The Future of Investor-State Arbitration: Revising the Rules?

Abstract

The last two decades have seen a remarkable growth in the number of investor-state disputes. Asia itself has witnessed a startling number of investment disputes. Overall, about 21% of all known investment disputes involve Asian states. Several authors predict an increasing number of disputes involving Asian actors in the future. While arbitration remains the preferred dispute resolution mechanism for resolving investor-state disputes, a number of Asian states have expressed discontent with the investment arbitration system. A few States have denounced investor-state arbitration entirely, while others have significantly reformed the dispute resolution provisions in their investment agreements. The EU, Canada and, in Asia, Vietnam have altogether dispensed with the inclusion of “traditional” investor-state arbitration in their investment agreements. In this tumultuous scenario, with Asia witnessing record foreign investment inflows and outflows, it is timely to review the current trends and recent developments in the investment arbitration framework and consider their effects on both Asian states as well as Asian investors. After explaining the current investment treaty and investment arbitration framework, this Chapter examines current trends and concerns in investment arbitration as relevant to the Asia-Pacific region. It reviews several recent developments in investment arbitration—from resolving the common concerns with investment arbitration on a piecemeal basis to a wholesale replacement of the current system—and examines their reception in Asia. It concludes that Asia has seen a considerable evolution (and, perhaps, maturity) in its international investment agreement framework, which bodes well for the region. Several international developments are likely to impact the investment arbitration framework in Asia, and it would be ideal to adapt them to the Asian context.