Investment treaties, which provide rights to foreign investors, have proliferated since the late 1980s. Many of them include investor-state dispute settlement (ISDS) provisions, an instrument of public international law that allows investors to sue states for alleged discriminatory practices. What “discriminatory practices” encompasses is subject to interpretation, and ISDSs have increasingly become controversial when challenging states’ legitimacy and sovereignty to enforce regulatory measures, such as environmental policy, health, water and energy supply regulations, or fiscal and monetary policy.

In Investment Treaties and the Legal Imagination: How Foreign Investors Play by their Own Rules, Nicolás M. Perrone traces the intellectual and institutional history of today's investment treaty and ISDS practices. The author argues that the early promoters of international investment protection—whom he refers to as the “norm entrepreneurs”—succeeded in crystallizing a particular legal imagination around foreign investment relations. This legal imagination had performative effects and still thrives in both international investment law and investment dispute settlements. The unknown story Perrone exposes is important for international law scholars and practitioners, since understanding the roots of the legal imagination underpinning the existing international legal regime is crucial for those who are advocating significant reforms. Additionally, the book makes valuable contributions to the business history field since many of the norm entrepreneurs who played a decisive role in shaping the legal imagination were businesspeople or members of business interest associations. Furthermore, the main beneficiaries of the international legal regime they helped give birth to were international banks and multinational companies. Perrone's narrative, as a result, is deeply intertwined with the history of how international business dealt with political risks after 1945.

The author first introduces the main characteristics of foreign investors’ rights, investment treaties, and ISDS. The way investor rights were imagined and conceptualized shaped the relations between investors, states, and local communities. The rationale behind international investment protection was an assurance of predictability for foreign investors, but it might come “at the cost of the autonomy and the expectations from others” (p. 23). The analysis then goes back to the 1950s and the promoters of this investment protection doctrine, focusing particularly on the drafts of two iconic norm entrepreneurs: Hermann Abs, head of Deutsche Bank, who also sat on the boards of various industrial companies; and Hartley Shawcross, who was general counsel of Royal Dutch Shell and a member of the Executive Council of the International Law Association. The nationalization of the Anglo-Iranian Oil Company in 1951 and the Suez Canal crisis in 1956, as well as the need to promote free enterprise and the liberalization of capital flows, motivated several other organizations—such as the International Chamber of Commerce and the Council of European Industrial Federations—to tackle this topic. Moreover, Abs created two organizations whose sole purpose was the promotion and protection of foreign investments and whose Directing Committee recruited executives from banks, law firms, and prominent Western corporations, including Standard Oil, Credit Suisse, Nestlé, Royal Dutch Shell, and AMRO. These norm entrepreneurs of the 1950s and 1960s played a crucial role in developing the legal imagination that underpinned investment treaties and ISDS, and diffused and perpetuated them through networks and lobbying activities to governments and international organizations.

As Perrone underlines, these efforts did not pay off immediately; after 1945, many Western states were pursuing active economic policies that sometimes included the nationalization of strategic sectors, while newly independent countries viewed the enforcement of foreign investors’ rights as a potential continuation of colonial exploitation. A multilateral protection convention was not on the horizon owing to lack of support, so countries that had an interest in protecting their investors sought to establish bilateral investment treaties. The first was signed between West Germany and Pakistan in 1959. The 1970s proved even more challenging since the views of the norm entrepreneurs, dominant at the time within the OECD, were challenged by competing visions developed by the Global South and the labor movement. These groups advocated foreign investor obligations, but they progressively lost the battle in the 1980s after the elections of Thatcher and Reagan and the enforcement of the Washington Consensus. In the early 1990s, the World Bank and UNCTAD promoted investment treaties and ISDS as a way to foster investment in developing countries, and thus their numbers increased dramatically.

Lastly, Perrone develops recent ISDS cases and convincingly demonstrates that the legal imagination, further developed since the 1950s, proved adaptable and is still relevant to how arbitrators view foreign investment relations today. This imagination therefore influences the extent to which arbitrators focus on—or are silent on—issues of distribution, recognition of Indigenous ways of living, and the embeddedness of local rights. For instance, Perrone points out that it is far from clear that states and investors are opposing parties, because local elites often favor and promote the activities of foreign investors. The narrative focuses primarily on states’ inconsistent behavior, which is at the core of many ISDS, thereby perpetuating extractive logic and silencing local communities, which often have no option but to adapt.

Thanks to his use of working papers and draft speeches elaborated in the past by the norm entrepreneurs as well as recent records of ISDS, the author succeeds in showing the continuities and adaptations of the legal imagination. Nevertheless, since most of these sources are public, the process through which this legal imagination was adopted by various governments and international organizations, along with the role played by business representatives, remains partially obscure. Moreover, since Perrone focuses mainly on recent ISDS, business historians might wonder about the extent to which the first bilateral investment treaties proved useful for the expansion of Western companies in the 1960s. As these final remarks show, Perrone's book offers stimulating insights into the history of investment protection and opens the door for future analyses at the intersection of business history and international law scholarship.