resonant development measures may lack formal legal standing in arbitration.

Recognizing this distinction is critical for understanding why a legality-based approach alone cannot accommodate the right to development. The norm’s authority and effectiveness derive less from codified rules and more from collective recognition, relational enforcement, and social mobilization, dimensions that legality-focused tribunals cannot capture. Complementing legality with legitimacy provides a more holistic evaluative framework, enabling ISDS to assess not only compliance with formal rules but also the broader social and political acceptability of decisions. This distinction lays the foundation for reconceptualizing the right to development as a legitimacy-building benchmark within investment arbitration, an approach explored in the subsequent sections.

B. Why the Right to Development is Particularly Suited to a Legitimacy-Based Approach

The right to development derives its authority not from codified obligations alone, but from the recognition and reinforcement it receives through social, political, and institutional networks. Unlike conventional legal norms, which operate through clear-cut rules and enforceable duties, this right functions through collective acknowledgment, coordination among states, civil society, and international organizations, and ongoing political engagement. Within the ISDS framework, which privileges investor-initiated, bilateral claims, a strictly legality-based approach fails to account for these relational and participatory dynamics, rendering the right to development largely invisible in arbitral proceedings.

Examined from a legitimacy perspective, however, the right to development becomes a tool for reinforcing the broader social acceptability of investment arbitration. First, it underscores that investment protections are not absolute but are linked to the contribution of foreign investors to host state development goals. This perspective situates investment within a social contract, emphasizing responsibilities toward communities and public welfare alongside private rights. For instance, in Saluka Investments BV v Czech Republic, the tribunal stressed the necessity of striking a fair balance between the legitimate interests of foreign investors and the host state’s duty to pursue its economic and social policies. This approach highlighted that investment protection operates within a broader framework of public welfare considerations, rather than as an isolated set of private entitlements. Similarly, in David Aven v. Costa Rica, the tribunal gave substantial weight to environmental protection as an expression of legitimate regulatory space, illustrating how distributive and developmental concerns can inform arbitral reasoning.

Second, legitimacy-oriented reasoning allows tribunals to interpret investor and state conduct in light of societal expectations, such as equitable resource allocation, environmental sustainability, and human rights compliance. The Bilcon v Canada case illustrates this tension: while the tribunal found a breach of NAFTA obligations in the environmental assessment process, the award was widely criticized for disregarding broader community and ecological concerns, thereby exposing the risks of neglecting developmental expectations. Similarly, in Glamis Gold v United States, the tribunal engaged with conflicts between mining rights and the cultural and social interests of indigenous communities, ultimately recognizing the state’s regulatory authority to protect these values. These cases demonstrate how developmental and distributive dimensions can shape both the reasoning and outcomes of arbitral proceedings, even absent explicit treaty mandates.

Third, framing the right to development as a legitimacy-building principle enhances the credibility of ISDS itself. When tribunals demonstrate sensitivity to public interests, distributive justice, and sustainable development, they cultivate broader acceptance among host states, affected communities, and the international community. The Methanex v United States award illustrates this dynamic: the tribunal upheld environmental regulations restricting harmful chemicals, affirming that legitimate public welfare concerns may prevail over investor claims. Similarly, in Chemtura v Canada, the tribunal endorsed regulatory measures protecting human health and the environment, underlining that investment law cannot ignore developmental imperatives without undermining its legitimacy. These cases collectively highlight that tribunals already engage, albeit inconsistently, with legitimacy-oriented concerns, offering fertile ground for operationalizing the right to development as a normative compass.

In short, the sociological and relational character of the right to development aligns naturally with a legitimacy-based approach. By emphasizing recognition, coordination, and resonance with societal norms, this framework enables ISDS to harness the right’s normative potential, even where formal legal enforceability is limited. Integrating this right more explicitly into arbitral reasoning would not only bridge the gap between abstract aspirations and the practical realities of investment arbitration but also reinforce ISDS’s own contested legitimacy.

C. Operationalizing Legitimacy: Dimensions Through Which the Right to Development Resonates

The concept of legitimacy has undergone significant evolution across political science, sociology, and legal theory. Early accounts, most prominently associated with Max Weber, emphasized the subjective dimension of legitimacy, namely the belief in authority (Legitimitätsglaube) rooted in shared social acceptance. Weber warned that authority collapses once it is perceived as serving only the interests of rulers rather than the collective good, highlighting the inherently relational nature of legitimacy. Building on this foundation, David Beetham argued that legitimacy encompasses both subjective recognition and an objective normative dimension: compliance with established rules must be justifiable in terms of widely shared societal values. Niklas Luhmann further developed the idea of “legitimation through procedure,” emphasizing impartiality, transparency, and fairness in decision-making as fundamental to modern legitimacy. Subsequent scholarship introduced distinctions between substantive and procedural legitimacy, input and output legitimacy, and more recently, models such as Vivien Schmidt’s tripartite framework of input, output, and throughput legitimacy. Across these debates, a consistent insight emerges: legitimacy is multi-dimensional, relational, and context-dependent, operating as a complement rather than a substitute for legality.

Within international law, legitimacy can be conceptualized through a dual lens, combining normative justifiability with social recognition. Normatively, it concerns whether a legal or institutional order is defensible as appropriate, reasonable, and consistent with principles of justice. Descriptively, it examines the extent to which affected actors, states, local communities, civil society, and other international stakeholders, recognize and accept the authority of the order. This dual perspective is particularly relevant in international adjudication, including ISDS, where tribunals may strictly enforce treaty obligations while facing persistent questions regarding the social credibility, justice, and responsiveness of their decisions. When legal rules are abstract, vague, or contested, legitimacy provides an evaluative framework that legality alone cannot offer.

Applied to the Right to Development, legitimacy operationalizes the norm’s sociological essence within ISDS through three interrelated dimensions. First, procedural fairness ensures that relevant stakeholders, including host states, local communities, and civil society, have meaningful opportunities to participate in decision-making processes. Procedural fairness does not simply mean opening the door to amici or counterclaims, but requires arbitral processes to be conducted in ways that acknowledge and symbolically integrate the voices of communities and affected stakeholders. Transparency of proceedings, reason-giving addressed to public concerns, and openness of hearings can generate legitimacy by signaling that the tribunal is attentive to constituencies beyond the immediate parties. Second, substantive equity focuses on whether outcomes genuinely reflect the distributive and developmental objectives underlying the Right to Development. Even where treaty language does not explicitly mandate developmental considerations, tribunals can interpret their powers to reinforce sustainable development, equitable resource allocation, and societal welfare, ensuring that the substantive purpose of the norm is not obscured by formalistic legality. Third, shared belief or sociological resonance gauges the alignment of tribunal decisions and institutional practices with widely recognized societal expectations and collective understandings of justice and development. The Right to Development derives its normative force from recognition by multiple actors and from its capacity to mediate collective interests, rather than from being a narrowly enforceable legal entitlement.

These dimensions illustrate how the Right to Development can function as a legitimacy-building norm within ISDS. By engaging procedural, substantive, and social mechanisms, tribunals and policymakers can transform the norm from an often “unapplied” or peripheral principle into a meaningful benchmark for assessing the fairness, credibility, and societal acceptance of arbitration outcomes. This approach allows the Right to Development to influence both perceptions of justice and the practical governance of international investment, demonstrating that its normative authority lies not solely in codified legal rules, but in the resonance it achieves through multi-actor recognition and alignment with collective aspirations.

V. A Functional Approach to Social Norms: Incorporating the Right to Development Through Legitimacy

The legitimacy of international investment arbitration (ISDS) has long been contested on grounds of democratic deficit, distributive imbalance, and limited responsiveness to broader societal concerns. Building on the three dimensions of legitimacy: procedural fairness, substantive equity, and shared belief. This section demonstrates how the Right to Development can function as a normative and sociological benchmark within arbitral practice. By embedding the Right to Development into ISDS, tribunals can not only assess but also reinforce the legitimacy of their authority.

1. Procedural Fairness: Expanding Participation and Transparency

Procedural fairness lies at the heart of legitimacy because it determines whether affected stakeholders view decision-making processes as inclusive, transparent, and accountable. In the ISDS context, arbitration has often been criticized as a “closed shop,” accessible only to states and investors, while local communities, NGOs, and civil society, the actors most directly affected by investment projects, remain voiceless. The Right to Development, with its emphasis on participatory development, provides a powerful rationale for procedural reforms.

A number of arbitral precedents illustrate the gradual opening of ISDS procedures. In UPS v. Canada, the tribunal acknowledged but cautiously circumscribed petitions from NGOs, signaling that investment disputes can raise issues beyond the immediate parties. In Suez v. Argentina, the tribunal admitted amicus curiae submissions from NGOs on the public interest dimension of water services. More recently, in Philip Morris v. Uruguay, the tribunal accepted amicus briefs from the WHO and PAHO, underscoring that matters of public health justify broader participation.

Institutional reforms reinforce this trajectory. ICSID first introduced provisions for amicus curiae submissions in its 2006 Arbitration Rules, and its 2022 amendments went further by strengthening transparency, explicitly regulating third-party participation, and mandating broader publication of awards and submissions. In parallel, UNCITRAL’s 2014 Transparency Rules required open access to pleadings, hearings, and documents. At the treaty-making level, states such as United States and Netherland have incorporated similar commitments into their model agreements, presenting transparency and inclusivity as integral to the legitimacy of ISDS. Taken together, these reforms demonstrate a gradual but discernible trend towards embedding participatory fairness in investment arbitration, resonating with the Right to Development’s emphasis on consultation and inclusion.

Yet procedural fairness remains unevenly applied. Tribunals often exercise discretion narrowly, rejecting NGO submissions as irrelevant or politically motivated. Critics argue that amicus participation, while symbolic, rarely shapes final outcomes. The Right to Development can serve here as a substantive benchmark: tribunals should view inclusivity not as an optional procedural add-on but as a normative requirement tied to development-oriented justice. Moreover, innovations such as structured community hearings, expert panels on sustainability, or procedural standing for host-state agencies representing marginalized groups could operationalize the Right to Development principles more fully.

By institutionalizing such mechanisms, arbitral proceedings would address one of the central criticisms of ISDS that it privileges private and state elites at the expense of broader societal stakeholders. This expansion of procedural fairness through the Right to Development does not merely improve optics; it strengthens the legitimacy of arbitration by making processes more responsive to developmental justice.

2. Substantive Equity: Balancing Investor Protection and Developmental Outcomes

Beyond procedure, legitimacy depends on whether arbitral outcomes reflect distributive fairness and developmental objectives. The Right to Development emphasizes not only growth but also equitable participation in, and distribution of, the benefits of development. Substantive equity requires tribunals to consider whether investor protections are interpreted in ways that genuinely advance societal welfare.

Several arbitral awards demonstrate how distributive concerns surface in ISDS. In Grand River Enterprises v. United States, the tribunal addressed the conflict between investor claims and the rights of indigenous communities over land use, highlighting how environmental protection and community participation can shape arbitral legitimacy. Similarly, in AES v. Hungary, the tribunal acknowledged the state’s regulatory space in setting energy tariffs, recognizing that economic measures aimed at the public good may constrain investor expectations. By contrast, in Thunderbird v. Mexico and CMS v. Argentina, tribunals privileged investor claims despite broader societal and policy concerns, reinforcing the critique that ISDS often elevates formal legality over distributive equity.

Other cases highlight tensions between investor protections and societal objectives. In Abengoa v. Mexico, the tribunal found liability for measures taken by local authorities to protect the environment, largely privileging investor expectations over community welfare. Similarly, in Occidental Petroleum v. Ecuador, the tribunal awarded substantial compensation without meaningful consideration of social distribution or state development constraints. Vivendi v. Argentina further illustrates how arbitral reasoning can favor investor claims even in contexts where public opposition and social interests are significant. These decisions exemplify ISDS’s formalistic application of legality at the expense of substantive equity, fueling critiques of its distributive bias.

The Right to Development offers tribunals a framework to recalibrate this balance. By interpreting standards such as FET or expropriation in light of developmental objectives, tribunals can ensure that investor rights do not overshadow host-state obligations to promote sustainable development. Emerging treaty practice supports this. For example, The Morocco–Nigeria BIT (2016) and the EU–Vietnam Investment Protection Agreement explicitly reference sustainable development, environmental protection, and human rights, signaling a normative shift toward Right to Development-compatible interpretations.

Ultimately, incorporating the Right to Development into substantive equity does not entail granting tribunals law-making powers but rather acknowledging development-sensitive considerations as part of treaty interpretation. This interpretative approach makes distributive outcomes visible, counters perceptions of bias, and situates ISDS within the broader normative architecture of international law.

3. Shared Belief: Resonance with Collective Norms of Justice and Development

Legitimacy is not only about process or outcome but also about resonance with widely shared beliefs. Max Weber’s insight that authority collapses when seen as self-serving applies acutely to ISDS, often perceived as privileging foreign investors at the expense of host communities. The Right to Development, endorsed by UN declarations, the 1986 Declaration on the Right to Development, the 2030 Agenda for Sustainable Development, and countless regional initiatives, represents a collective belief in development as a universal entitlement.

At the systemic level, legitimacy crises have prompted reform efforts explicitly tied to shared beliefs. UNCITRAL Working Group III’s deliberations on ISDS reform repeatedly invoke “public confidence” and “trust in the system” as guiding principles. The EU’s push for a multilateral investment court likewise seeks to reestablish legitimacy by aligning ISDS with societal values of transparency, accountability, and fairness. These reforms resonate strongly with the Right to Development, which embodies the collective conviction that investment must serve public welfare.

Ignoring these shared beliefs risks delegitimizing ISDS altogether. Scholars such as Andrea Bianchi emphasize that legitimacy requires not only compliance with rules but also alignment with the values recognized by affected actors. By referencing instruments like the 1986 Declaration on the Right to Development or the Sustainable Development Goals, tribunals can embed their reasoning within a widely accepted normative framework, thereby enhancing the system’s credibility.

The Right to Development thus functions as a social anchor for legitimacy: it signals that arbitration is not indifferent to distributive justice or developmental needs but is responsive to collective understandings of fairness. In doing so, it bridges the gap between formal legality and societal acceptance, ensuring that ISDS is viewed not as an alien system imposed from above but as a mechanism compatible with global developmental aspirations.

VI. Conclusion

This study demonstrates that the right to development functions primarily through social, political, and institutional mechanisms rather than formal legal enforcement, rendering it poorly suited to the traditional legality-based framework of ISDS. Historical evolution, institutional design, and arbitral practice reveal persistent structural and doctrinal barriers: ISDS privileges bilateral, investor-initiated claims, limits tribunal authority to consent-based mandates, and is reinforced by professional norms that emphasize monetary remedies and legal predictability over collective and developmental concerns. As a result, developmental claims are often relegated to the periphery of arbitral proceedings, with limited recognition of their sociological and relational dimensions.

A legitimacy-based approach, by contrast, provides a complementary evaluative lens that captures the normative force of the right to development. By emphasizing procedural fairness, substantive equity, and shared societal beliefs, tribunals can interpret investment obligations in ways that promote sustainable development, equitable resource allocation, and social welfare, without requiring formal treaty incorporation. Such an approach not only enhances the social and political acceptance of arbitration outcomes but also reinforces the broader credibility and normative coherence of the investment regime.

Ultimately, operationalizing the right to development through a legitimacy-oriented framework bridges the gap between abstract aspirational norms and practical adjudication, allowing ISDS to accommodate both investor protections and collective societal goals. Future reforms of investment arbitration should consider procedural innovations, multi-stakeholder engagement, and non-monetary remedies to realize the potential of the right to development as a legitimacy-building benchmark in international investment law.