Investor-state Dispute Research Articles

Reform of Investor-State Dispute Settlement – Current State of Play at UNCITRAL

In the last two decades, investor-State dispute settlement has received continuous criticism related to inter alia the legitimacy, transparency and efficiency of the current system. Since 2017, different options of how to improve the system are discussed at the United Nations Commission on International Trade Law (UNCITRAL). The reform options discussed in this context are of high political relevance, considering that investor-State dispute settlement often concerns sensitive topics related to States’ sovereign regulatory powers. In order to provide a overview for all interested parties, this article summarizes and explains the different reform options discussed at UNCITRAL in the last four years. It also presents the positions of the relevant stakeholders, evaluates some of the reform options and gives an outlook over the next steps needed to move the reform efforts forward.a

Stress Test for EU’s Investment Court System: How Will Investments Be Protected in the Comprehensive Agreement on Investment?

On 30 December 2020, the European Union (EU) and China agreed in principle to a revamped investment treaty: The Comprehensive Agreement on Investment (CAI). Notably, the EU and China have not decided which investment dispute resolution system will be included under the new agreement. Instead, the EU and China are continuing negotiations on this contentious topic. This article discusses the key features of the proposed investment court system in the context of the CAI negotiations to assess whether China could agree on such a paradigmatic change that would have systemic consequences. The article explains the objective reasons behind China’s partial support for the proposed reforms to the existing investor-state arbitration system. For example, China has supported adding an appellate body without accepting the EU’s full-fledged investment court proposal. Finally, the article identifies the points of convergence and divergence which will shape the CAI negotiations and pave the way to global investor-state dispute settlement (ISDS) reform. comprehensive agreement on investment (CAI), investor-state dispute settlement (ISDS), investment court system (ICS), United Nations Commission on International Trade Law (UNCITRAL Working Group III), Comprehensive Economic and Trade Agreement (CETA), EUVietnam Free Trade Agreement (EVFTA), State-to-state dispute resolution, Achmea case, financial responsibility regulation, European Commission

Invoking Systemic Ideals or Systemic Rules? Jurisdiction in WTO and Investor-State Dispute Settlement

How do international economic adjudicators approach the question of systemic integration? Systemic integration could be a powerful tool in the defragmentation of the international legal order. Yet, it is a complex tool, coalescing between a legal rule of interpretation and normative ideal of a coherent international legal order. By undertaking an empirical and doctrinal review of the decisions of the World Trade Organization (WTO) and investor-state dispute settlement mechanisms, the paper illustrates both the underutilisation and inconsistent application of the principle within the reasoning of those adjudicators. The paper analyses how international economic law adjudicators attempt (or perhaps fail) to define the indeterminate legal authority of systemic integration. What is contributing to this methodological pluralism in the application of systemic integration? The paper investigates both the competing ‘law-applying’ or ‘law-making’ adjudicative functions and the limitations of tribunal jurisdiction as possible explanations for the competing perceptions of the role of systemic integration in international economic dispute resolution. The underutilisation and inconsistency of systemic integration in the WTO and investor-state dispute settlement mechanisms highlights the need to bridge the gap, both theoretically and doctrinally, in understanding how systemic ideals fit within legal rules.

ISDS mechanism under the EVFTA: Comparison with the CPTPP and Implications for Vietnam

International investment plays an indispensable part in the economic development of most countries in the world. Not only does it ensure huge and stable capital flows, but it also creates jobs and transfers advanced technology to host countries. Nevertheless, in that process, investment-related disputes are inevitable and it is impossible not to mention the Investor-State dispute because of the unequal status of the two disputing parties. As a consequence, the Investor-State Dispute Settlement (ISDS) mechanism was born to resolve this particular type of dispute as well as protect the interests of foreign investors, who are always considered to be the subordinate party. This article mainly aims to study the ISDS mechanism in the European Union - Vietnam Free Trade Agreement (EVFTA) in a comparative relationship with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The authors collect, summarize, compare and analyze data from trustworthy sources and conducts the in-depth interviews with the experienced experts in law, dispute settlement and international integration. The findings show that the ISDS mechanism is basically quite similar in EVFTA and CPTPP. However, there are still notable differences in these two new generation free trade agreements in terms of the scope of application, dispute settlement agency and suit procedures. In addition, the study also highlights the situation of widespread application of the mechanism worldwide in the period 1987-2020. Besides, the difficulties and challenges that Vietnam has to face in the context of ISDS-related disputes are expected to increase in the coming time are pointed out. From the analysis, a number of implications are proposed for the state and businesses with the desire to minimize the disputes or damage caused by the disputes.

Appointing Arbitrators: Tenure, Public Confidence, and a Middle Road for ISDS Reform

When parties bring claims under investor-state dispute settlement (“ISDS”) procedures, who should serve as decision-maker? Relevant parties ask the question in different settings and with different criteria in mind. A party in a dispute, contemplating ISDS proceedings, whether by it or against it, likely will focus on the qualities of particular individuals available to serve as arbitrators. Party-appointed panelists charged under the applicable instrument with choosing a neutral or chair, and institutional appointing authorities charged with that task or with choosing arbitrators in default of party choice, will also turn their minds to candidate assessment. Different individuals or institutions might look for somewhat different qualities, but all who are called upon to make the choice will think about how best to assess the candidates.

Back to sovereignty? Policy space in investor-State dispute settlement

The paper examines how investor-State dispute settlement mechanisms -included in international investment agreements- are able to condition national policy space, even when foreign investors question measures regarding human rights, public health, or environmental protection. It also intends to identify and explain the new trends in international investment agreements that illustrate different ways out the investor-State dispute settlement labyrinth. In order to achieve the objectives, a qualitative documentary research was conducted, based on secondary sources. The new trends in international investment agreements cartography show the emergence of a new concept of sovereignty rooted in the defense of policy space -“regulatory sovereignty”.

Capital Market Incentives and Regulatory Challenges in Investor-State Dispute Settlement

Capital Market Incentives and Regulatory Challenges in Investor-State Dispute Settlement

Does the CJEU Misunderstand Investment Treaty Arbitration in Commission v Micula?

This article focuses on the recent judgment of the Court of Justice of the EU (CJEU) in European Commission v Micula (C-638/ 19 P) concentrating on two paragraphs in particular, namely paragraphs 144–145. These passages lead us to believe that the Court of Justice’s more recent and hostile attitude towards intra- EU investment treaty arbitration (in Achmea, Komstroy, and PL Holdings) might be a result of several misunderstandings by the Court on how investor-state arbitration and BITs work. The first concerns the nature of consent to arbitrate under an investment agreement. The second concerns the purpose of investor-state dispute settlement (ISDS), and the third relates to the retroactive effects of the Court’s judgment in relation to Romania’s consent to arbitrate under the Romania-Sweden BIT. From these three issues the fourth misunderstanding follows, which is a lack of clarity on the relationship between EU law and the Member States’ existing obligations under the ICSID Convention. This discussion is relevant because it shows that when a court which is foreign to a system and uses the features of that system to define and develop its own legal system, the chances that the foreign system will be potentially misunderstood or mischaracterised are very high. This in turn will not only cause legal problems, such as issues with legal certainty and the finality of decisions for already concluded arbitrations, but it will also set in motion other unexpected consequences.

Investor-state Dispute under International Investment Law

Since the last century international investment law has been developing along with the increasing number of international investment agreements such as bilateral investment treaties aiming at efficient protection for foreign direct investment. The idea to introduce comprehensive protection for foreign direct investment appeared with the States started to perceive that foreign direct investment is a must for the prosperity of economic development of the countries. Since the international investment regime has emerged it started to become universal and uniform in the international economy. The establishment of the International Centre for Settlement of Investment Disputes was a crucial step for the protection of foreign direct investment in the international investment regime. The investor-state dispute settlement system has been developing through innovations introduced by parties of the international investment regime. However, Investor-State arbitration has remained as one of the most efficient mechanisms in the investor-state dispute settlement system throughout the years.

Emerging Challenges and Opportunities in International Investment Law and Investor-State Disputes: W(h)ither Central Asia?

Emerging Challenges and Opportunities in International Investment Law and Investor-State Disputes: W(h)ither Central Asia?

The Vienna Convention on the Law of Treaties in Investor-State Disputes: History, Evolution, and Future

The Vienna Convention on the Law of Treaties in Investor-State Disputes: History, Evolution, and Future

Investor-State vs. State-State Dispute Settlement1

International investment agreements have provoked intense criticism in the policy debate during recent years. Particularly contentious has been their “ISDS” mechanisms, which enable investors to bring disputes against host countries. This paper examines whether host countries would be better off with state-state dispute settlement (SSDS), as often alleged, assuming that SSDS cause political/diplomatic arbitration costs that are not present with ISDS. Two separate reasons why host countries might benefit from SSDS are identified, but neither provides a convincing argument for host countries to move to SSDS. The paper concludes that host countries should reduce the stringency of their agreements, rather than introduce imperfections in the dispute settlement systems to reduce their bite.​

فك رموز اتفاقية الاستثمار لمنظمة التعاون الإسلامي في ضوء قضية "اتصالنا" لجمهورية العراق

Promulgated in 1981, the purpose of the Agreement on Promotion and Protection and Guarantee of Investments among Member States of the Organization of the Islamic Conference (nowadays the Organization of Islamic Cooperation) (the “OIC Investment Agreement” or the “Agreement”) is to provide guidelines for the treatment of investments between member States of the Organization. The Agreement provides for investor compensation if the State hosting the investment breaches the Agreement’s substantive terms. Disputes arising under the OIC Investment Agreement are subject to the resolution provisions in Article 17, which provides for conciliation and arbitration. Although, since its entry into force, several investors have attempted to make use of its dispute resolution mechanism, since information on the outcome of these cases is limited. The two arbitral awards that are publicly available, in conjunction with recent practice followed by investors, reveal that the dispute settlement provisions of the Agreement are not free from ambiguity. In light of the recent Itisaluna Iraq LLC and others v. Republic of Iraq case, this article sets out to elucidate a series of problematic issues pertaining to the interpretation and the application of the Agreement’s dispute settlement provisions, as they have risen from publicly availably arbitral awards and other decisions. These include whether: a) the Agreement provides for investor-State dispute settlement; b) conciliation is a precondition to arbitration; and c) investors can use the Most Favored Nation clause (MFN) of the Agreement for dispute settlement purposes. These issues are of significance for pending and future cases under the OIC Investment Agreement. Given the ambiguities of the language of the OIC Investment Agreement, it is preferable that future claimants follow the OIC dispute settlement process as faithfully as possible. Such an approach will immunize them to a great degree from jurisdictional pitfalls of importing separate dispute resolution frameworks via MFN.

Cutting-Edge Issues in International Dispute Resolution

Esmé Shirlow presented the findings of a policy paper developed in collaboration with the International Institute for Sustainable Development (IISD), titled Approaches of International Courts and Tribunals to the Award of Compensation in International Private Property Cases and Implications for the Reform of Investor-State Arbitration. The policy paper follows previous IISD work on compensation in investor-state arbitration, which left open the question of whether approaches to issues of compensation in investor-state arbitration differ from the approaches of other international courts and tribunals (hereinafter, courts), and the extent to which this comparative practice might offer inspiration or ideas for ongoing investor-state dispute settlement reform. The research presented by Dr. Shirlow seeks to answer this question by analyzing how issues of compensation have been analyzed in cases concerning alleged state interferences with private property filed before the Permanent Court of International Justice (PCIJ), International Court of Justice (ICJ), International Tribunal for the Law of the Sea (ITLOS), United Nations Convention of the Law of the Sea Annex VII Tribunals, European Court of Human Rights (ECtHR), African Court on Human and Peoples’ Rights (ACtHPR), and the Inter-American Court of Human Rights (IACtHR).

Explaining China's Approach to Investor-State Dispute Settlement Reform

Explaining China's Approach to Investor-State Dispute Settlement Reform

The UK and the Development of Investor-State Dispute Settlement

The UK and the Development of Investor-State Dispute Settlement

Intra-EU Application of the Energy Charter Treaty: A Critical Analysis of the CJEU’s Ruling in Republic of Moldova

In its recent judgment in Republic of Moldova (also known as the Komstroy case), the Court of Justice of the European Union (CJEU) took the view that the arbitration clause contained in Article 26(2)(c) of the Energy Charter Treaty (ECT) does not apply to intra-EU investor-State disputes. This article provides a critical analysis of this ruling and highlights the methodological flaws of its reasoning. As part of this analysis, it discusses the implications of the Energy Charter Treaty’s nature as a “mixed agreement” for the scope of application of Article 26(2)(c) and the CJEU’s jurisdiction to interpret the ECT. It also discusses the proper interpretation of Article 26(2)(c) pursuant to the rules on treaty interpretation laid down in the Vienna Convention on the Law of Treaties, including with the help of documents from the ECT’s travaux préparatoires. Finally, the article deals with Republic of Moldova consequences – or rather the lack thereof – for arbitral tribunals and the courts of non-EU countries.

Corporate Wealth Over Public Health? Assessing the Resilience of Developing Countries' COVID-19 Responses Against Investment Claims and the Implications for Future Public Health Crises

In the wake of the Covid-19 pandemic, states around the world swiftly enacted a multitude of far-reaching emergency responses to contain the viruses’ spread and to cope with the economic repercussions of the ensuing crisis. However, these measures detrimentally impacted the operating conditions of many businesses or, at the least, decreased their profitability. As this inevitably affected foreign investments, investors could be tempted to invoke “Investor State Dispute Settlement” (“ISDS”) clauses in International Investment Agreements (IIAs) to initiate proceedings before arbitral tribunals and seek compensation for loss of profit caused by states’ Covid-19 responses. Due to the specific circumstances in most developing countries, they were hit particularly hard by the crisis and are especially vulnerable to the threat of investment claims. It is therefore important to enable developing countries to realistically anticipate the risk of investment arbitration by assessing the chances of success of foreign investment claims against those policies that were most frequently adopted by them amidst the crisis. Against this background, this paper assesses how likely developing countries’ Covid-19 responses breached substantive standards of investor treatment under typical IIAs and which defense strategies states may invoke to justify their regulatory action. Based on this analysis, this paper concludes by formulating policy recommendations on how developing countries may enhance the resilience of their emergency responses against foreign investors amidst future public health crises.

Features of the Investor State Dispute Settlement (ISDS) Provisions under Bilateral Investment Treaties (BITs) of Bangladesh: An Overview

Abstract not available
 Dhaka University Law Journal, Vol. 31, 2020 P.85-103

Challenges in Enforcing Awards in Investor State Disputes

For many centuries, the pursuit of justice has been a universal human aspiration. Aspirations such as justice-social, economic, and political may be found in the Constitution's preamble. According to the Constitution, Article 39-A ensures that everyone has equal access to the court system. Adversarial litigation isn't the only way to settle conflicts, as the world has seen. Overcrowding in courtrooms, a scarcity of personnel, and other issues including delay, expense, and formality all point to the need for more innovative solutions. If you want to use an ADR mechanism, all you have to do is click on it. The Indian court infrastructure as it is right now is insufficient to deal with the increasing volume of litigation in a fair amount of time. Despite their best efforts, the average person may get mired in litigation for the rest of their lives, and it can even extend to the next generation in certain cases. In addition to being harassed, he risks depleting his resources in the process. All those involved in the administration of justice have a long-term interest in expediting cases and delivering high-quality justice, as has been correctly stated. The existing infrastructure of courts must be supplemented with ADR procedures as soon as possible in this context. ADR systems are being made available throughout the globe for settling ongoing disputes and at the pre-litigation stage, in addition to improving the efficiency of the judiciary's work. The sad reality is that we may be on our way to a society invaded by hordes of attorneys, ravenous as locusts, and bridges of Judges in numbers never before imagined, said former American Supreme Court Chief Justice Warren Burger. No, it's not true that the average person wants a courtroom with black robed judges, well-dressed attorneys, and ornate paneling to settle their conflicts in. People who have legal issues, like those who are in pain, want relief, and they want it as soon and cheaply as possible. In all, ADR arbitration has risen to prominence as the preeminent ADR form. As a result, its usefulness has grown. Aside from court adjudication, it's very popular since it's the only option. Each country has had a distinct legal, social, and cultural evolution throughout its history. When foreign parties are involved in commercial discussions, they may come into differences. Even if the parties can come to terms, litigation may be necessary to assist them settle their differences. Litigation may be a barrier for parties because of the various laws and processes that apply in different countries. To resolve this issue, litigation may not be the best option. The private and impartial character of arbitration makes it an ideal dispute settlement technique. In light of this, it's critical to assess if Indian arbitration law, as it now exists, is effective after being shaped by numerous conventions, treaties, laws, rules, and Acts, among other things. Accordingly, we're looking at legislative provisions as well as judicial approaches in the current study.