International Investment Court Research Articles

Assessing Recent Proposals to Reform the Investment Treaty Arbitration System

Supervisory Committee Supervisor Dr. A. Claire Cutler (Department of Political Science) Outside Member Andrew Newcombe (Faculty of Law) Economic globalization, the liberalization of markets, and the opening of once closed societies have all heralded the remarkable emergence of the current system of investment treaty arbitration. The current system, however, has attracted significant criticism and calls for reform. This thesis reviews the historical employment of arbitration in international society and the circumstances that lead to the emergence of the current system of investor-state dispute settlement. Following this, two recent proposals for reform of the current system are outlined: the creation of an international court of investment and the implementation of appellate mechanisms for investment treaty arbitration. The thesis concludes by offering an assessment of these proposals and argues for the rejection of the proposal to replace the current system with an international investment court, but offers a cautious endorsement of appellate mechanisms.

Against Imperial Arbitrators: The Brilliance of Canada's New Model Investment Treaty

Investment treaty arbitration has become politically “toxic” even in states that pioneered the development of investment treaties. There is consensus on the need for reform. But there is a dearth of historical research on what went wrong with investment treaties, when it happened, or how to find the way forward in light of the past. As a result, reform efforts have a stumbling quality. One can see this in multilateral fora, such as the United Nations Commission on International Trade Law (UNCITRAL), where over four years of study and negotiations have produced little consensus. One can also see it in the investment treaty practice of individual states, such as Canada, which has recently lurched across the spectrum from investment treaty arbitration to a permanent international investment court, to the abandonment of investor-state dispute settlement (ISDS), and back to investment treaty arbitration. This article fills the gap in understanding by explaining what went wrong with investment treaty arbitration and when it happened. It demonstrates that the customary international law on state responsibility for injuries to aliens evolved during the 19th century to protect foreign investors against exceptional failures of the nightwatchman and rule-of-law states. As the consensus regarding customary international law standards of treatment unraveled during the 20th century due to the spread of communism, decolonization, and economic nationalism, capital-exporting states turned in bilateral investment treaties (BITs) to uphold traditional principles regarding the protection of foreign investment. Starting in the late 1990s, however, an unexpected surge of claims brought under NAFTA’s investment chapter fortuitously opened the door to the central problem of modern investment treaty practice: the rise of “imperial arbitrators” who do not merely police exceptional failures of the nightwatchman and rule-of-law states, but who choose to second-guess the normal operations of modern regulatory states without any meaningful checks or balances. Although the NAFTA Parties nipped that development in the bud, the rise of imperial arbitrators leapt to the broader universe of investment treaty arbitration, where it flourished until claims against developed states for measures such as the phaseout of nuclear power brought investment treaty arbitration to a crisis point. Seeking a way forward in light of the past, the article examines Canada’s recent experimentation with investment treaty reforms, including the development of a permanent international investment court in relations with the EU, the complete elimination of ISDS in relations with the United States, and a return to traditional investment

Behavioural Economics and ISDS Reform: A Response to Maria Laura Marceddu and Pietro Ortolani

Abstract Academic investigators have used behavioural economics, a method developed originally to study consumers and their sentiments towards products, to study matters of public policy. A recent article in the European Journal of International Law – ‘What Is Wrong with Investment Arbitration? Evidence from a Set of Behavioural Experiments’ – gives a detailed summary of a series of experiments performed in order to study public sentiment towards investment arbitration. The investigators, Maria Laura Marceddu and Pietro Ortolani observe that public sentiment improves towards the outcome of a dispute settlement procedure when survey respondents are told that the procedure was a ‘court’ with tenured judges, and it worsens when they are told that it was ‘arbitration’ with temporary appointees. From their observations, Marceddu and Ortolani conclude that an international investment court, such as that which the European Union promotes, is a good idea. We suggest, however, that a further inquiry should investigate in greater detail public understanding of what qualities the individuals who serve as judges or arbitrators ought to display, as distinct from the institutional format in which dispute settlement takes place.

Legal Analysis of the Permanent International Investment Court and Its Role in Establishing Consistency under International Investment Law

Legal Analysis of the Permanent International Investment Court and Its Role in Establishing Consistency under International Investment Law

Legal analysis of the permanent international investment court and its role in establishing consistency under international investment law

Legal analysis of the permanent international investment court and its role in establishing consistency under international investment law

Evaluating an International Investment Court for International Investment Disputes Under European Union’s Proposal

Berserk resentment of the existing framework regulating the international investment protection system and the operating of investment tribunals have direct to a prevalent perception that there is an immediate need for reform. This is especially pronounced having to do with Investor-State dispute settlement (ISDS), where there is an overall perception that it is not anything but an unfair and unbiased arbitration system available to decide disputes between states and foreign investors. Therefore, ISDS has been obtained a reputation for being non-transparent, one-sided, and contradictory in all decisions made by ISDS tribunals. The European Union (EU) has responded to this need, by proposing an international investment court; in this research, an attempt is making to look at this court, according to the European Union’s proposal. Moreover, the research explores the potential in creating this international investment court since a system can be drastically altered. However, some criticism can be addressed by international investment courts. However, specific steps can be taken to improve the international community’s investor-state dispute settlement system by re-valuating all the objectives and goals to solve international investment disputes.

Enforcement of Investment Court Decisions under the New York Convention: A Search for Defining Elements

This paper explores whether a decision rendered by an international investment court or similar body would be enforceable in the courts of third States as a ‘foreign arbitral award’, pursuant to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. After asserting the premise that an investment court would be harmonious with States’ existing obligations under the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), this paper reviews salient aspects of the New York Convention’s travaux preparatoires, and its use to enforce the decisions of bodies that challenge assumptions concerning what features make an award ‘foreign’ and ‘arbitral’. The paper then charts a new path by gauging the meaning of ‘arbitration’ in international economic law, in light of its widely ratified usage decades later in the distinctive arbitral procedures of the World Trade Organization (WTO). Drawing from this variety of contexts, the paper concludes by linking the interim arbitration mechanism adopted by some WTO members in April 2020 to the institutional body that may yet emerge from UN Commission on International Trade Law (UNCITRAL) negotiations on the reform of investor-State dispute settlement (ISDS).

The Chilling Effect

Investor-State Dispute Settlement (‘ISDS’) poses significant challenges in respect of tobacco control, public health, human rights, and sustainable development. Two landmark ISDS rulings provide procedural and substantive guidance on the interaction between ISDS and tobacco control. The ISDS action by Philip Morris against Uruguay in respect to graphic health warnings raised important procedural and substantive issues. The ISDS matter between Philip Morris and Australia over the plain packaging of tobacco products highlighted matters in respect of abuse of process. In the Trans-Pacific Partnership, there was a special exclusion for tobacco control measures in respect of ISDS. There was also a larger discussion about the role of general public health exceptions. In the Comprehensive Economic and Trade Agreement, there was a debate about the application of ISDS to intellectual property rights. In the European Union, there has been discussion of the creation of an international investment court. In the renegotiation of the North American Free Trade Agreement, there has even been calls to abolish ISDS clauses altogether from both Republicans and Democrats. This article concludes there is a need to protect tobacco control measures implementing the WHO Framework Convention on Tobacco Control 2013 from further investor and trade challenges.

Robbing Peter to Pay Paul? isds and ics from an eu Law Perspective

In 2009 the Treaty of Lisbon conferred upon the European Union the exclusive competence on foreign direct investments (Article 207 tfeu). Following from this new competence the eu has carried out a comprehensive regulation of trade and investment issues and reforms which include the creation of an International Investment Court, as proposed by the European Commission in both ceta and ttip negotiations. This article analyses some of the core legal issues of the proposed Court from a European perspective and comes to the conclusion that the same eu constitutional obstacles allegedly posed by isds are present in the ics. As a result, the Commission’s proposal weakens the perception of isds as a fair and legitimate mechanism to deal with investment-state disputes, whereas it perpetuates the existence of an external and parallel mechanism of dispute resolution outside the European court system.

The Future of International Investment Regulation: Towards a World Investment Organisation?

With growth in foreign investment and in the number of companies investing in foreign countries, the application of general principles of public international law has not been deemed adequate to regulate foreign investment and there is, as yet, no comprehensive international treaty on the regulation of foreign investment. Consequently, states have resorted to bilateral investment treaties (BITs), regional trade and international investment agreements (IIAs) and free trade agreements to supplement and complement the regime of protection for foreign investors. In the absence of an international investment court, states hosting foreign investment or investor states have opted for investor-state dispute settlement mechanism (ISDS). This mechanism has brought about its own challenges to the international law of foreign investment due to inconsistency in the application and interpretation of the key principles of international investment law by such arbitration tribunals, and further, there is no appellate mechanism to bring about some cohesion and consistency in jurisprudence. Therefore, there are various proposals mooted by scholars to address these challenges and they range from tweaks to BITs and IIAs, the creation of an appellate mechanism and the negotiation of a multilateral treaty to proposals for reform of ISDS only. After assessing the merits and demerits of such proposals, this study goes further, arguing for the creation of a World Investment Organisation with a standing mechanism for settlement of investment disputes in order to ensure legal certainty, predictability and the promotion of the flow of foreign investment in a sustainable and responsible manner.

Comprehensive Economic and Trade Agreement, ISDS and the Belgian Veto: A Warning of Failure for Future Trade Agreements with the EU?

The recent free trade negotiations between the EU and Canada have provided a cautionary tale for the future of international trade involving the EU. Investor-State dispute settlement (or ‘ISDS’) has been a contentious element of EU negotiations and has been supplanted in the Comprehensive Economic and Trade Agreement (or ‘CETA’) by a new international investment court model. In the fall of 2016, the new investment court and regional politics involving Belgium became a flash point in the final stage of the signing of CETA. Although the Agreement was signed on 30 October 2016, the authors examine the question whether the continuing headwinds faced by CETA sends a message that all future trade agreements with the EU may experience similar problems.

IN SEARCH FOR THE OPTIMAL MODEL FOR RESOLVING INTERNATIONAL INVESTMENT DISPUTES

International Centre for Settlement of Investment Disputes (ICSID) has been set as an authoritative forum for investment dispute resolution. But lately it’s been perceived as dealing with legitimacy crisis. At the same time, within the framework of TTIP negotiations, the European Commission has proposed the formation of International Investment Court. It is still uncertain whether this proposal is going to be adopted and implemented, but among its anticipated effects is the replacement of investor-to-state dispute settlement system, which is reflected in ICSID. This paper explores the uniqueness of ICSID by focusing on a particular part of procedure: the annulment. The analysis demonstrates that the annulment procedure raises significant legal and political issues, which have the potential to undermine social legitimacy of the system as a whole. The aim of this paper is to look into the possibility to place the International Investment Court as a mode to overcome those issues, both legal and political ones.

Is Investor-State Arbitration Publicc?

The essay critiques prevailing descriptions of investor-state arbitration (ISDS) that see this mechanism as a form of ‘public’ adjudication requiring exclusively ‘public law’ reforms going forward, culminating in, as the European Union has recently suggested in the course of negotiations for the investment chapter of the Trans-Atlantic Partnership, its replacement by a permanent international investment court in lieu of arbitration using party-appointed arbitrators. It is skeptical of the ostensible public/private divide and most of the ten reasons advanced in the literature, premised on that divide, for concluding that the international investment regime, and particularly ISDS, is public. It next critiques ten widely praised public law prescriptions for change to the regime or ISDS. It concludes with ten broad lessons for why ISDS, in its current form, is best viewed as a ‘hybrid’ between public and private.

The European Union's Proposal for an International Investment Court: Significance, Innovations and Challenges Ahead

Rampant discontent with the system that governs the protection of international investment and the functioning of investment tribunals has led to a widespread view that there is an urgent need for reform. This is particularly pronounced in the context of investor-state dispute settlement (ISDS). The European Union (EU) has responded to this need by proposing the creation of an international investment court. With its political weight, the EU confers unprecedented legitimacy on the critics of the current ISDS system and breaks with the latter's background in commercial litigation. The article explores the EU proposal, focusing on its significance, innovative provisions, and projected impact. It argues that the international investment court constitutes a ground-breaking reform proposal for ISDS but it also faces challenges. These need to be tackled in order to avoid affecting the court’s “legal feasibility” and prospective functioning, and the article proposes steps that can help address these issues.

A Case for an International Investment Court

The article elaborates on the lack of objective guarantees of independence and impartiality in the existing system of investment treaty arbitration. This founds a case for an international investment court to replace the existing system. The argument proceeds in three steps: (1) investment treaty arbitration is uniquely a form of public law adjudication, constituted at the international level; (2) as constituted it does not satisfy standards of independence and impartiality in public law adjudication; and (3) various reasons that might be offered to justify this failing are unsatisfactory in light of the importance of these standards. For this reason, states should be encouraged to establish an international investment court in accordance with well-known principles of judicial decision-making. Above all, alternatives to the existing system should be measured against the criteria that typically apply in public law, especially the related principles of openness and independence. Absent these criteria being met, one does not have a system that depoliticizes disputes and subjects them to the rule of law, or that warrants the utmost respect of all parties, above all developing states.