Multilateral Investment Court Research Articles

Designing a Multilateral Investment Court for Procedural Justice

Abstract Working Group III of the United Nations Commission on International Trade Law has embarked on a mandate to reform investor-State dispute settlement (ISDS), through identifying a set of concerns that merit multilateral procedural reform. In response, the EU has proposed creating a standing multilateral investment court. Despite the importance of procedural justice theory in domestic legal systems, its value as a resource in international dispute resolution is under-recognized. This article focuses on procedural justice through the literature on the social psychology of justice, as offering an empirically-based theoretical foundation that helps identify key elements and options in designing investment adjudication. Within ISDS reform, the authors focus on necessary innovations in independence and impartiality, transparency, participation, and correction of error, the key pillars of procedural justice research. The EU proposal suggests substituting a more traditional judicial model of dispute resolution for the current and problematic arbitral model, which aligns to a greater degree with the principles of procedural justice.

The Court of Justice of the European Union and International Dispute Settlement: Conflict, Cooperation and Coexistence

AbstractOne of the significant changes in the landscape of international law in recent decades has been the increase in the number of international courts and other forms of international dispute settlement. The EU has pushed for the inclusion of dispute settlement chapters in its trade and investment agreements, it has joined multilateral treaties that include dispute settlement mechanisms, and it has proposed the establishment of multilateral investment court. The Court of Justice of the European Union has shown a more guarded approach in recent years towards international dispute settlement. This article explores the potential ways to address these sources of conflict and allow the CJEU to coexist with other international courts.

Embedded Neoliberalism and the Legitimacy of the Post-Lisbon European Union Investment Policy

Much has been written about the ongoing legitimacy crisis of the global investment treaty regime and the system of investor-to-state dispute settlement (ISDS). In the European Union (EU), the proposed inclusion of investment protection provisions and ISDS in negotiations on the Comprehensive Economic and Trade Agreement (CETA) with Canada and the Transatlantic Trade and Investment Partnership (TTIP) with the United States triggered unprecedented levels of contestation. This article seeks to explain why EU responses to such contestation, in the form of an investment court system and a multilateral investment court, did not bring about a clear break away from the traditional ISDS model. Drawing on critical political economy perspectives, it regards the EU investment policy following the entry into force of the Treaty of Lisbon as deeply embedded in a broader neoliberal project mediated by material, institutional, and ideological configurations. Several factors have inhibited possibilities for more fundamental changes. The European Commission construed the lack of legitimacy as stemming from ISDS’ procedural features rather than questioning its social purpose. There has been no shift in the underlying social power balance, and no comprehensive counter-project has been proposed. The European Commission enjoys relative autonomy vis-à-vis other parts within the EU institutional ensembles and wider societal interests, allowing it to block more radical solutions. Finally, there were no clear signs of a fundamental departure from the neoliberal path in terms of wider EU economic regulation.

Explaining China's approach to investor‐state dispute settlement reform: A contextual perspective

AbstractChina's approach to ISDS reform is widely perceived as undecided and ambiguous. This paper provides the first detailed analysis of China's submission to the UNITRAL Working Group III and situates China's approach in the context of global dialogue of ISDS reform and competing reform proposals. The paper shows that China's open, flexible, and evolving approach to ISDS reform could be better understood by a contextual evaluation of the pertinent factors which have contributed to its formation. Moreover, this paper explains why China did not sign up to the EU's investment court system (ICS) proposal in the EU‐China Comprehensive Agreement on Investment (CAI). Lastly, the paper argues that China should reconsider its attitude towards the ICS in the CAI context and that the EU's recent suggestion that the envisaged multilateral investment court may adopt an ‘open architecture’ is likely to enhance its appeal to China.

‘The Greatest Victory’? Challenges and Opportunities for Mediation in Investor-State Dispute Settlement

Abstract This article identifies the rise of mediation as a reaction to the ‘public legitimacy crisis’ experienced by arbitration in investor-State dispute settlement (ISDS) and, more broadly, as a general symptom of the contemporary backlash against international adjudication. It offers an analysis of the nine main challenges that mediation has traditionally faced in ISDS, together with a notice of how recent developments have been contributing to unlocking its underutilized potential. It illustrates the support of numerous States, and in particular of Asian States led by China for dispute prevention and mediation, and provides a critical analysis of some of the limitations of the mediation-related reform options in the agenda of UNCITRAL’s Working Group III including the development of model clauses, a multilateral international investment law advisory centre and a multilateral investment court. The article also examines the recent UNCITRAL secretariat’s guidelines addressing some of the other obstacles faced by mediation in ISDS, including, but not limited to, governance, legislative and policy impediments and the tension between confidentiality in mediation and transparency as a structural goal. The conclusion recaps the main findings of the article and stresses the minimum common denominator quality of mediation as a means to restore balance in a reformed ISDS ‘ecosystem’.

Reforming Investor-state Dispute Settlement: The EU Multilateral Investment Court Perspective

Rapid changes to the global socio-political dynamics have led the emergence of new challenges to the investor-state dispute settlement (ISDS) mechanism. The imperfections of the existing ISDS system have shown a clear need for reforming this institution. Moreover, this is evidenced by the desire of a number of countries to create a multilateral investment court as proposed by the European Union. Will the new EU Multilateral Investment Court System be better than the current ISDS mechanisms? The Multilateral Investment Court System is the latest proposed measure in the context of multilateralism and the institutionalization of a decentralized international investment law regime. The success of the proposal will declare a new era for international investment law around the world. Still, the proposed reform of ISDS has both benefits and disadvantages. The main goal of this paper is to examine investor-state dispute settlement (ISDS) reform in the context of the EU Multilateral Investment Court by pointing out the shortcomings and rooms for improvement. In addition, this paper indicates that the MIC project has the greatest chance of support by majority of countries, as compared to other possible options for the proposed ISDS reform but at the same time, it has difficulties in achieving the goals of ISDS and fully realizing potential. The results of this research should help to proceed with smooth transition of the MIC to ISDS system and review issues for further discussion.

UNCITRAL Working Group III and Multilateral Investment Court – Troubled Waters for EU Normative Power

This article analyses the European Union (EU)’s and its Member States’ activities in the multilateral reform of investors- state dispute settlement (ISDS) in the early stages of the United Nations Commission on International Trade Law (UNCITRAL) discussions with the ultimate goal of the establishment of a multilateral investment court. First, the article explains the EU’s approach to the reform and its ambitious proposal of a standing investment court. Then, it demonstrates how difficult it turned out to be for the EU to promote the reform proposal in multilateral negotiations at the UNCITRAL. Finally, the article explores how the EU employs several means, including internal mobilisation, or engagement of other stakeholders, in order to ensure that work of the UNCITRAL continues in a direction of systemic reform of ISDS. In conclusion, it offers a view of how the EU normative ambitions play out in the context of different approaches of third countries and how legal factors complement its political preferences.

The Renewed Role of States in Investment Arbitration – Report of the 6th EFILA Annual Conference 2021

The 6th EFILA Annual Conference dedicated to “The Renewed Role of States in Arbitration” was hosted virtually by Herbert Smith Freehills on 14 and 15 January 2021. The first panel kicked off the Conference by discussing “The Renewed role of States in Arbitration”. This was followed by a keynote speech by Prof. Gary Born on the “Multilateral Investment Court”. The second panel then debated the points raised by the keynote. The second day of the Conference began with a panel on the “Toolbox of States against Claimants” and was followed by a panel on “Best Practices for Defending Investor-State Damage Claims on Quantum”. This report provides an overview of each of the panel discussions as well as the keynote speech. The 6th EFILA Annual Conference, which took place online on 14 and 15 January 2021, was devoted to the theme “The Renewed Role of States in Arbitration”. The Conference was introduced by Prof. Loukas Mistelis (Queen Mary University of London and EFILA). In his opening remarks, Prof. Mistelis observed that a debate on the legitimacy of investment arbitration has developed in the past 15 years. He noted that States are progressively seeking to regain the primary role in the investment law-making and dispute resolution processes, and EFILA is attentive to this trend.

ISDS Reform: The Long View

Abstract This lecture surveys the criticisms directed at international investment agreements (IIAs) and their reliance on investor-State dispute settlement (ISDS), as well as the leading reform venues that have been addressing such criticisms: UNCTAD, ICSID, and UNCITRAL. It argues that despite these ambitious efforts, the international investment regime’s reliance on investor-State arbitration will not be wholly displaced by any of the alternatives under active discussion – from national courts to mediation to a Multilateral Investment Court. In the long run, current reform efforts are likely to produce an ever more complex regime, governed by more diverse substantive rules interpreted by more complex options for dispute resolution. The focus on reforming the ways investor-State disputes are resolved fails to respond to doubts about the need for IIAs, undermines aspirations to harmonize international investment law, and ignores dire needs for stimulating (and protecting) foreign capital flows to achieve the goals of the Sustainable Development Goals – from mitigating climate change to preventing the next pandemic.

ISDS Reform: Analysis on Establishing a Multilateral Investment Court System

ISDS Reform: Analysis on Establishing a Multilateral Investment Court System

Multilateral Investment Court – a Cure for Investor-State Disputes Under Extra-EU International Investment Agreements?

Both branches of international economic law – international investment and trade law are currently in crisis. Many reforms have been proposed to cure the shortcomings of their dispute resolution mechanisms. Distinctive though they are, it seems that the newest EU’s proposal to establish the Multilateral Investment Court is heavily inspired by the dispute settlement system which exists in the World Trade Organization. The new system has been introduced to replace the investor-State dispute settlement mechanism existing in most investment treaties. In this article, the author assesses the objectives of the reform through the prism of successes and failures of the WTO dispute settlement system.

Justice and Authority in Investment Protection

AbstractWhat role should concerns about distributive justice play in international investment law? This paper argues that answers to fundamental and contestable questions of social and global distributive justice are a necessary, if implicit, premise of international investment law. In particular, they shape our views on the purpose of investment law, and in turn determine the scope of authority that investment law can claim, and that states should accord it. The implausibility of achieving international consensus on these questions constitutes a substantial objection to the harmonization of investment law or the consistent operation of a multilateral investment court.

Arbitration, the World Trade Organization, and the Creation of a Multilateral Investment Court

Abstract The proliferation of international tribunals has reached the investment sphere. The European Union and its treaty partners have included an investment court system in the four individual investment agreements they have negotiated since the European Union took competence over foreign direct investment with the passage of the Lisbon Treaty. The United Nations Commission on International Trade Law (UNCITRAL), with the European Commission’s encouragement, is considering reform of investor-state arbitration with the front runner for reform the establishment of a multilateral investment court. Yet trade and investment law seem to be an oddly inverse relationship when it comes to preferred modes of dispute settlement. In the trade law realm, the survival of the ‘crown jewel’ of the World Trade Organisation (WTO)—its Dispute Settlement Body is uncertain. The appellate body has recently come in for special opprobrium. Arbitration is one of the suggested alternatives should existing dispute settlement procedures cease to function. Thus, in the investment law sphere, arbitration is apparently more and more disfavoured, and the preferred alternative is some kind of standing body with the pièce de résistance—an appellate body—at its apex. Why are these two regimes asynchronous? I hypothesize that states favour judicialization of disputes in the abstract but have reservations once judicialization becomes more concrete. Judicial or quasi-judicial decisions are hard for individual states to ignore or discredit, yet states have difficulty organizing multilateral responses to decisions they dislike.

The appearance of bias in international investment arbitrators and analysis of potential impediments to bias in the European Union’s proposal for a multilateral investment court

ESAANZ ESSAY PRIZE WINNERInternational investment arbitration is in a controversial state. While the systems put into place by various treaties allow an investor to protect their investments directly by initiating proceedings against a government, claims of arbitrator bias are supported by the fact that arbitrators are appointed by the parties. There are transparency concerns which contribute to arbitrators being biased towards investors from developed countries. The regime of international investment arbitration is heading towards either abolition or reform. The European Union, being the partner to more investment treaties than any other country, proposes the creation of a multilateral investment court. As a structured arbitration court, there may be less bias than the current regime of investment arbitration as proceedings would be more transparent and open to the public, binding precedent would leave less grey area in decisions and add consistency to rulings, and judges no longer being appointed by the parties removes any incentive to rule in favour of their appointing party to secure future appointments. Together with an appeals system, this proposed structure purports to be a positive change in ISDS. However as the essay will show, this approach is not likely to be attractive to the majority of states who are interested in protecting their right to govern. These issues will need to be addressed if the investment court proposal is going to gain support.

Investor-State Dispute Settlement Reform: Reconsidering the Multilateral Investment Court in the Context of Disputes Involving Intellectual Property Law

On January 18, 2019, the European Commission submitted a proposal to the United Nations Commission on International Trade Law to establish a multilateral investment court for investor-state disputes. The European Commission’s proposal reflects growing discussions about the potential reform of the investor-state dispute settlement system. While the present work on reform options focuses on issues relating to the legitimacy of the investor-state dispute settlement system, the effects of the reform options on investor-state disputes that specifically involve intellectual property law remain to be examined.
 This Article argues that although the proposed multilateral court structure offers a comprehensive approach to addressing the concerns with the investor-state dispute settlement system, it does not address a number of issues that are specific to disputes involving intellectual property law. This Article analyzes issues that arise from the arbitral tribunal’s role in investor-state disputes that involve laws governing intellectual property at the international and domestic levels. In doing so, this Article shows that these issues are distinct from the ones that broadly relate to the legitimacy of the investor-state dispute settlement system. In light of these issues, this Article proposes additional considerations for the multilateral investment court structure. Specifically, this Article proposes including expertise in the relevant international agreements as a selection criteria for adjudicators and giving deference to the host state’s courts in disputes that involve issues of domestic intellectual property law.

Are arbitrators biased in ICSID arbitration? A dynamic perspective

Concerns over arbitrator impartiality and independence in ICSID arbitration have led to reform proposals geared towards a multilateral investment court. Due to the ad hoc nature of appointments, it has been suggested that arbitrators may strategically render decisions in biased ways with the goal of encouraging reappointments. Although criticism against arbitrator bias has attracted significant attention, so far limited empirical evidence has been provided to support such concerns. This paper introduces a dynamic perspective to examine concerns of bias arising from ad hoc appointment. I find that contrary to conventional views held by critics of investor-state arbitration, on average, arbitrators tend to decide against their reputation from prior decisions in ICSID arbitration, which implies an effort to establish a reputation for being neutral and unbiased. This finding challenges one of the premises of proposals to replace arbitration with an investment court.

Effecting Consistency in Investor-State Dispute Settlement Through the Introduction of Precedent in a Multilateral Investment Court

In recent years, the current Investor-State Dispute Settlement (ISDS) system has been a subject of reform discussions triggered by several factors, amongst which includes the lack of consistency in ISDS decisions commonly rendered by arbitration tribunals. This undesirable fact places the current ISDS system in conflict with essential rule of law values such as stability, reliability, predictability, and equality - which inevitably diminish the legitimacy of the current system. Undeniably, the un-uniform investment treaties underlying ISDS decisions is a valid justification for divergent outcomes, however, the recognition that a majority of investment treaties share similar if not identical legal standards also makes the argument for consistent ISDS decisions legitimate and in fact necessary to foster the harmonious development of investment law across the network of identical treaty standards. To this end, the use of “precedent” is critical in achieving the aforesaid goal. Notably, albeit informally, the use of precedent is already a recognised practice in ISDS, yet inconsistent decisions persist. As a turning point, this article advocates that consistency in ISDS decisions can be best achieved through the “formal introduction of a system of precedent”, in “a Multilateral Investment Court (MIC)”, which is possible without jeopardizing the inherent differences contained in International Investment Agreements (IIA).

The contribution of the European Union to the rule of law in the field of international investment law through the creation of a Multilateral Investment Court

AbstractThe concept of the international rule of law has developed in a form distinct from, but related to, the rule of law at the domestic (or European) level. This article examines the notion of the international rule of law and then, after explaining the international system of investment protection and its dispute settlement system, sets these against the international rule of law. It concludes by looking at how the European Union's proposal for a Multilateral Investment Court would contribute to augmenting the international rule of law in the field of investment protection.

A New Frontier in International Investment Law: Adjudication of Host Citizen-Investor Disputes?

This is the age of reform in the world of international investment law. Most particularly through the reform process at the United Nations Commission on International Trade Law (UNCITRAL), states are seeking to remake the procedural infrastructure of international investment law for it to better respond to their interests. One new addition to the existing infrastructure that has been proposed is making investors accountable at the international level for their misconduct. Under this rubric, the idea of giving host citizens the possibility of claiming against investors in international adjudication has been mooted. Scholars have been quick to draw up proposals for the international adjudication of host citizen-investor disputes. This paper examines the legal challenges and practical difficulties with those proposals. On the back of that examination, it is concluded that the European Union-proposed Multilateral Investment Court could serve as a forum for the international adjudication of host citizen-investor disputes. But it would only play a supporting role in a bigger system of justice for host citizens. The main role would be played by a mandatory insurance scheme. This paper puts forward the first conception on how this scheme could work in tandem with the Multilateral Investment Court to deliver justice on a broad scale to host citizens.

A Paradigm Change: The CETA Investment Chapter

The Investment Chapter of the Comprehensive Economic and Trade Agreement (CETA) can be seen as an unofficial blueprint of future EU Investment Agreements and Chapters. It was developed under immense public pressure and had to fulfil multiple conditions resulting from the EU constitutional framework. This contribution highlights the political and juridical background of EU investment policy, and then analyses the most significant new approaches in international investment law - both with regard to substantive standards and investor-State dispute settlement - as exemplified in the CETA. With regard to the substance, it can be witnessed that states are more proactive in defining investment protection standards, leaving less discretion for adjudicators. With regard to dispute settlement, the EU managed to introduce a completely new Investment Court System (ICS) with preselected adjudicators and an appellate mechanism. In light of all these developments, this article argues that we are currently facing a complete change of paradigms in EU investment law, heading towards the EU’s long-term goal of establishing a Multilateral Investment Court (MIC).