This article provides an in-depth examination of the earliest investor-state arbitration appearing in the historical record—the 1864 arbitration between the Suez Canal Company and Egypt. The arbitration is fascinating because the Company’s claim of mistreatment has a strikingly modern character: under what circumstances, and with what consequences, can the government of the day change its laws in order to promote its conception of the public good, where the change negatively impacts the value of the foreigner’s investments? Egypt demanded the right to eliminate the forced labor regime upon which the canal project’s finances depended; the Company demanded compensation. The arbitral commission’s solution, based essentially on a principle of sanctity of contract, is one that finds significant support in modern jurisprudence. Citing ‘the contract’ is, and long has been, a powerful rhetorical and legal weapon for the aggrieved investor.
Keywords
investment
arbitration
infrastructure
expropriation
Suez Canal
Rights
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