Felipe Ford Cole1Felipe Ford Cole is a Sharswood Fellow at the University of Pennsylvania Carey Law School. He thanks Jay Butler, Melissa Murray, Guy Charles, Gina-Gail Fletcher, Craig Konnoth, and The University of Chicago Law Review Online editors for their helpful comments and feedback.

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Over the last decade, new contributions to the history of international investment law (IIL) have begun to redefine the field’s origins. Where a progressive narrative of steadily improving legal responses to the travails of moving and protecting investments around the world once stood, a more sober story of the continuities of gunboat diplomacy, resort to force, and asymmetries of power is emerging. The scholars behind the new histories of IIL, drawing on earlier critiques of similarly Whiggish narratives in international law, aim to establish a new, more nuanced relation between IIL and its history. Many challenges lie ahead in the venture into the massive tangle of previously underexplored historical events, sources, and theories. No challenge will prove as fraught as reconciling the contemporary normative ends of IIL with those behind its emergence in the late nineteenth century and early twentieth century. For most IIL scholars and practitioners today, the normative goal of IIL is the peaceful expansion of investment for the benefit of societies and investors alike. For the jurists and diplomats that shaped the core IIL doctrines in the nineteenth and early twentieth centuries, however, the goal was securing the property of investors from “civilized” races in a world of “uncivilized” races. These incongruent ends are hardly unusual for a modern body of law, but in the case of IIL, the full influence of theories of racial hierarchy is not entirely understood. This Essay provides a roadmap for this project. First, I introduce the two prevailing narratives of the history of IIL and the stakes involved in the field’s history. In Part II, I lay out some of the methodological steps necessary to resituate race more firmly in the history of IIL. Part III presents a brief case study of race in the Venezuela crisis of 1902, a historical watershed in the emergence of IIL, employing the methodological suggestions explored in Part II.

I.  Past and Present in International Investment Law

IIL’s relationship to history has been, until recently, ambivalent. Though IIL scholars and practitioners rely on history to substantiate their arguments and descriptions, the history simply complements the regular torrent of cases produced in the growing and dynamic field. But over the past decade, scholars invoking the imperative to reform IIL have rooted their claims and proposals in history. Accordingly, history has come to the fore of the IIL field in a manner previously unseen. This Part lays out the two main narratives, traditional and counternarrative, of the history of IIL and explores the stakes of the field’s history.

A.  The Traditional Narrative

The traditional narrative of IIL’s history holds that its core doctrines developed in a series of politically neutral, progressive fixes to problems encountered by foreign investors from capital-exporting nations in the capital-importing world beginning in the nineteenth century. When European and U.S. investors were denied justice in pursuing their claims in nineteenth-century Latin America, for instance, their diplomats espoused their claims, demanding, over time, a minimum standard of treatment and asserting a right to extend diplomatic protection whenever such a standard was not made available. Arbitration, the premier dispute resolution mechanism in IIL, was said to have been applied to investment disputes in the late nineteenth century as an effective remedy for increasingly complex claims arising from a wide range of denials of justice suffered by European and U.S. investors. Over the course of the twentieth century, the IIL regime and investor-state arbitration were perfected in a series of key treaties and debates between states were settled by a “grand bargain.” The bargain traded the promise of increased investment for investment protection between capital exporters and importers epitomized in the dramatic proliferation of the bilateral investment treaty (BIT) after 1959 and the International Centre for Settlement of Investment Disputes (ICSID) Convention of 1965.

In the traditional narrative, IIL is said to have underwritten economic development and strengthened the rule of law, especially after its maturation in the postwar period. Together with BITs, international investment agreements (IIAs) and megaregional trade agreements smoothed over nation-by-nation distinctions in the protections offered to investors. Beyond guarantees of security, transparency, non-discrimination, and fairness, a robust framework for the protection of legitimate expectations also emerged. By the late twentieth century, this produced exponential growth in foreign direct investment flows, from a total of $196 billion in 1989 to over $1.5 trillion in 2019. Under the assumption that more foreign direct investment led to more economic growth overall, the modern IIL regime is said to have contributed substantially to the rapid escalation of economic growth in the global South. The modern IIL regime is also credited with strengthening the international rule of law by modeling rules “applied coherently, consistently, competently, and impartially” and through its substantive guarantees like the fair and equitable treatment standard. Beyond this, the traditional narrative cites the rise of investment arbitration between states and investors—from ten total in 2001 to over 1,104 by 2020—and the dramatic decline in expropriations as further evidence.

B.  The Counternarrative

The counternarrative links IIL to the imperial expansion of European states beginning in the seventeenth century, where extraterritorial protection of chartered trading companies aligned the interest of private investors with states, thus enshrining the protection of investments in customary international law.2Kate Miles, The Origins of International Investment Law 42 (2013). During the nineteenth century and early twentieth century, challenges to the broad exercise of investment protection mounted by Latin American states and jurists insistent on equality of treatment provoked restatements from jurists in capital-exporting states that doubled down on protection through the right to diplomatic protection and a minimum standard of treatment.3Id. at 69. After decolonization, jurists from formerly colonial states advocated for larger powers for host states through measures like permanent sovereignty over natural resources, the New International Economic Order, and the Charter of Economic Rights and Duties of States. As in the nineteenth century, these measures were similarly rebuffed by capital-exporting states by means of the “constraining and neutralizing” effects of the ICSID Convention and the BIT regime. Rather than a “grand bargain,” the counternarrative sees the development of the modern IIL regime as a co-optation of the promotion of economic development and revindication of colonial power.4Id.

The counternarrative of the history of IIL contends that the modern IIL regime has had a negative impact on economic development and the rule of law. In the counternarrative, the FDI inflows that the traditional narrative claims have been conducive to economic development are instead said to have had an ambivalent or deleterious effect, promoting unequal development—benefitting few people or few regions—and returning few benefits at the high cost of strategic resources and industries. Moreover, the counternarrative points to the dramatic asymmetries involved in foreign investment. The multinational corporations that plan and direct most of the world’s foreign investment have at their disposal resources and influence that dwarf that of host countries in the global South. Moving and closing projects can be uncontroversial decisions for these firms while the same decisions represent significant losses to host countries. The modern IIL regime, per the counternarrative, has also proven detrimental to the rule of law. Investment arbitration has tended to favor investors and wealthy host nations, and, more systematically, a select few large international law firms. Structurally, investment arbitration has steadily eroded the domestic sovereignty of states beyond the removal of jurisdiction over disputes by sharply curtailing regulatory powers.

Ultimately, the key distinction between the traditional and counternarrative is their view of the relevance of the past to the present. For the traditional narrative, IIL has progressed from historical periods in which the flow of capital across borders was bound up in imperial expansion and colonial projects. Over time, it created a legal framework for enforcing the rights of investors that was neither ineffective nor violent, moving—as the title of a widely cited article suggests—“from gunboats to BITs.” For the counternarrative, contemporary IIL did not evolve past its history. These scholars argue that a fundamental preference for investor protection over the rights of postcolonial host nations emerged early on and persists in the modern IIL regime.

C.  Why the History of IIL Matters

The divergence between the traditional and counternarrative is not merely academic. For almost two decades, the IIL regime has been descending into a legitimacy crisis, a reality that apologists for the current IIL regime do not deny. The crisis is extensive. Over the past decade, the bedrock assumptions that the IIL regime promotes growth-creating foreign direct investment and that investors must be courted with strong legal protections have been shown to stand on flimsier ground than originally thought.5Two recent meta-analyses of studies of the effect of BITs and other IIAs on FDI flows find only a negligible effect after correcting for publication bias and differences in methodology. See Lorenz Reiter & Christian Bellak, Effects of BITs on FDI: The Role of Publication Bias, in Handbook of International Investment Law and Policy 1 (2020); Josef C. Brada, Zdenek Drabek & Ichiro Iwasaki, Does Investor Protection Increase Foreign Direct Investment? A Meta-Analysis, 35 J. Econ. Surv. 34 (2021). See also Joachim Pohl, Societal Benefits and Costs of International Investment Agreements: A Critical Review of Aspects and Available Empirical Evidence (OECD Publ’g, Working Paper No. 2018/01, 2018); Roberto Echandi, Jana Krajcovicova & Christine Zhenwei Qiang, The Impact of Investment Policy in a Changing Global Economy: A Review of the Literature (World Bank Grp., Working Paper 2015); Jason Webb Yackee, Do Bilateral Investment Treaties Promote Foreign Direct Investment-Some Hints from Alternative Evidence, 51 Va. J. Int’l L. 397 (2010). Earlier, but narrower, studies found positive effects on FDI. See Peter Egger & Michael Pfaffermayr, The Impact of Bilateral Investment Treaties on Foreign Direct Investment, 4 J. Compar. Econ. 788 (2004). IIAs and existing and proposed megaregional investment agreements (like the Trans-Pacific Partnership and USMCA’s change to NAFTA) have collapsed under legal-constitutional and political scrutiny. Investment arbitration, a core aspect of the contemporary IIL regime, has repeatedly been shown to favor investors from wealthy, capital-exporting states over host states—among other structural and legal deficiencies.6Relatedly, attention has been drawn to the ill effects of the changes that conforming to investor expectation does to domestic law. Last, but certainly not least, new political currents hostile to globalization in Europe and the United States have turned the traditional bulwarks of the IIL regime into its most fragile columns.

This was the troubled status of international investment before the COVID-19 pandemic broke out in early 2020. During the pandemic, it became clear that the shock to the fiscal planning and investment strategies of states and investors would not be fleeting in nature—to say nothing of the collapse of several dogmas of international economics and finance. Under the weight of these recent and ongoing developments, the call to reform the IIL regime to correct the imbalance toward foreign investors over host countries, to protect human rights and the environment, and to promote sustainable and inclusive growth only continues to rise.

The dueling historical narratives of IIL are an integral part of efforts to reform the troubled regime. The traditional narrative, focused as it is on IIL’s successful extraction from historical contexts and “politics,” creates the impression that the current crisis is not fatal. From the position of the counternarrative, the present is powerful evidence of the IIL regime’s inability to outrun its own history.

II.  New Histories of International Investment Law

Although the gradual adoption of historical methods in IIL scholarship has greatly benefited the field, an even more profound engagement with history—in substantive and methodological terms—can advance the project of transforming IIL. This Part explores possible steps toward a more thorough engagement with the history of IIL. I begin by exploring how new methods and new questions can be applied to diplomatic correspondence, a common historical source for scholars of IIL. I then describe how underexplored geographical, chronological, and topical contexts can enrich the project of historicizing IIL, examining the nineteenth century, Latin America, and race.

A.  New Methods, New Questions

Primary sources are necessary but not sufficient components of historical analysis. Reassembling the past for study requires an ensemble of contextual information in addition to referencing the documents left behind by historical actors. Consider one of the key sources for IIL: diplomatic correspondence, or the communications between diplomats, their consulates and embassies abroad, and foreign diplomats at home. This correspondence contains the inner workings and evolution of customary international law, day-by-day records of state practice as it happened in real time. Tracing the evolution of IIL through these documents can yield a remarkable amount of information: the actual disputes between states and investors, the emergence of and competition between ideas, and the key figures involved in those disputes. Over a long period of time and in conjunction with traditional sources like travaux preparatoires (the official records of treaty negotiations), the evidence to be gleaned from diplomatic sources is vast. The problem lies in the fact that diplomatic correspondence is a narrow lens that lacks context. In this mode, the sources can only speak to a narrow confluence of events as seen from within the foreign ministry or the minds of individual diplomats.

Foreign ministries, especially in the nineteenth century, were rich sites of legal, political, cultural, and social interplay. Any one dispute that emerges in diplomatic correspondence is subject to a dizzying array of forces. A barebones set of questions might include: What characterized general diplomatic practice at the time generally? What were the geopolitical stakes in the dispute? Who were the diplomats? Who were the parties? What were the regnant legal or diplomatic doctrines to be applied? Setting aside these questions and singularly citing the outcome of the dispute as catalogued in the correspondence renders, at best, an overly simplified picture of the tangled historical events and processes at multiple scales of time and space that may be dispositive to the dispute. After all, the geopolitical stakes, the diplomats, and the relevant law might all find the cited dispute and its resolution as exceptional or driven by a discrete set of forces not under consideration. This need not require entire monographs or multiyear research. Not all the broader questions may be material to the historical inquiry, which will tend to reduce the universe of historical currents, all of which reside in a well-developed secondary literature.

For IIL, there are several key questions that are likely to feature in most historical studies that focus on the nineteenth century. The first set involves investment flows: their relative size and geopolitical importance, points of origin and destinations, balance in composition between portfolio and direct forms, and their legal nature. Then there are the lawyers in their various roles as jurists, private counsel, diplomats, and judges. The transformation in their work and reception of their writing, along with the blurring distinction among their formal roles, is pivotal. The third set concerns the politics defining the relationship between foreign investors and home and host countries, and the rivalry of capital-exporting countries for new markets and within capital-importing countries.

B.  New Contexts

IIL’s origins in the mercantile underside of imperialism, colonial expansion, and neocolonialism have only recently coalesced into a comprehensive counternarrative. Many of the historical particulars have been available in the work of scholars from the Third World Approaches to International Law (TWAIL) movement and from historians of international law but have not been widely cited in the IIL field.7See generally R. P. Anand, Origin and Development of the Law of the Sea (1983); Muthucumaraswamy Sornarajah, The International Law on Foreign Investment (2017); Antony Anghie, Imperialism, Sovereignty and the Making of International Law (2007); Martii Koskenniemi, The Gentle Civilizer of Nations (2001). The novel argument is that IIL’s origins endure a modern manifestation, a straightforward claim that the past is not fully past.

In addition to the methodological concerns described in Part II.A, the new histories of IIL should consider where new studies are most sorely needed, both in time and space. Here, I examine how new periods and places of study can better focus our attention on race and the history of IIL.

1.    Late nineteenth and early twentieth centuries.

The least studied period remains the “long” nineteenth century (1789–1914). It was during this period that capital became a major export of certain European economies. Moreover, this period saw the modern characteristics of international investment capital markets, such as access to capital markets, the corporate legal form, and the emergence of the multinational corporation, first emerge. Especially critical periods are found at the formation and collapse of foreign investment bubbles, especially in those that took place during the years 1820–1826, 1850–1873, and 1873–1918.

2.    Latin America and race.

The nations of Latin America were the first major destinations for outward investment from Europe in the nineteenth century. More than a decade of brutal war fought on credit left the region’s public finances in a parlous state and drove a dramatic flight of capital. Attracting foreign investment was at the fore of fiscal planning for the region’s incipient states due to the collapse of the Spanish imperial administrative structure and the reticence of local elites to taxation.8See generally Miguel Angel Centeno, Blood and Debt: War and Taxation in Nineteenth-Century Latin America, 102 Am. J. Sociology 1565 (1997). Political fractures, which had been temporarily smoothed over by the unifying cause of independence, spilled over into palace wars and coups. In the years immediately after independence, this situation was not well known among financiers and potential investors from Europe. Instead, it was older, fanciful images of natural abundance that inspired a desire for riches. With the independence of Gran Colombia in 1822, a veritable boom of investment began in London, the leading capital market after the destruction visited on Paris in the Napoleonic Wars.9Frank G. Dawson, The First Latin American Debt Crisis 6–8 (1990). By 1825, the massive outlay in Latin American debt, hastily organized joint-stock mining companies, and merchant firms stood at £24 million, representing more than 60% of all foreign loans and a third of all the paid-in capital of listed company stock on the London Stock Exchange.10J. F. Rippy, British Investments in Latin America, 1822–1949, at 23–24 (1959); Harry English, A Complete View of the Joint Stock Companies Formed during the Years 1824 and 1825, at 10 (1827).

After the trade depression of the Panic of 1825, the penurious Latin American states defaulted on their debts—many of which had been engineered by corrupt European agents to ensure their short-term gain.11See generally Juan Flores Zendejas & Felipe Ford Cole, Sovereignty and Debt in Nineteenth-Century Latin America, in Sovereign Debt Diplomacies (Pierre Pénet & Juan Flores Zendejas eds., 2021). And the precarious mining companies, premised on mines that were soon discovered to be flooded or inoperable, collapsed in dramatic fashion. Almost immediately, spurned bondholders and failed shareholders turned to their foreign ministries for help in addressing their claims for unpaid debts and various injuries that had doomed their businesses. Individual proprietors and merchants based in Latin America, who were caught in the crossfire of palace wars and saw their property damaged or were coerced into making loans to warring parties, also wrote to their foreign ministries to demand that they take up their case for redress.12D.C.M. Platt, British Bondholders in 19th-Century Latin America—Injury and Remedy, 14 Inter-Am. Econ. Affairs 3 (1960).

This encounter between Latin American states, foreign investors, and European states refashioned customary international law, redefined investors and investments, and specified the resolution of investment disputes. It also drove the race to determine what would become international investment law. During the nineteenth century, the decline of divine authority as a source of international law gave way to new explanations that looked to the shared historical specificity of the development of European states as a new common ground for international law. In order to define European specificity, jurists in the late nineteenth century turned to the new discipline of anthropology.13Ntina Tzouvala, Capitalism As Civilisation: A History of International Law 48 (2020). They found and incorporated an explanation rooted in the novel concept of civilization. Whether humanity had common origins or not, jurists came to agree that at their “specific moment in time humanity stood divided” between the peoples that had achieved evolutionary maturity or “civilization,” “barbarians” who had not, and the “savages” who never would.14Id. at 49. Latin American investment disputes played no small role in the proliferation of this theory. The earliest anthropological studies were meant to provide essential “facts” on which British creditors of defaulted Latin American states established their claims.15Marc Flandreau, Anthropologists in the Stock Exchange: A Financial History of Victorian Science 80–81, 100–01 (2016). Their observations of mixed-race societies mired in financial disarray and political instability backed up the concept of civilization by providing a sharp contrast to the civilizational standard of white, European states emblematic of “boundedness, rationality, self-control, potency and measured manifestations of strength.”16Tzouvala, supra note 13, at 71. Robert Dudley Baxter, a noted jurist who compiled a study of national debt based on these studies, wrote that they confirmed “current hypotheses . . . [of the] decline of the Latin race and ascending march of the Anglo-Saxon and Teutonic races.”17Flandreau, supra note 15, at 81.

Jurists argued that the right of sovereignty derived from civilization—thereby placing the concept at the center of international law. James Lormier’s 1883 writings are emblematic: civilized nations were sovereign, the barbarians were only quasi-sovereign, and the savages were not sovereign.18Tzouvala, supra note 13, at 70. The way in which international law was applied to resolve investment disputes derived from this bedrock, tripartite racial distinction of the world. Since Latin America was both quasi-civilized and the principal destination of foreign investment for an extended period, it became an important arena for the creation of IIL with race at the center.

III. Race in the Venezuela Crisis of 1902

This Part examines one of the pivotal historical events in the history of IIL, the Venezuela crisis of 1902, by drawing on the methodological and contextual suggestions offered in Part II.

A.  Interimperial Rivalry and the Legalization of Diplomacy

The origins of the Venezuela crisis of 1902 lie in the emergence of the United States as a regional hegemon during the latter half of the nineteenth century and its interimperial rivalry with Britain.19See generally J. Fred Rippy, Antecedents of the Roosevelt Corollary of the Monroe Doctrine, 9 Pacific Historical Review 267 (1940). As early as 1860, the once dominant position of Britain as the main exporter to Latin America had declined to a paltry 7%, while U.S. exports reached 14%.20Rory Miller, Britain and Latin America in the 19th and 20th Centuries 64 (1993). Diplomatic outreach grew quickly, with a total of fifty new friendship, commerce, and navigation treaties between 1850 and 1870, compared to sixteen treaties before 1840.21See generally William M. Malloy, Charles Garfield & Denys P. Myers, Treaties, Conventions, International Acts, Protocols, and Agreements Between the United States of America and Other Powers, vol. 3 (1913); William M. Malloy, Charles Garfield & Denys P. Myers, Treaties, Conventions, International Acts, Protocols, and Agreements between the United States of America and Other Powers, vol. 2 (1910). The Monroe Doctrine, which stipulated an American intent to preserve republicanism in the Americas, was now understood to have the backing of a capable U.S. Navy. The gradual decline in British power coincided with a wave of outward investment; without the commercial and geopolitical importance it once enjoyed, Britain found it difficult to effectively pursue the endless claims that these investments generated.22Rippy, supra note 19.

The problem crystallized in Mexico in 1861. After several decades spent pressing successive Mexican governments for sundry unpaid debts and claims, the British joined a punitive expedition with France and Spain designed to extract a settlement, conveniently timed with the outbreak of the Civil War in the United States. Only after a bruising diplomatic exchange with the United States did the British renounce any such future actions. Instead, they argued that the United States, as the sole “civilized” power in the region, would now assume the responsibility of guaranteeing the “the moral obligation toward other nations, of restoring peace and order in Mexico, and of preventing the recurrence of scenes which disgrace humanity and neutralize . . . the international rights and natural commercial relations of civilized nations.”23Id. Over the ensuing decades, U.S. diplomats generally eschewed any interest in acting as guarantors of European investors in the region, instead promoting the use of mixed claims commissions and arbitrations to peaceably settle investor disputes and claims. But by the end of the century, U.S. diplomats and a budding generation of international lawyers eagerly took up the idea that they were at the helm of the sole civilized power in the Americas, in keeping with their commonly held belief that they were living avatars of civilization and its most important defenders.24See generally Juan Pablo Scarfi, The Hidden History of International Law in the Americas (2017); Emily Rosenberg, Financial Missionaries to the World (2004); Cyrus Veeser, A World Safe for Capitalism (2007). Toward the close of the century, in part due to an urge to maintain their civilizational status and to respond to the rise of German influence and FDI in the Caribbean, these lawyers set out to use international law—promoting treaties to formalize relations and arbitration to resolve investment disputes and claims—to ensure the standing of the United States.25See generally Friedrich Katz, The Secret War in Mexico (1983).

In 1902, the first major test of the legalized U.S. foreign relations regime came when Venezuela defaulted on its foreign debt. The default was small in monetary terms but important in the interimperial rivalry in the Caribbean between the United States, Britain, and Germany. Cipriano Castro, Venezuela’s president and caudillo, was locked in the second year of a costly war against a coalition of regional powerbrokers backed by a prominent rival, Manuel Antonio Matos, and several prominent foreign investors. During the war, foreigners had seen their property damaged, investments expropriated, and their contracts breached or voided. The default added to the fever pitch of demands for compensation. The United States, frustrated that Castro knew the Monroe Doctrine would prevent a full-scale European incursion in Venezuela, advocated for arbitration. Castro, who did not agree that the claims could not be addressed by Venezuela courts, refused to submit the claims to arbitration. In response, an allied force of British, German, and Italian navies sailed to Venezuela, arriving in December of 1902, and blockaded the La Guaira and Puerto Cabello before proceeding to seize their customhouses.26Brian S. McBeth, Gunboats, Corruption, and Claims: Foreign Intervention in Venezuela, 1899–1908 10–12 (2001). See generally Manuel Rodriguez Campos, Venezuela 1902: La Crisis Fiscal y El Bloqueo : Perfil de Una Soberanía Vulnerada (1983). Castro quickly changed tack and acceded to arbitration, signing protocols to submit the claims to a series of ten mixed-claims arbitrations with the nations representing the various claimants.

B.  The Minimum Standard

The crisis and resulting decisions from the ten mixed-claims arbitrations, known collectively as the Venezuela Arbitrations, have long been described as important precursors to the minimum standard of treatment for foreign investors. Yet subsequent discussions of the Venezuela crisis and the arbitrations have remained under the impression that Venezuela’s foreign claimants had routinely faced a “denial of justice”—the phrase appears thirty-two times in the 1001-page reports of awards—a reality not sustained by the reports of the arbitrations or in the arbitration protocols, which tasked umpires with addressing only whether injuries to property took place before fixing the amount of compensation.27Miles, supra note 2, at 68. Instead, allegations of denial of justice featured prominently in the diplomatic correspondence that preceded the blockade.28Sebastián Mantilla Blanco, Full Protection and Security in International Investment Law 89–90 (2019). One reason that reports of the denial of justice were so readily taken up by subsequent observers and jurists interpreting the Venezuela Arbitrations lies in the fact that the minimum standard was a central element of the standard of civilization. Or as Martins Paparinskis put it: “[R]ules on the treatment of aliens existed and operated simultaneously as obligations that could be breached and elaborated within the international legal order, and as a benchmark for the entitlement to be considered a fully-fledged subject of this legal order in the first place.”29Martins Paparinskis, The International Minimum Standard and Fair and Equitable Treatment 20 (2013). In this context, an allegation of the denial of justice to one investor was on its face enough to invoke the full weight of the international law.

C.  Civilization and Arbitration

When U.S. diplomats pressed fervently for arbitration during the crisis, they drew on civilization. As Ntina Tzouvala has argued, civilization contained two intertwined, underlying logics: improvement and biology. Under the former, the civilized could uplift the barbarian and the savage. The latter held that civilization could not be attained by the noncivilized as a matter of biological fact. The lawyers behind the legalization of U.S. foreign relations were undoubtedly in the former camp. Arbitration was seen as a U.S. legal artifice, originating in the famed Jay Treaty of 1794 that settled claims by Britons following the Revolutionary War by means of mixed-claims arbitrations.30Jackson H. Ralston, International Arbitration from Athens to Locarno 191 (1929). After the conclusion of another arbitration with Great Britain, the Alabama Arbitration, U.S. jurists doubled down on their advocacy of an international court of arbitration, which was eventually achieved at the 1899 Peace Conference at the Hague. Two important examples of jurists that advocated for and practiced arbitration with a sense of its civilizational pedigree are Secretary Elihu Root and Professor John Bassett Moore.

After a successful career as an early corporate lawyer in New York, Root was tapped by President William McKinley in 1899 to serve as secretary of war and charged with administering the new colonial possessions gained in the Spanish-American War. Root’s perspective on improvement during his tenure as secretary of war is epitomized in the 1901 Platt Amendment, a policy that neatly constrained Cuban sovereignty and preserved a right of U.S. intervention in order to preserve “a government adequate for the protection of life, property, and individual liberty.” The Platt Amendment’s subtle, improvement-oriented language, like its declaration that the United States “disclaim[ed] any disposition or intention to exercise sovereign, jurisdiction or control” over Cuba, was tempered by the more heavy handed policy surrounding it, like the requirement that the right to intervention be enshrined in the Cuban constitution as a precondition for the end of American occupation. In Root’s mind, this formal preservation of sovereignty under U.S. tutelage amounted to “a conservative and thoughtful control of Cuba by Cubans,” a kind of civilization by codification that could find clear support on the international stage.31Louis A. Perez, Cuba under the Platt Amendment, 1902–1934, at 37 (1986). When the Platt Amendment failed as a portable legal model in the region and instead galvanized a new generation of Cuban resistance, Root, as Professor Benjamin Coates puts it, “traded constitutional law for international law.”32Benjamin A. Coates, Legalist Empire: International Law and American Foreign Relations in the Early Twentieth Century 118 (2016). After he ended his term as secretary of war in 1904, he spent a year in private life rethinking the grand strategy of U.S. foreign policy, hewing ever closer in his thought to the necessity of a civilizing mission in Latin America.33Juan Pablo Scarfi, The Hidden History of International Law in the Americas: Empire and Legal Networks 13 (2017). Root became convinced during this period that the United States could expand its methods of civilizational tutelage further south, efforts that would “result in setting up for the people of South America a standard of good government, a respect for law, for the practical application of the principles of liberty and justice, of which they have had no knowledge before.”34Id. (citing Elihu Root, Miscellaneous Addresses 265 (Robert Bacon & James Brown Scott eds., 1917)). After his appointment to secretary of state in 1905 and after a long tour of South America in 1906, he devised a program of achieving “hemispheric hegemony through consent, moral, and intellectual leadership,” with arbitration at the forefront.35Scarfi, supra note 24, at 13.

During 1904, Root’s year in the political wilderness, the Roosevelt administration was surprised by the decision of the arbitral panel in the Venezuela Arbitrations. At issue was whether the blockading parties enjoyed preference in payment of their claims over the claimant states that had not joined the blockade. When the panel awarded the blockading states preference in February 1904, the Roosevelt administration was alarmed at the possibility that the decision might incentivize further military intervention in the region premised on investor claims. Root helped the administration craft their response, the so-called Roosevelt Corollary to the Monroe Doctrine in December 1902. Visible throughout the message is Root’s vision of spreading civilization in the Americas—but with added force. Repeated “wrongdoing” leading to the “loosening of the ties of civilized society may,” like the nonpayment of obligations, disorder, inefficiency, and indecency in “social and political affairs,” trigger intervention from the United States in the name of civilization. But an even more direct violation was any “inability or unwillingness to do justice at home and abroad,” an abstract, if discernable reference to Castro’s refusal to arbitrate and the lack of a minimum standard of treatment. At the Third Pan-American Conference in 1906, it fell on Root to defend the Corollary against the Drago Doctrine, which stood for the principle that the Monroe Doctrine prohibited armed intervention for debt collection in the Americas and was a direct reaction to the Venezuela crisis from Argentina, through the Argentine minister of foreign affairs, Luis Maria Drago. Root devised a solution that, he believed, preserved the civilizing mission of the United States in the region by requiring a recourse to arbitration before any debt-collecting intervention. James Brown Scott, the noted jurist and Root’s technical advisor at the conference, praised Root’s solution as a “legal” response to the merely “political” Drago Doctrine.36Scarfi, supra note 24, at 13. For his part, Root would later describe the victory on racial terms. “A peculiarity of the Latin races,” he wrote to a friend, “is that they pursue every line of thought to a strict, logical conclusion and are unwilling to stop and achieve a practical benefit as the Anglo Saxons do.”

While arbitration was seen as an important civilizing instrument, the arbitration proceedings themselves became important sites where ideas about race and international investment law were developed. Several of the jurists promoting arbitration at the turn of the twentieth century took on clients of their own. Moore, an international jurist of some renown in the United States, is one such example. Moore rose through the State Department ranks in the 1880s in the Grover Cleveland administration and was appointed to the Columbia Law School faculty in 1891 at age thirty-one. Moore’s growing profile in international law earned him the editorship of the Digest of the International Law of the United States after the death of Francis Wharton in 1889, publishing his first edition, in eight volumes, in 1906. In 1902, a group of U.S. investors, organized as the San Domingo Improvement Company (SDIC), hired Moore as counsel. The SDIC had bought defaulted debt contracts at a tremendous discount from a Dutch company that included the right to receive a percentage of the revenue from Dominican customshouses. Moore was tasked with lobbying the State Department and Roosevelt administration for a solution to the impasse the SDIC found itself at with the Dominican government over the contracts, from which the firm stood to make millions.

Moore was unable to persuade the Roosevelt administration to intervene diplomatically or otherwise but obtained an arbitration agreement with the Dominican government a year later. In his sprawling brief, Moore zeroed in on asignaciónes and revolutionary claims, payments that several Dominican administrations made to domestic creditors that financed the pacification of challenges to their power. The asignaciónes, Moore alleged with scant evidence, were derived from customs receipts designated for the payment of the SDIC debts and as such “too much stress” could not be placed on them. Moore drew a parallel between the “illegal expenditures” of the asignaciónes and revolutionary claims and the “wasteful expenditures” of government budgets, which were not at issue in the arbitration and whose control had never been transferred to creditors. “Whence is to come,” Moore asked rhetorically, given the miniscule funds left over from the bloated budgets, “the money to pay for any improvement, necessity, or foreign demand . . . to pay illegal expenditures such as asignaciónes . . . to pay usury and the principal sums themselves of usurious contract?” The answer was self-evident: “from the sums due to creditors.” By failing to adequately raise taxes, refusing to curtail all but essential spending, and negating the existence of the illegal expenditures, the Dominican Republic failed its foreign creditors. Though Moore personalized the Dominican actions as the “unlawful expenditure of other people’s money,” his proposed solution revealed that it was Dominican sovereignty—locked in a self-propagating mode of “improvident or wrongful acts” for the foreseeable future—that was the problem. It was not only the asignaciónes and revolutionary claims that made Dominican sovereignty fictive, but the entirety of the way that it ran its government and, most of all, the way it treated its foreign creditors. In crafting his proposed solution, Moore could thus ignore Dominican sovereignty altogether. Only a full receivership of the nation—the power to control budgets and an array of governmental appointments—would work.


Through new methods and attention to new contexts, the role of race in the history of IIL may be better understood. In the short historical exercise provided in this Essay, I have shown how race shaped the basic imperative to protect investments from the “civilized” world in the “uncivilized” world. From the perspective of Latin America, racist assumptions about the capacity of nonwhite states and societies helped to motivate the establishment of the minimum standard and investment arbitration in the early twentieth century. With new tools for studying the history of IIL identified here, we will be able to look more closely at the confluence of nineteenth and early twentieth century historical processes—colonial expansion, interimperial rivalry, and investment booms—that produced international law and financial globalization and underwrote racist theories of civilization. With this new history, we can conceive of new and farther-reaching remedies for the enduring inequalities—and their historical contingency—that remain central to the operation of international investment.

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Felipe Ford Cole is a Sharswood Fellow at the University of Pennsylvania Carey Law School. He thanks Jay Butler, Melissa Murray, Guy Charles, Gina-Gail Fletcher, Craig Konnoth, and The University of Chicago Law Review Online editors for their helpful comments and feedback.

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Featured image: tom_bullock, One Dollar.

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