The No of Tokyo Revisited: Or How Developed Countries Learned to Start Worrying and Love the Calvo Doctrine

Abstract
This article explores the negative reaction of developed countries, as host State recipients of foreign investment, when they are faced with the possibility of having its national policies and regulations challenged through investor-State arbitration, a system of adjudication of investment disputes created and promoted by developed countries over time. The discussion about the need and suitability of an investor-State settlement dispute mechanism between developed countries has been particularly relevant in preferential trade agreements involving developed countries, some already in force (like NAFTA and AUFTA), and other in current negotiation (like CETA, TTIP and TPP). The article compares the reaction of developed countries against investor-State arbitration with the past experience of developing countries with respect to investment disputes, particularly considering the experience of Latin American States in cases of ‘diplomatic protection’ and investor-state arbitration. The article concludes that developed countries can draw lessons from such experience, especially if they want to improve the international settlement of investment disputes, a mechanism that requires a reciprocal commitment from all States in order to be effective.