Investment Arbitration Today: Attempting the Reconstruction of the System

Abstract

INTRODUCTION On 10 July 2017, the United Nations Commission on International Trade Law (UNCITRAL), agreed to initiate work on a possible multilateral reform of investment dispute settlement, including the probable establishment of a multilateral investment court. This follows a formal request from many countries, including the European Union and its Member States, to examine this issue. This is the latest development in a series of setbacks for investorstate dispute settlement (ISDS). Formerly, a number of other states have actively rejected the use of ISDS clauses or significantly limited their scope. Denunciation of the International Centre for Settlement of Investment Disputes (ICSID) Convention – Venezuela or Bolivia –, termination of its investment agreements – South Africa or Ecuador –, revision of its model Bilateral Investment Treaty – India –, non-renewal of its investment treaties – Indonesia –, are a few examples of the different approach to solving investorstate disputes and a clear manifestation to break with the current structure and form of international investment law. Simultaneously to all these movements and actions, the idea that emerges is that an ISDS reform is possible from’ within’. Without breaking the current structure, it is possible to evolve and modernise international investment law and arbitration. Despite what has been said before, there is no doubt that in the coming years international arbitration will remain the preferred option for resolving foreign investment disputes and all stakeholders need to ensure it counts among the most effective dispute resolution mechanisms. Only in 2016, 62 new cases were initiated pursuant to International Investment Agreements (IIAs), bringing the total number of known cases to 767. Changing the model would be slow, even if this change finally happens, and it should be borne in mind that the IIAs include sunset clauses with an average duration of 10 to 15 years. This study focuses precisely on analysing the changes that are occurring in this area to try to respond to the criticisms made, without abandoning the model. In this sense, two aspects are the focus of the study. Firstly, the adoption of rules designed specifically to resolve these types of disputes. Secondly, the changes made both in the substantive law of foreign investments and into the ISDS clauses of the IIAs.