Assessing the Rules of Appointing Arbitrators under the EU’s Investment Court System

Abstract

In recent years investor–state arbitration has faced a number of criticisms, such as the pro-investor allegation, the lack of transparency and the regulatory chilling effect. In 2015, the EU proposed an Investment Court System (ICS) in the investment chapter of the Transatlantic Trade and Investment Partnership negotiated between the EU and the US. This new mechanism is designed to improve the investor–state dispute settlement mechanisms, in particular the investor–state arbitration. A unique feature of the ICS is that it deprives the right of the disputing parties to appoint arbitrators. This is an apparent departure from the common practice of conventional investor–state arbitration, such as that conducted under the rules of the International Centre for Settlement of Investment Disputes. This new approach seems to formulate itself on the pro-investor hypothesis that asserts that the appointment of an arbitrator by an investor will lead to the appointee’s bias in favour of the investor. This paper assesses whether such methodology is justifiable and necessary by discussing the pro-investor allegation and rebutting it with empirical evidence. This paper considers the challenge procedure as the more appropriate and practical safeguard against an arbitrator’s bias.