Re-constructing Dispute Settlement Mechanism in Trade and Investment Agreements: Key Considerations for the PACER Plus Negotiating Parties

Abstract

The last few decades have been characterized by a proliferation of Regional Trade Agreements (RTAs) which cover, inter alia, trade in goods, trade in services and investment. Hundreds of these agreements are currently in operation while a significant number are still currently being negotiated. The Pacific Agreement on Closer Economic Relations Plus (PACER Plus) falls under the latter category. While the launching of PACER Plus negotiations has been hailed by contracting parties as a development and integration instruments, the issue of the nature of dispute settlement in a final agreement that will cover both trade and investment has been a polarizing one. Taking inspiration from the World Trade Organization (WTO) dispute settlement system and the dispute settlement system established under the North American Free Trade Agreement (NAFTA), this paper will examine the relevance of disputes settlement mechanism in trade and investment agreements. In so doing, it will answer a fundamental question namely whether a single dispute settlement system should be established under PACER Plus or whether it would be necessary to establish a separate mechanism for settling trade disputes and another for investment disputes as is the case under NAFTA owing to the specificities of investment disputes.