Investor-State Arbitration in the Context of EU-EAC EPA

Abstract

Will investor-to-state arbitration be the dispute settlement mechanism of choice for investment disputes under the EU-EAC EPA? This study argues that despite the criticism, ISDS shall be included under the investment chapter in the EU-EAC EPA. This argument is based on three reasons for this;1) The coming into force of the Lisbon Treaty which now gives the EU exclusive competence on Foreign Direct Investment, 2) The existing of numerous BITs between the EU Member States, and the EAC Partner States which stipulate ISDS as the dispute settlement mechanism, 3) both blocs advocate for ISDS in their laws and investment policies. The inclusion of ISDS is likely to shrink the policy space of the EAC Partner States if it is adopted under the existing framework. Therefore, to avoid the situation that has made ISDS unpopular both under the BITs and the NAFTA, it is recommended that the EU and EAC partner ensure a balance between investor rights and the developmental goals of host states. This has been achieved in some of the emerging new generation investment agreements such as the COMESA Common Investment Agreement which is proffered here as a model that can adopted to ameliorate the problems of ISDS as it currently exists in international law.