Multilateral Investment Court Research Articles

ISDS Reform and the Proposal for a Multilateral Investment Court

ISDS Reform and the Proposal for a Multilateral Investment Court

Multilateral Investment Court: The Gap Between the EU and China

Abstract The EU has now shifted from ad hoc investment arbitration to an envisaged Multilateral Investment Court. Its essential character is expected to be a two-instance standing court system, together with a random allocation of cases. This judicialized court system could address China’s preference of correctness as to ISDS system to some extent, subject to the competence of judges, while at the same time it raises new problems and new concerns. Firstly, would the envisaged standing court, in the context of enhancing the regulatory powers of states, still be qualified as a neutral forum to strike the appropriate balance between the protection of investors’ right and preservation of states’ regulatory powers? Secondly, would the judicialized court system be effective and flexible enough to suit the current nature of ISDS? Thirdly, would the envisaged two-tier court system be put into efficient operation so as not to become a de facto bar to access of justice? In fact, a judicialized system has its pros and cons, and thus its successful establishment and operation would be subject to more detailed rules.

Does Investor-State Dispute Settlement Discriminate Against Nationals?

The paper answers the question of whether investor-state dispute settlement (ISDS) discriminates against nationals. This issue was actually settled in 1926 in Hopkins v Mexico. The complaint that ISDS is discriminatory as a matter of principle has surfacedbefore the German constitutional court in the context of the ratification of the Comprehensive Economic and Trade Agreement between Canada and the European Union (CETA). It is predicated on the fact that only foreigners have legal standing, whereas nationals cannot take legal action against measures of their own government before an investment tribunal. As a corollary, foreign investors have an extra venue at their disposal to challenge statemeasures. The case is argued, in part, on the basis of the principle of equality before the law. It is undisputed that equality before the law includes procedural law. It entails that like cases are treated equally in terms of appellate review. The Federal Constitutional Court was able to leave the question of discrimination open in the applications for a preliminary injunction. It will have to take a stand, however, in the principal proceedings and examine the issue in light of the German constitution, for what is being impugned is the ratification act which is subject to national law. If the Court were to side with the applicants, it would deal a death blow not only to CETA in its present form, but to the multilateral investment court system promoted by the European Union and, in particular, Germany. The point made by the applicants in the CETA complaint is not only of importance to a German constitutional law context. If ISDS is per se discriminatory is a fundamental issue which requires answering before any reform steps in relation to ISDS are being addressed.

Diversity and the Principle of Independence and Impartiality in the Future Multilateral Investment Court (MIC)

This article starts from the assumption that the future Multilateral Investment Court (MIC) will be shaped by a new and different type of international investment adjudicator (IIA), and it focuses on the diversity issues that will need to be addressed during the court’s creation. In this article, diversity is understood in a broad sense that includes questions related to IIA gender, race, geographical origins and legal background. The article argues that diversity may in fact evolve into one of the MIC’s key collective composition rules. It also sets out some of the grounds in favour of diversity in the MIC, and considers the specific ways in which diversity may permeate the constituent process for the MIC roster and its modus operandi. A further common thread is provided by the links between diversity and the principle of independence and impartiality, which will be a crucial MIC duty.

Investor to State Dispute Settlement (ISDS) Mechanisms: A Comparison of Evolving Legal Approaches in Brazilian and Latin American with the European Union

Investor to State Dispute Settlement (ISDS) Mechanisms: A Comparison of Evolving Legal Approaches in Brazilian and Latin American with the European Union

Diversity and the Principle of Independence and Impartiality in the Future Multilateral Investment Court

Abstract This article starts from the assumption that the future Multilateral Investment Court (MIC) will be shaped by a new and different type of international investment adjudicator (IIA) and focuses on the diversity issues that will need to be addressed during the Court’s creation. In this article, diversity is understood in a broad sense that includes questions related to IIA gender, race, geographical origins and legal background. The article argues that diversity may in fact evolve into one of the MIC’s key collective composition rules. It also sets out some of the grounds in favour of diversity in the MIC, and considers the specific ways in which diversity may permeate the constituent process for the MIC roster and its subsequent modus operandi. A further common thread is provided by the links between diversity and the principle of independence and impartiality, which will be a crucial MIC duty.

Achmea: The End of Investment Arbitration as We Know It?

The authors focus on the impact of the Achmea judgment on the current system of investment treaty arbitration. Particularly, the authors look at the impact on arbitration clauses in the intra-EU bits and the ECT. The authors also consider the possible impact of the decision on investment arbitration clauses in investment contracts with the EU Member States, the future intra-EU investment court system, the EU Member States’ bits with third countries, the CETA investment court system and the multilateral investment court. Is the Achmea judgment the end of investment arbitration as we know it? The authors conclude that Achmea marks the end of one chapter in the history of investment treaty arbitration, specifically that of investment treaty arbitration based on intra-EU bits. The authors argue that Achmea also marks the beginning of a new chapter in investment treaty arbitration. According to them, Achmea is an additional factor in the current legitimacy crisis of investment treaty arbitration, which forces both States and the arbitration community to look for new innovative solutions to replace or at least reform the current system.

Achmea: The End of Investment Arbitration as We Know It?

The authors focus on the impact of the Achmea judgment on the current system of investment treaty arbitration. Particularly, the authors look at the impact on arbitration clauses in the intra-EU BITs and the ECT. The authors also consider the possible impact of the decision on investment arbitration clauses in investment contracts with the EU Member States, the future intra-EU investment court system, the EU Member States’ bits with third countries, the CETA investment court system and the multilateral investment court. Is the Achmea judgment the end of investment arbitration as we know it? The authors conclude that Achmea marks the end of one chapter in the history of investment treaty arbitration, specifically that of investment treaty arbitration based on intra-EU BITs. The authors argue that Achmea also marks the beginning of a new chapter in investment treaty arbitration. According to them, Achmea is an additional factor in the current legitimacy crisis of investment treaty arbitration, which forces both States and the arbitration community to look for new innovative solutions to replace or at least reform the current system.

Incremental, Systemic, and Paradigmatic Reform of Investor-State Arbitration

Although the legitimacy of investor-state arbitration has come under fire, states have not (yet) converged on which reforms to pursue. In simplified terms, three main camps have emerged to date: 1. Incrementalists view the criticisms of the current system as overblown and argue that investor-state arbitration remains the best option available. Hence, they favor retaining the existing dispute resolution system but instituting modest reforms that would redress specific concerns. 2. Systemic reformers see merit in retaining investors’ ability to file claims directly on the international level, but view investor-state arbitration as a seriously flawed system for dealing with such claims. They champion more significant, systemic reforms, such as replacing investor-state arbitration with a multilateral investment court and appellate body. 3. Paradigm shifters dismiss the existing system as irrevocably flawed and in need of wholesale replacement. They reject the utility of investors’ making international claims against states, whether before arbitral tribunals or international courts. They embrace a variety of alternatives, such as domestic courts, ombudsmen, and state-to-state arbitration. Against this backdrop, the United Nations Commission on International Trade Law (UNCITRAL) gave one of its working groups a three-staged mandate to investigate the possible reform of investor-state dispute settlement, which required it, first, to identify and consider concerns about investor-state dispute settlement (ISDS); second, to consider whether reform was desirable in light of any identified concerns; and, third, if reform was desirable, to develop relevant solutions to be recommended to the Commission. This essay (1) conceptualizes the three main reform approaches that have been advocated to date and identifies the likely strategies of, and risks faced by, the different reform champions; and (2) analyzes UNCITRAL’s role in these reforms as both a venue and an actor navigating a complex series of relationships with other key stakeholders. Pointing to the future, I conclude by identifying the likelihood of ongoing pluralism with respect to different institutional processes for resolving investment disputes and sketching how actors might proceed to develop flexibility both among and within different reform options.

Doomed to Failure: Why the EU Investment Court System is Destined to Fail Both Foreign Investors and Host States – 3rd Annual EFILA Conference Keynote

This contribution discusses the EU’s multilateral investment court system (the ICS) and its promotion by the EU in the context of what is in essence ‘fake news’ about investment arbitration. Given the problems with the ICS, including little clarity over its precise structure, unanswered questions regarding the likely candidates for judges, and apparent division between EU Member States on the whole idea, the author argues that the ICS is destined to die.

It Is not Just about Investor-State Arbitration. A Look at Case-284/16, Slovak Republic v Achmea BV

In the much-awaited Achmea judgment, the Court of Justice held that investor-state tribunals (ISTs), ‘such as’ the one under the Netherlands-Slovakia intra-EU bilateral investment treaty (BIT) are incompatible with EU law. In this arguably short judgment, the Court of Justice consolidated its attitude towards the relationship between other international courts and the EU legal order; it set new limits to Article 344 TFEU; and, it expanded its list of tribunals that do not qualify as Member State courts or tribunals under Article 267 TFEU. Nonetheless, whilst the Commission can rejoice that it can now clearly oblige Member States to terminate their intra-EU BITs, Achmea sends some worrying signals. The future of ISTs under Member State BITs with third countries is uncertain; so is the viability of the Investment Court System under the agreements with Canada and Vietnam, the future of the Multilateral Investment Court, and the overall coherence of the EU’s international investment law and policy.

The EU's Investment Court System and Prospects for a New Multilateral Investment Dispute Settlement System

The EU’s proposal to establish a new Investment Court System during the TTIP negotiations has well represented the cumulative resentment of the public, governments, civil societies as well as academics in regard to the existing ISDS mechanism. Such issues as the lack of legitimacy, transparency, consistency, the absence of a review mechanism, and the high burden to public finance in the existing system have been criticized as undermining the sovereignty of the State and its right to regulate for legitimate policy objectives such as the environment, health, and safety. Despite the merits of the existing ISDS mechanism, the increasing demand for improved safeguards against abusive claims and discretionary power of private adjudicators should be adequately addressed in consideration of the democratic principles and the objectives of sustainable development goals. It is also noteworthy that the function of the traditional ISDS system, devised as a preferential instrument for foreign investors, has evolved over time as the distinction between capital-exporting and capital-importing countries became blurred and more attention is focused on the equality and balance of power among domestic and foreign businesses as well as between investors and the host States. In this vein, the establishment of a permanent tribunal and the public appointment of tribunal members with a fixed-term, as proposed by the EU in the new ICS, are indicative of the shifting paradigm in the discourse of treaty-based investor to State arbitration systems. Despite the fact that the system of ICS can hardly solve all of the problems, it may possibly improve the level of legitimacy by incorporating public features of the procedure. At the same time, it is noteworthy that the objective of improving the legitimacy and consistency of the dispute settlement system cannot be achieved without the prospect of establishing a multilateral dispute settlement mechanism with consolidated and harmonized standards of investment rules. Considering the difficulties of reaching a multilateral agreement on investment as witnessed in the past decades, the approach of the Mauritius Convention, which adopted an opt-in mechanism, would be useful as it reduces the risk of failure in negotiations while building a consensus among participants and allowing them to decide when to ratify the Convention in consideration of their domestic circumstances. Considering the extensive network of trade and investment agreements that Korea has concluded in the past decade, it is more than necessary for the Korean government to pay close attention to the recent development in this process and actively participate in discussions on the possibility of establishing a multilateral investment court and the key principles of investment protection and facilitation in international fora.

Designing a Multilateral Investment Court: Issues and Options

Led by the European Union and Canada. a coalition of states is contemplating negotiations that would lead to the establishment of a multilateral investment court as an alternative to investor–state arbitration for the settlement of investment disputes. Discussions of the design of such an institution are at an early stage, and this essay is intended to aid the discussions by outlining many of the issues that would need to be covered in the drafting of a treaty instrument to establish such a court, and suggesting possible solutions.1 The value of the proposed solutions is not that they are fully argued as the best way to design the court, but that they might trigger concrete thinking about the options available to the drafters. Also, I have emphasized issues that relate closely to the overall legitimacy of the court and its potential to transform investment dispute settlement: some design issues of considerable importance are not addressed, such as, for example, rules on document discovery, the role of expert witnesses, the structure of oral hearings and the sequencing of written pleadings, and so on. Some of these matters might be dealt with best in the treaty instrument and others through detailed rules of court or a code of procedure. I have tried to preserve the character of this essay as a broad-ranging ‘think piece’ rather than a blueprint for the court that purports to be exhaustive, or reads like a laundry-list.

The Future of International Claims Commissions: Conceptualizing the EU's Proposed Multilateral Investment Court as an International Claims Tribunal

I want to consider the European Commission's proposed multilateral investment court as an international claims tribunal. The commission is not promoting its investment court as a claims tribunal, but that is essentially what it is. The commission seeks to establish a mechanism to allow foreign investors to submit future disputes under international law to binding dispute resolution before a standing tribunal. The proposed court differs from most claims tribunals, as it is intended to be multilateral and to apply to future disputes. But that is what makes the proposal so interesting and potentially useful.

Escaping from Freedom? The Dilemma of an Improved ISDS Mechanism

This article is based on the EFILA’S ‘Inaugural’ Annual Lecture 2015. ISDS in its current international arbitration format has attracted criticism. In response, the EU proposal for ISDS in the TTIP consists of a two-tiered court system, comprising an appeal mechanism empowered to review first-instance decisions on both factual and legal grounds and, the EU says, paving the way for a “multilateral investment court”. The Lecture expressed surprise at the EU proposal of a court mechanism given the CJEU’S unambiguous, historical unease with other similar, parallel international court systems. The Lecture proposed a third way, aimed at addressing these concerns, whereby a Committee – stroke – Interpretive Body, informed by the intentions of the TTIP Parties, would take over the development of TTIP jurisprudence in a more linear and consistent manner, with a longer-term view, whilst ad hoc arbitration tribunals in their current form would focus on the settlement of the discrete factual dispute. Since the Lecture was delivered, the ICS was adopted in both the EU–Vietnam FTA and (in part) the EU–Canada CETA. This contribution ponders how the ICS might work in practice, sit alongside current ISDS tribunals, and contribute to development and jurisprudence in the field.