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Abstract

The ability to move digital data internationally has become an asset to countless businesses. Yet an increasing number of countries’ data regulations hinder these cross-border data flows. As such, many have speculated that companies could protect their interests in data flows through international investment law, a regime that lets companies sue foreign governments for harm to private assets. Yet the literature has largely been cursory or equivocal about these suits’ likely success. This Article argues that, under current law, such suits have a strong—if not unassailable—legal basis. Critically, the reality of global data regulation and digital commerce means such suits are only likely to arise in specific contexts. In those contexts, a close reading of the current law reveals that companies will have well-grounded arguments under the treaties, caselaw, and policy of today’s investment regime. The regime’s history also bodes well for them. The real viability of these suits has counterintuitive, opposing implications. On the one hand, such suits could bolster the resilience of—and even catalyze—beneficial domestic and international data regulation by solidifying emerging legal norms. On the other, they could deter countries from adopting such regulation. This negative effect results from the risk that international investment law, by superintending data regulation, will become a form of data regulation itself. To prevent this regulatory spillover, investment tribunals in data-flows cases should reinvigorate a longstanding but neglected tool in the international-investment caselaw: the Salini test. A binding application of Salini in data-flows cases can preserve international investment law’s ability to strengthen beneficial data regulation while ensuring the investment regime remains centered on its economic domain: capital flows—not data flows.

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