Theorizing Backlash: Supranational Governance and International Investment Law and Arbitration in Comparative Perspective

Theoretical understandings of the backlash against international investment law and arbitration can benefit from examining analogous dynamics in supranational governance more generally. Two features characterize both systems: the delegation of regulatory power to functional pre-commitment agents beyond the State; and the persistence of constitutional legitimacy in State-level principals. In these circumstances, the ‘agency-cost problem’ is aggravated in two ways that find surprising support in the literature. Global administrative law, for example, comes close to rationalizing a system of ‘agents without principals’ by bracketing whether any legitimating connection between the two is possible. Pluralist-constitutional theorists, by contrast, cast pre-commitment agents as representatives of a global constitutional order, thus rationalizing a ‘principal-agent inversion’. Either way, a break occurs in the ‘power-legitimacy nexus’ thus leading to backlash.