The Necessity of Establishing an Appellate Body in International Investment Arbitration

Abstract

Despite its significant role in settling disputes between sovereign States and foreign investors, the international investment arbitration has been subject to substantial criticisms the most important of which is the inconsistency of awards in similar cases; a serious issue that dismantles the coherence and predictability of awards and undermines the legitimacy of international investment arbitration. In this article, the issues that give rise to the current crisis as well as the potential impacts of an appellate body to be established to review the inconsistent investment arbitration awards will be discussed. In the following, various options that can serve for this purpose will be theoretically and practically assessed. Eventually, after evaluating all the proposed options, the article concludes that the International Center for Settlement of Investment Disputes (ICSID) is the best option for this purpose in a manner that the Annulment Committee of ICSID is modified in order to transform into a comprehensive, fixed, and permanent appellate body acting within ICSID to review and, if necessary, correct the appealed awards. This proposal of course entails the structural modification of ICSID and thus requires the revision of ICSID Convention. Moreover, the article proposes a number of other suggested modifications to the ICSID Convention including expansion of appeal grounds, appointing fixed appellate judges familiar with public international law, preventing judges of the appellate body from simultaneously arbitrating other investment disputes, and fixing a deadline for the appellate body to decide.