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Do Investor-State Dispute Settlement Cases Influence Domestic Environmental Regulation? The Role of Respondent State Bureaucratic Capacity
Journal of International Dispute Settlement  (IF0.938),  Pub Date : 2021-04-30, DOI: 10.1093/jnlids/idaa027
Berge T, Berger A.

Does international politics influence domestic politics? In the investment treaty regime, there is currently a debate about whether investor-state dispute settlement cases influence respondent state domestic regulation. We present a systematic test of this relationship. Using two unique datasets, we examine whether investor-state cases targeting environmental measures influence respondent states’ environmental regulation. We make two theoretical contributions. First, we present an integrated typology of potential regulatory responses to investor-state dispute settlement cases. Second, we propose a novel, conditional theory of regulatory responses to investor-state cases. We argue that states’ responses should depend on their bureaucratic capacity. In our analysis, we find that respondent state bureaucratic capacity conditions the relationship between investor-state cases and subsequent domestic regulation. There is a more pronounced negative relationship between investor-state cases and regulatory behavior in states with high bureaucratic capacity than in low-capacity states.