Partisan politics and the resolution of international economic disputes

Why do some states settle investor-state dispute settlement (ISDS) claims more frequently than others? Prior research suggests that ISDS claim type and domestic political events influence a respondent state’s decision to settle. This dissertation investigates how government partisanship shapes settlement behavior across major ISDS claims, which involve substantial infringements on the property rights of foreign direct investment (FDI), and minor ISDS claims, which stem from government regulatory actions. I argue that left-leaning governments, which represent labor interests that rely on the employment and economic opportunities created by FDI, are more inclined than right-leaning governments to settle ISDS claims involving major infringements of property rights. In contrast, because left-leaning citizens place greater value on preserving domestic regulatory autonomy, left-leaning governments tend to resist settling ISDS claims that stem from government regulatory actions to a greater extent than right-leaning governments. I test this partisan theory of international economic disputes by three empirical strategies. First, I examine whether left- or right-leaning governments are more likely to resolve major or minor ISDS claims through settlement, and which governments tend to settle these different types of claims more quickly. To examine how partisan settlement patterns vary by claim type, I hand-code more than 600 ISDS claims by categorizing the underlying government actions as either major or minor based on the seriousness of the infringement. Second, I examine the micro-foundation of government settlement on ISDS claims by assessing whether partisan citizens differ in their support for settling major versus minor ISDS claims. For this analysis, I use survey experimental data from surveys fielded in the United States and Argentina. Third, I use a case study approach to examine how the interaction between interest groups and partisan governments shapes settlement outcomes, drawing on a detailed case study of Argentina. For this analysis, I rely on primary and secondary documents as well as interviews with arbitrators involved in Argentina’s ISDS claims. This dissertation contributes to the literature by demonstrating that government partisanship and the government actions that trigger ISDS claims are key factors shaping the decisions of respondent states in ISDS disputes. In addition, it sheds light on ongoing debates about reforming the ISDS mechanism. The findings of the dissertation show that left-leaning governments are particularly resistant to settling ISDS claims brought by foreign firms over government policy actions. This finding is consistent with the cases of Ecuador and Venezuela, where left-leaning governments chose not to recognize the ISDS mechanism. Notably, concerns over the ISDS system are not limited to developing countries. The European Union, motivated by concerns over ISDS claims that threaten policy autonomy, has also advanced efforts to replace the ISDS mechanism with a new legal framework. Ongoing challenges to government policy autonomy and the resulting tensions may undermine international economic cooperation and weaken the liberal international order.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Political Science

Grantor

University of Illinois Urbana-Champaign

Year dc:date

2025

Author dc:creator

• Huh, Seung-Uk

Contributors dc:contributor

• Winters, Matthew
• Pahre, Robert
• Carroll, Robert
• Yang, Yujeong

• international political economy
• IPE
• Investor-State Dispute Settlement
• ISDS
• foreign investment
• FDI
• WTO

Statement dc:rights

• Copyright 2025 Seung-Uk Huh

Language dc:language

en

Handle dc:identifier

https://hdl.handle.net/2142/132781

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/132781