Cutting the Gordian Knot: Investment Dispute Settlement À La Carte

Abstract

This paper examines the different approaches proposed for investment dispute settlement reform by major players in the global North and global South – ranging from incremental changes that respond to specific criticisms of the present-day investor-state dispute settlement system to the development of far-reaching institutional reforms, such as the establishment of a multilateral investment court. We observe considerable convergence of the main models on the objectives of reform and on many procedural features. In respect of dispute settlement design, by contrast, the main models are mutually incompatible. Drawing on the dispute settlement design under the United Nations Convention for the Law of the Sea (UNCLOS), we introduce, as a solution for the way forward, the idea of “dispute settlement a la carte“. This refers to a model that allows states to choose, under the umbrella of a common framework, among different modes of investment dispute settlement. This would encompass the creation of a multilateral investment court to whose jurisdiction states and organisations can voluntarily submit, but also provide states with the option of continuing to use investor-state arbitration or inter-state arbitration to settle investment disputes. Such a model could provide a common framework for investment dispute settlement reform, allowing different states and organisations to pursue different structural models for investment dispute settlement, while providing them with a platform that promotes convergence where possible. This would ensure representativeness of the regime and a degree of interpretative unity and safeguard the ability of states and organisations to shape their reciprocal obligations.