The Debate on Treaty-Based Investor–State Dispute Settlement: Empirical Evidence (1987–2017) and Policy Implications

Abstract

Abstract Over the last decade, Investor-State Dispute Settlement (ISDS) has been the most controversial issue in international investment law and policy. This paper is not intended to take sides with any position on the multiple dimensions of the ISDS debate. Instead, this note only attempts to examine and summarize the empirical evidence available which may be useful to foster a more factual and objective discussion on this controversial topic. To achieve this objective, this note will empirically assess the use of ISDS between 1987 and 2017 by focusing on eight key questions: (i) the number of ISDS disputes; (ii) the most commonly used arbitration rules, venues and arbitrators; (iii) the features of the parties involved in disputes -both investors and States; (iv) the investment protection guarantees most frequently invoked by investors and the most frequently recognized by tribunals; (v) the economic sectors in which ISDS tends to concentrate, (vi) the outcomes of the disputes, (vii) the performance of the ISDS procedures in terms of time and cost, and (viii) the frequency of ISDS relative to State-to-State investment dispute settlement. This evidence summarized in this paper shows that ISDS is a manifestation of deeper and more complex political economy in the relationship between foreign investors and host States. The debate on ISDS has deviated the attention from a more critical issue. That is, the significant number of cancellations or total withdrawal of investment projects in developing countries and economies in transition that never reach ISDS, and yet entail the same type of grievances that IIAs are supposed to prevent. This finding suggests that in practice, in many countries the principles and disciplines included in IIAs are not being fully implemented nor mainstreamed within regular administrative action at different levels of government.