Reform of Investor-State Dispute Settlement: In Search of a Roadmap

On 28th May 2013, UNCTAD published an Issues Note on “Reform of Investor-State Dispute Settlement: In Search of a Roadmap. It was then integrated into chapter III of the 2013 World Investment Report, launched in close to 50 destinations on 26th June 2013.

The note's starting point is the increasing number of concerns that have emerged about the current ISDS system (e.g. a perceived deficit of legitimacy and transparency; contradictions between arbitral awards; difficulties in correcting erroneous arbitral decisions; questions about the independence and impartiality of arbitrators; and concerns relating to the cost and length of arbitral procedures).

We then identify five main paths for reform, noting that each of them comes with its specific advantages and disadvantages and responds to the above concerns in a distinctive way. Our five options for reform are:
· Promoting alternative dispute resolution;
· Tailoring the existing system through individual IIAs;
· Limiting investor access to ISDS;
· Introducing an appeals facility;
· Creating a standing international investment court.

The note was also distributed through UNCTAD’s World Investment Network (WIN), and reached the OGEMID Listserv, a community of professionals with interest and expertise in international investment law. Our Note generated considerable discussion on this forum, partially reproduced below. The response on OGEMID to the Note was both positive and negative and centered on three main issues: (1) alternative dispute resolution (ADR); (2) investor-State dispute settlement versus substantive treaty obligations; and (3) the role of arbitrators. UNCTAD thanks the OGEMID community and the individual commentators for agreeing to allow us to transfer their comments to the Investment Policy Hub in order to allow a larger part of IIA stakeholders to benefit from the various insights, open the debate up to the public and invite further discourse.

We therefore invite your comments, either in response to the discussion that occurred on OGEMID or to the ISDS Reform Note in general.

By: Sophie Nappert

Date: 28 May 2013

Please see UNCTAD's IIA Issues Note - “Reform of Investor-State Dispute Settlement: In Search of a Roadmap”, at the following link:

UNCTAD has issued the press release reproduced below and calls for a multilateral policy dialogue on ISDS to search for "a multilateral policy dialogue on ISDS to search for a consensus about the preferred course for reform and ways to put it into action".

One might express a degree of surprise at the fact that the Note departs in some respects from the usually balanced and insightful UNCTAD standards in that it rehearses well-trodden criticism of ISDS and breaks little new ground in its proposed solutions.

The Note may be well-timed, however, in that the current thinking applied in the context of IIA negotiations, notably at EU level, might usefully inform a "new road map".

[Editor's note: click here for "press release"]

By: Velimir Zivkovic

Date: 28 May 2013

I just wanted to concur that in some regards the Note does seriosly depart from UNCTAD quality standards. In particular, I would like to draw attention to the fact that the part that proposes 'introducing' ADR into ISDS, namely mediation and conciliation, contains absolutely no mention whatsoever of the existing ICSID Convention provisions on conciliation. It is either a very grave but unintended omission, or an implicit discrediting of the ICSID system, but in any case one would expect more from UNCTAD.

By: Sophie Nappert

Date: 28 May 2013

We may have reached the stage that, in order to make any progress on these issues, it is looking like arbitrators will have to start making their voices heard. After all, they are front and centre in the line of fire - the Unctad Note adopts some of the more strident attacks on ISDS decision-making:

"The method where arbitrators are appointed by disputing parties has led to a. perceived tendency for each disputing party to appoint individuals sympathetic to its interests.

Moreover, arbitrators in ISDS cases are a relatively small group of individuals dominated by lawyers in private practice (about 60 percent), resulting in situations where the same individuals often serve as arbitrators in some cases and as counsel in others. This may incentivize arbitrators to decide issues in a way. that would be beneficial for them in a different case (so called “issue confict”). To this adds arbitrators’ interest in being re-appointed in future cases. All of this has cast doubt on arbitrators’ independence and impartiality. Regardless of whether such incentives actually impact arbitral decision-making, the resulting perception of conflicting interests itself is enough for eroding the credibility of ISDS in the eyes of many stakeholders."

It may be that, if they have any concern about the integrity of the ISDS system which they stand accused of abusing, arbitrators will have to do more than turn the historical cold shoulder.

By: Hernando Diaz-Candia

Date: 28 May 2013

Good morning. Perhaps the UNCTAD note was referring to the fact that many (most?) BITs do not even mention conciliation and possibly making a subtle suggestion to consider a tiered approach. p.s., a quick search on the ICSID webpage only shows nine conciliation cases [list omitted for space purposes].

By: Anonymous

Date: 28 May 2013

UNCTAD's recommendations seem to be largely clueless although it is necessary to take on board criticisms of the current system because such criticisms are widespread even though many of us think to a large extent unjustified.

To expect that any significant positive results could be achieved by adding an ADR layer to precede binding arbitration is totally -- oh well, almost totally -- unrealistic. The experience on the ground that I have had dealing with state and state organization arbitrations is that the state parties almost always find it impossible to settle if it involves paying state treasury funds to a foreign investor due to the negotiator's vulnerability to political and frequently even physical repercussions if he has given away state money to a private investor. The state negotiator will almost always insist that the arbitration -- even if a negative result is foreseen -- go to its term since a binding award imposed on the state is more palatable than any surrender.

One must not forget as well that binding arbitration pursuant to the ICSID Convention and BITs was designed to replace the state to state diplomatic negotiations procedure which had been found unsatisfactory, not the least by investor states like the United States which found it distasteful and inefficient to have to put its weight behind its investors claims sometimes to the detriment of its foreign policy objectives and not being able to investigate sufficiently the legitimacy of its investors' claims. Better to put it in the hands of a neutral arbitral body!

It appears to me that a lot of the criticisms made in the UNCTAD report are not truly based on faults in the arbitration procedure but rather on the substance of the obligations undertaken in investment treaties. These are always subject to renegotiation but let's not mistake negotiations on substance for improvement of procedure.

Do arbitrators for instance insufficiently take into consideration public policy motivations for state action? If Zimbabwe, for instance, decides that because of the history of its country, and of colonialism, it is necessary for its indigenous people to succeed to the lands of white settlers does this mean that such settlers, if protected by treaty, are deprived of rights to fair compensation for the land of which they are deprived? If so, on what basis? The issue is substantive not an issue of the arbitral process.

One can see the public interest motivation for having some centralizing review body but if the purpose would be to avoid inconsistent arbitral awards one would be into full legal merits review which would cause the break down of the whole system. Perhaps that was intended! Public perception would appear to lean towards finding something inherently wrong with inconsistent awards and one ends up with having to square the circle.

By: Rob Howse

Date: 28 May 2013

I believe, based on recent work on MIGA, that the availability of structured ADR could well make a positive contribution to the solution of investment disputes. I do not see ADR as the same thing as "settlement" of a claim, but rather as operating at an earlier stage, where it may be possible to consider alternatives that avoid a situation where the only solution is paying monetary compensation to the investor. I see UNCTAD as perhaps going in that fruitful direction, and thus it is not surprising to disturbing to me that the note doesn't mention the ICSID formal "conciliation" procedure. I don't regard that as genuine ADR.

The real challenge is early warning or identification of a dispute, before the relationship between the investor and the host state has not completely broken down, and while the host state still feels it has policy flexibility and that responding to investor concerns doesn't inevitably entail a public image of defeat or surrender.

To see how and where ADR could work, a close look at MIGA is very helpful.

By: Velimir Zivkovic

Date: 28 May 2013

Indeed, the general recourse to ICSID conciliation (and its mentioning in BITs) seems to be low, but this does not undermine the fact that there is a framework in place for it. IMHO, it deserved at least some mention by the UNCTAD, even perhaps as an example of how not do it (the ICSID procedure does lean a lot towards formalized, arbitration-like scenario).

By: Anonymous

Date: 28 May 2013

The UNCTAD note, as I take it, is intended to be read by politicians and diplomats as well, not only lawyers. It may be strident but it puts serious issues on the table by a credible institution (not by some marginal bomb-throwers). Now, here is an unrealistic and strictly rethorical suggestion: in order to evaluate comments more seriously, perhaps we all should agree to disclose how much fees, personally or institutionally, has the commentator made overall in or from investment arbitration (as advocate, arbitrator or expert witness). Charging fees is perfectly legitimate of course (no argument there), but it may give more context to the comments.

By: Todd Weiler

Date: 28 May 2013

As they say, it takes two to tango (or to engage in any other form of ad hoc or institutionalised form of dispute resolution).

I concur with the anonymous commentator, in so much as he/she is making the observation that the correct circumstances must be present in order for any form of alternative dispute settlement to have a chance of success. I think Rob's contribution rests on a similar premise.

As such, in addition to good faith - which is more likely to still be present earlier in the dispute than later - interests must also be aligned. Both conditions are necessary and must therefore be present, and neither is a predicate to, necessarily causative of, nor even contributory to the promotion of, the other. This is the point at which we must call upon the political scientists for their many useful analytical paradigms, including public choice (and its subsidiary theories of regulatory capture, rent-seeking and political failure), the Weberian rationality bureaucracy versus the Machiavellian acquisitive bureaucracy, and all of the means available to understand how political leaders make decisions both in their own interests and in light of the perceived democratic will.

I would submit that while, in theory, there may be times early in the course of a dispute during which the opportunity for resolution presents itself - and that therefore it never hurts to strive towards ensuring that all possible means of facilitating such resolution are available - I'm not aware of any systemic analyses that would permit us to quantify the number of occasions upon which these opportunities will arise. My anecdotal experience suggests: (1) that it might not be possible to undertake a successful quantitative analysis because the circumstances of each case tend towards being sui generis; and (2) in any event, in the current political climate, institutional and political interests will rarely, if ever, align in favour of resolution (as opposed to defiance, obfuscation and/or delay on the part of the respondent).

As very much reflected in the tenor of the UNCTAD document itself, there seems to be little upside for the political/bureaucratic decision-maker - who might otherwise be reasonably inclined towards resolving a dispute - to do so because his/her actions will inevitably be labelled - at best - as early capitulation to the cast of boogeymen who haunt the nativist (e.g. "foreigners" "big corporations" etc.). Such allegations will undoubtedly be cast, with wanton abandon, both by opportunistic members of the political opposition and by those whose Statist sentiments honestly inure them towards an embrace of the 'sovereignty = democracy = good / sovereign constraints =

hegemony/autarchy = bad' meme. Would it not be rational to simply choose to pass the hot potato to the next minister, or government, instead?

I shall assume that we agree - at least in principle - that constraints upon the exercise of governmental discretion can and should sometimes be undertaken, voluntarily, by States. When these undertakings are made on a bilateral or multilateral basis, they commonly (although not exclusively) take the form of a treaty. These treaty promises generate legitimate expectations on the part of intended beneficiaries (such as security of property rights, procedural fairness in decision-making, treatment no less favourable or reasonable reliance upon prior pledges). If we agree that this process is a good thing (either because it promotes economic activity or just because we value the rule of law in and of itself), I think we would be much better off focusing on how compliance with these obligations should be fostered, rather than on how non-compliance should be adjudicated.

To be sure, dispute settlement mechanisms are part and parcel of any compliance regime, but they're by no means the whole story. As the anonymous commentator observed, the author(s) of the UNCTAD report appear to have sometimes failed to distinguish between their estimation of the value of the the substantive obligations contained within these treaties and the means by which alleged cases of non-compliance should be resolved. As such, my prescription may fall on deaf ears. Nevertheless, what I would suggest is that we go even further back in time than Rob has suggested - by focusing on how to ensure that governments engage in policy-making activities that are consistent with treaty obligations in the first place, such that less disputes ever even arise.

By: Christian Campbell

Date: 29 May 2013

Many good points with which I agree. In defence of the UNCTAD Note, it final paragraph addresses substantive obligations:

"An important point to bear in mind is that ISDS is a system of application of the law. Therefore, improvements to the ISDS system should go hand in hand with progressive development of substantive international investment law itself. UNCTAD's Investment Policy Framework for Sustainable Development (IPFSD) offers policy options in this regard."

Given the note is actually about ISDS (process and not substance) and the importance of "the last word", I don't think the authors of the UNCTAD note underestimate the substantive obligations.

Your last (=important) point - ensuring policy-making activities that are consistent with treaty obligations - is also spot on, and I think you can attest to the benefits (and limitations) of this (even) in a well-developed State like Canada. Many States will not have the means (if they have the inclination) to vet policy proposals against treaty obligations, so capacity building is needed. The task would also be simplified if States did not have to vet each proposal against dozens of (different) BITs.

By: Steve Ratner

Date: 30 May 2013

[ . . . ]

1. I don't think it's fair to suggest that UNCTAD is singling out investor-state dispute settlement and neglecting other issues related to foreign investment. UNCTAD's mandate is broad, and it is studying many aspects of the foreign investment process, including preparation of BITs and compliance with them. They are even working on a massive quantitative analysis of different BIT provisions. This latest report may be of particular interest to OGEMID, but it needs to be put in context.

2. Even taking the report in isolation, I think it's pretty cautious in tone and looks fairly at the advantages and disadvantages of alternatives to the status quo. Of course we can say that the dispute settlement process works reasonably well insofar as most disputes don't even reach arbitration, and most arbitrations -- at least those that are published -- do not generate significant controversy and are reasonably (at least) well-argued in their analysis of the law and facts. It's clear that many investor claims are obviously well-founded and some are just as obviously not.

3. But we can't neglect the concerns about legitimacy whether in terms of outcomes or process. These are not just academic or UNCTAD concerns or we would not be witnessing the re-evaluations of BITs by Australia, South Africa, and others, as well as outright withdrawals. I think those processes are not just about the content of BITs -- although certainly some states seem less interested than in the past in protecting foreign investment -- but also about the process of their interpretation -- or least the appearance of it -- in some cases. If these actions of governments are not evidence that some of these concerns are worth addressing, what counts? That the number of controversial outcomes is small is not surprising (investment law would be in deep trouble if it were not), but it's not cause for dismissing alternatives. For the Americans, it would be like saying that Bush v. Gore is an outlier that overall says nothing about the way the Supreme Court is behaving. The most interesting question left open is whether the system will adjust without external shocks -- like new institutions -- or whether it will recalibrate on its own.

By: Rob Howse

Date: 30 May 2013

I think Steve and I are on the same wavelength here. I would only emphasize the point that a relatively small number of controversial, badly reasoned, poorly justified outcomes can create a major legitimacy crisis. I remember the massive effect of the Tuna/Dolphin panel rulings on perceptions of the legitimacy of the GATT/WTO system.

By: Anna Joubin-Bret

Date: 31 May 2013

Allow me to add some thoughts to the ongoing discussion about UNCTAD's note on reform to the ISDS system. I don't want to comment on the arguments and concerns spelled out in the note but rather on the more constructive options and ways forward.

Like many of you I think that monitoring, analysis, criticism and debate are useful. They are a much needed ingredient to make things move in international relations although, not surprisingly, they move slowly, at the pace of States. Some of you may remember the process and discussions that led to introducing transparency into the ISDS system in treaties and in arbitration rules. Today it is an established fact although many commentators had predicted that it would not be feasible. The discussion about an appeals facility has been on the table for the last10 years now and I think that we are getting there. A new generation of treaties is addressing scope of ISDS and clarifying substantive obligations in a much more balanced way. Establishing an international investment court has been discussed for far longer alongside discussions on multilateral investment rules, that remain, in my view, the ultimate objective.

I would like to venture three comments:

- the debate and options lack an important dimension, namely the role of the domestic courts of host States. The entire ISDS system is an exception to the natural fora to hear disputes related to investment and in my view, it is an element that should not be simply discarded as irrelevant when seeking ways forward. The example of Australia is not isolated.

- the more I look into alternative dispute resolution, particularly investment mediation with the recent launching of the IBA Investor-State Mediation Rules, the more I see a concrete move towards its inclusion into treaties (see the EU-Canada negotiations or the ASEAN ACIA are good examples) and disputes themselves. I don't see anything unrealistic there. ICSID statistics show that a significant number of cases (39%) get settled before an award is rendered at various stages of an arbitration. Many more cases are simply not going to arbitration because neither the investor nor the State party see merits in a final decision that will also put an end to the investment in the country. Munir's point it is a trend on the ground that mediation has also found its way into commercial arbitration is very valid. Since the ISDS system is patterned on commercial arbitration, the same causes are likely to produce the same effects. The more arbitration becomes lengthy, costly and cumbersome, the more parties will look for alternative routes. We are hearing this put forward more and more forcefully by in-house counsel of multinational enterprises and treaty practice shows that States follow suit.

-Sharing of good practice and experience among States on dispute prevention policies (DPPs) is important. A lot is being done by States and institutions such as the World Bank or APEC for example that warrants attention. Like for successful amicable settlement of investment disputes, there is not enough information and evidence out there. Maybe colleagues in academia could give us more.

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To All,

The OGEMID discussion relating to the UNCTAD Issues Paper has also triggered a Call for Papers for a Special Issue by OGEMID's sister publication, the online journal Transnational Dispute Management ( You and your colleagues may find that Call to be of interest:

TDM Call for Papers: "Reform of Investor-State Dispute Settlement: In Search of A Roadmap"

We are pleased to announce a forthcoming TDM special issue: "Reform of Investor-State Dispute Settlement: In Search of A Roadmap."

Edited by Jean E. Kalicki (Arnold & Porter LLP and Georgetown University Law Center) and Anna Joubin-Bret (Cabinet Joubin-Bret and World Trade Institute), this special issue will explore recent calls for reform of the investor-State dispute settlement (ISDS) system, along with the viability of five "reform paths" recently proposed for discussion by UNCTAD, the United Nations Conference on Trade and Development (see UNCTAD IIA Issues Note, "Reform of Investor-State Dispute Settlement: In Search of a Roadmap," 29-30 May 2013, available at

You can find an extensive call for papers on the TDM website, TDM Call for Papers: "Reform of Investor-State Dispute Settlement: In Search of A Roadmap"

Submissions should be thoughtful and rigorous rather than advocacy pieces - we are not looking to publish tunnel-vision "calls for action" or "calls to defend the castle" by one side or another in the debate.

Publication is expected in October or November 2013. Proposals for papers (e.g., abstracts) should be submitted to the editors by 15 September 2013.

Please address all proposals to both Jean Kalicki, at, and Anna Joubin-Bret, at Please CC when you submit material.

Feel free to forward this call for papers to colleagues and friends who might be interested in contributing to this special.



Mark Kantor
Transnational Dispute Management

1. Regarding statistics quoted at pp3-4, it is not so helpful to highlight maximum awards or claim amounts or legal fees incurred; more useful are averages or (even better) median amounts, and you might like to refer to the statistics in OECD's Discussion Paper last May as well as the earlier studies by Prof Susan Franck.

2. I do share however your (and others') concerns about rising costs (and delays) in investor-state arbitration (and indeed international commercial arbitration). The response of "promoting ADR" in fact can be combined with greater transparency, although the latter can cut both ways for host states. For example, my co-authors and I recently proposed treaty provisions (for trade as well as investment disputes) whereby an independent expert would publicise an early assessment of the compensation or broader economic loss associated with a measure on the assumption of a violation being proved (especially eg of national treatment commitments):

Burch, Micah, Nottage, Luke R. and Williams, Brett G., Appropriate Treaty-Based Dispute Resolution for Asia-Pacific Commerce in the 21st Century (May 24, 2012). University of New South Wales Law Journal, Vol. 35, No. 3, pp. 1013-1040; Sydney Law School Research Paper No. 12/37. Available at SSRN:

3. On other proposed reforms, tailoring various "procedural" responses (p6, see also eg these proposed with Dr Kate Miles in 2009: as well as "limiting investor access" and an "appeals facility", were differentially assessed last year as follows by numerous international investment law experts (including some contributors to OGEMID):

Campbell, Christian, Nappert, Sophie and Nottage, Luke R., Assessing Treaty-Based Investor-State Dispute Settlement: Abandon, Retain or Reform? (June 14, 2013). Sydney Law School Research Paper No. 13/40. Available at SSRN:

4. At p7 fn 30, the Australia-Malaysia FTA was concluded in 2012 (not 2011) and its omission of ISDS lacks much practical significance because the AANZFTA (with well-drafted ISDS provisions) remains in effect - and the Australian government has not even attempted to revisit any existing investment treaties containing ISDS. It is also worth noting that the omission of ISDS from the Japan-Philippines FTA is not very "recent" (2006) and exceptional in Japan's investment treaty practice, which has otherwise included ISDS even in treaties with developed countries (notably, and more recently, Switzerland):

Hamamoto, Shotaro and Nottage, Luke R., Foreign Investment In and Out of Japan: Economic Backdrop, Domestic Law, and International Treaty-Based Investor-State Dispute Resolution (December 26, 2010). Transnational Dispute Management, 2011; Sydney Law School Research Paper No. 10/145. Available at SSRN:


Dr Luke Nottage
Professor of Comparative and Transnational Business Law
Associate Dean (International)
Co-Director, Australian Network for Japanese Law (ANJeL)
Sydney Law School

UNCTAD is to be commended for encouraging this debate. That said, we can only reform the system incrementally. In a forthcoming policy brief for the Progressive Policy Institute and George Washington University, I put forward a fresh and practical approach.

A Fresh Approach to International Investment Rules

Susan Ariel Aaronson [i]

Executive Summary

Money makes the world go round. Nations compete for investment in the interest of stimulating trade, economic growth, productivity, access to new technologies, and employment. As a result, policymakers around the world have made attracting investment a priority. Outward global investment totaled $1.45 trillion in 2010, over 25 times larger than the $51.6 billion invested in 1980.

Although money flows are global, the system of rules governing investment is bilateral and regional. Cross-border investment is governed by a patchwork of over 3,000 bilateral investment treaties (BITs), regional and bilateral trade agreements (FTAs) with investment chapters, as well as the trade-related investment provisions of the World Trade Organization. Moreover, these international investment agreements (IIAs) do not cover all states, investors, and categories of investments. Taken as a whole, this agglomeration of ad hoc rules is failing investors, states, and their citizens. The current system has several problems:

1. The rules governing international investment lack clear and consistent definitions and norms.

2. Many investment agreements allow foreign investors to challenge direct or indirect seizures of property by requesting an independent tribunal. But there is no unified, transparent, and multilateral mechanism for resolving investment disputes. Tribunals are issuing inconsistent decisions and causing uncertainty for investors and states.

3. These tribunals have no effective means of enforcing their decisions.

4. Some investors game the system by picking specific treaties or forums to hear disputes. Moreover, some investors may rely on BITs to jump over their domestic legal systems in the belief they may be better positioned to gain compensation.

5. Investors are increasingly challenging government regulatory or budgetary action as “indirect expropriations.” While government regulatory or budgetary decisions may often affect the value of an investment, governments must preserve their policy space—their flexibility to govern in the public interest.

We believe that investors, states, and citizens would benefit from a more universal, consistent and accountable system of rules to govern international investment. Unfortunately, the international community has failed four times to create a universal system since 1948, and few countries today seem eager to try again. Although a more comprehensive and coherent regime would provide investors with greater certainty, many investors have learned to work with the current bilateral and regional system, and thus, they prefer the status quo. But business and governmental leaders can no longer ignore the problems of this uneven system. We suggest three practical steps that will move us toward a more consistent, universal, and accountable system.

Step 1: At the behest of the G-20, the WTO should work with relevant international organizations to develop a code of norms and best practices. G-20 members should use this code as a basis for future investment agreements and encourage all WTO member states to do so.

Step 2: WTO members should set up an Investment Appellate Body to review and if necessary, override controversial arbitrations, where the rights of investors or governments were inadequately protected. The Investment Appellate Body will stand beside the WTO’s Trade Appellate Body.

Step 3: At the behest of one or more WTO member states, the WTO Secretariat should explore whether the Investment appellate body should authorize member states to use trade policy to retaliate against states that repeatedly ignore investment tribunal decisions


Most readers are probably aware that the debate over international investment rules can get pretty heated. The supporters fight hard to beat back any criticism; the critics get very frustrated over perceived corporate influence and bias.

I'm a bit of an outsider to all of this, and I have found the state of the law, and the debate, a bit surprising. I have what could be called a reasonable and centrist view that searches for a middle ground (as I like to think), or, alternatively, could be seen as a view so "radical" that even some investor-state critics will be skeptical (as an investment law friend told me).

I'll let you be the judge -- feel free to tell me in the comments why my Cato paper on this subject is heretical and awful, or brilliant and visionary (or something in between) []. In this paper, I take a side in the debate, although to be honest, I feel like perhaps I've created a third side, and I'm not sure to what extent anyone will agree with me. (But then, I work at the Cato Institute, so I'm used to that.)

To whet your appetite, here's the conclusion:

If the major economic powers that have pushed for the current international investment system were to re-evaluate these issues, they might consider the following. Many of the rules in the existing regime seem positive in and of themselves. A wide range of countries have domestic laws that deal with expropriation and regulatory expropriation. And due process–type requirements are also common. Taking these domestic principles and elevating them to international legal status is not inherently objectionable.

But there are important implications from doing so, as these rules have a real impact on domestic policymaking. To some extent, these implications are obscured when the principles are made part of an international investment regime. It makes the rules seem limited to “foreign investment” matters, whereas in reality they are much broader. This is domestic law being pushed to the international level. If this is going to be done, it should be discussed more explicitly. A global agreement on rules for expropriation, in which governments gather with the explicit task of developing common rules on compensation for expropriation, would be one thing. Applying these principles only to foreign investors, and doing so as part of what is characterized as an investment treaty, is another thing entirely.

The current set of international investment rules was created to deal with problems faced by Western companies investing in the developing world decades ago. But what rules are appropriate in today’s more balanced world of investment, where companies with multiple national affiliations invest in multitudes of countries around the world? What rules are appropriate in a world where the nationality of companies is increasingly irrelevant, as companies operate globally and have little allegiance to particular governments? Liberalizing foreign investment is an important goal. But we need to make sure that any international rules in this area take on this task in an appropriate way, and it is worth examining how the existing system is performing. In this regard, this paper has proposed the following reforms to the system: any rules in this area should be multilateral, not bilateral or regional; the core principle should be nondiscrimination, with some of the broader principles currently in effect taken out; and state-state dispute settlement should be used, rather than investor-state. Rules along these lines would better reflect the current state of foreign investment flows, promote foreign investment, and maintain domestic regulatory autonomy.

Isn't this funny? Ever since I wrote my PhD on African Investment Law in 1976 (i.e. before the first actual ICSID sentence) I kept wondering who needs an investment protection treaty. In this debate here, Anna Joubin-Bret and others point out to the rule of law improvements in many host countries. But no host country has said here it does need a treaty. My suspicion is home states have a stronger interest here than host states, and possibly even investors. And my view is let those countries wanting to improve their investment climate decide whether they see a foreign judge as a contribution.
Christian Häberli (WTI)

The Transnational Dispute Management special on the "Reform of Investor-State Dispute Settlement: In Search of a Roadmap" has been published last week.

TDM 1 (2014) - Reform of Investor-State Dispute Settlement: In Search of a Roadmap

Edited by Jean E. Kalicki (Arnold & Porter LLP and Georgetown University Law Center) and Anna Joubin-Bret (Cabinet Joubin-Bret) this TDM special issue on the "Reform of Investor-State Dispute Settlement: In Search of a Roadmap" has more than 60 papers making it the largest TDM Special Issue to date. The interest in this topic, and the breadth of proposals offered by our contributors, demonstrates both the importance of holding this dialogue and the creativity of astute users and observers of the present system. This Special Issue is particularly timely in light of the European Union public consultation on investor-state dispute settlement and the Transatlantic Trade and Investment Partnership just begun by EU Trade Commissioner Karel De Gucht.


* Introduction TDM Special issue on "Reform of Investor-State Dispute Settlement: In search of a Roadmap"
by J.E. Kalicki, Arnold & Porter LLP; A. Joubin-Bret, Avocat à la Cour


* Assessing Treaty-based Investor-State Dispute Settlement: Abandon, Retain or Reform?
by S. Nappert, 3 Verulam Buildings; L. Nottage, Sydney Law School; C.T. Campbell, Center for International Legal Studies

* Inter-Governmental Evaluation of Investor-State Dispute Settlement: Recent Work at the OECD-hosted Freedom of Investment Roundtable
by D. Gaukrodger, Investment Division, OECD; K. Gordon, Investment Division, OECD

* Do We Need Investment Arbitration?
by C.H. Schreuer, Wolf Theiss

* Perspectives for Investment Arbitration: Consistency as a Policy Goal?
by R. Dolzer, University of Bonn

* The Emperor Has No Clothes: A Critique of the Debate Over Reform of the ISDS "System"
by J.J. Saulino, Crowell & Moring LLP; J.S. Kallmer, Crowell & Moring LLP

* Making impossible investor-state reform possible
by L. González García, Matrix Chambers

* ISDS growing pains and responsible adulthood
by S. Constain


* Advancing Reform at ICSID
by A.R. Parra, International Council for Commercial Arbitration

* UN Commission on International Trade Law and Multilateral Rule-making - Consensus, Sovereignty and the Role of International Organizations in the Preparation of the UNCITRAL Rules on Transparency
by J. Salasky, UNCITRAL; C. Montineri, UNCITRAL

* Error Correction and Dispute System Design in Investor-State Arbitration
by A. Schneider, Marquette Law School

* The Politics of International Investment Arbitrators
by C.A. Rogers, Università Commerciale Luigi Bocconi

* Investor-State Dispute Settlement Reform - Examining the Formative Aspect of Investment Treaty Commitments: Lessons from Commercial Law and Trade Law
by L. Hsu, School of Law, Singapore Management University


* Proposal of changes to the system of investment dispute resolution: a contribution from South America
by H. Rondón de Sansó

* Is There a Life for Latin American Countries After Denouncing the ICSID Convention?
by R. Polanco Lazo, World Trade Institute

* Ecuador's contribution to the reshaping of the protection of foreign investment and international arbitration: The UNASUR initiative
by A. Galindo, Dechert LLP

* What's Yours is Mine: Conflict of Law and Conflict of Interest Regarding Indigenous Property Rights in Latin American Investment Dispute Arbitration
by W. Shipley, Centre for International Sustainable Development Law (CISDL)

* A Resilient Boat Sailing in Stormy Seas: ASEAN Investment Agreements and the Current Investor-State Dispute Settlement Regime
by T. Wongkaew, Graduate Institute of International and Development Studies

* Investor-State Dispute Settlement from the Perspective of Vietnam: Looking for a "Post-Honeymoon" Reform
by T.T. Nguyen, International Law Department, Ministry of Justice of Vietnam; T.C.Q. Vu, Legal Affairs Department, Ministry of Planning and Investment of Vietnam

* ICSID's Relevance for the Resolution of China-Africa Disputes
by W. Kidane, Seattle University School of Law

* Africa and the System of Investor-State Dispute Settlement: To Reject or Not to Reject?
by U. Ewelukwa Ofodile, University of Arkansas School of Law

* Initial Hiccups or More? About the Efforts of the EU to Find its Future Role in International Investment Law
by J.A. Bischoff, M.M.Warburg & CO


Section I - Treaty Interpretation

* Delegating Interpretative Authority in Investment Treaties: The Case of Joint Commissions
by A. van Aaken, University of St. Gallen

* Reform of Investor-State Dispute Settlement: Lessons From International Uniform Law
by J. Karton, Queen's University, Faculty of Law

* Which is to be the Master?: Extra-Arbitral Interpretative Procedures for IIAs
by M. Ewing-Chow, Centre for International Law (CIL); J.J. Losari, Centre for International Law (CIL)

* Keeping Interpretation in Investment Treaty Arbitration 'on Track': The Role of States Parties
by T. Ishikawa, Waseda Institute for Advanced Study

* In Search of Consistency and Fairness in Investor-State Arbitration: An "Institutional" Approach to Interpreting the Doctrine of Legitimate Expectations
by U.E. Özgür, CEPMLP, University of Dundee

* Travaux Préparatoires and the Legitimacy of Investor-State Arbitration
by B.S. Vasani, Jones Day; A. Ugale, Jones Day

* State-To-State Investment Treaty Arbitration: A Hybrid Theory of Interdependent Rights and Shared Interpretive Authority
by A. Roberts, London School of Economics, Department of Law

Section II - Revising Treaty Language

* Reform of Investor-State Dispute Settlement: the US Experience
by J.K. Sharpe, U.S. Department of State; K.L. Kizer, U.S. Department of State

* Liberalization or Litigation? Time to Rethink the International Investment Regime
by S. Lester,

* Rethinking Rights and Responsibilities in Investor-State Dispute Settlement: Some Model International Investment Agreement Provisions
by E. Boomer, MIDS

* Back to the Future: Contemplating a Return to the Exhaustion Rule
by D. Kalderimis, Chapman Tripp

* Restricting the Scope of International Investment Agreements as a Means to Set Limits to the Extent of Arbitral Jurisdiction
by M. Valenti, Università degli Studi di Milano

* Limiting Investor Access to Investment Arbitration - A Solution without a Problem?
by A. Bouchenaki, Herbert Smith Freehills LLP; L-Y. Tan, Gibson Dunn

* Exclusion From Within the Ambit of a Protected Investor, a Fair Price to Pay for the Act of Abusive Treaty Shopping?
by V. Gupta, Dr. Ram Manohar Lohia National Law University, Lucknow

* A Few Pragmatic Observations on How BITs should be Modified to Incorporate Human Rights Obligations
by P. Dumberry, Faculty of Law, University of Ottawa; G. Dumas-Aubin, Faculty of Law, University of Ottawa

* On Genealogy of Proposals to Reform Investor-State Arbitration
by A. Ghouri, University of Turku, Faculty of Law

Section III - State-State Procedures and a Standing Investment Court

* The Abiding Role of State-State Engagement in the Resolution of Investor-State Disputes
by T.R. Posner, Weil, Gotshal & Manges LLP; M.C. Walter, Weil, Gotshal & Manges LLP

* Power and Persuasion in Investment Treaty Interpretation: The Dual Role of States
by A. Roberts, London School of Economics, Department of Law

* In Search of a Roadmap - Lessons for the ISDS Regime in the U.S. Experience of Lump-Sum Claims Settlement Processes
by T.J. Feighery, Arent Fox LLP

* Permanent Investment Tribunals: The Momentum is Building Up
by O.E. Garcia-Bolivar, BG Consulting, Inc

* The Challenges of Creating a Standing International Investment Court
by E. Zuleta, Gómez-Pinzón Zuleta Abogados S.A.


* Achieving a Faster ICSID
by A. Raviv, Wilmer Cutler Pickering Hale and Dorr LLP

* Streamlining the ICSID Process: New Statistical Insights and Comparative Lessons from Other Institutions
by J. Kim, Yonsei Law School

* Fragmentation and Harmonization in the ICSID Decision-Making Process
by R. Castro de Figueiredo, Tauil & Chequer Advogados Associado a Mayer Brown LLP

* ICSID Annulment Standards: Who Has Finally Won the Reisman vs Broches Debate Two Decades Ago?
by N. Tsolakidis, White & Case LLP

* ICSID Annulment Reform: Are We Looking at the Right Problem?
by M.B. Silberman, Arnold & Porter LLP

* The trembling legitimacy of the ICSID annulment system in the light of decisions by Ad Hoc Committees vis-à-vis the Ad Hoc Committee decisions
by V. Giraud Martinelli, Mezgravis & Asociados

* Addressing and Redressing Errors in ICSID Arbitration
by D.B. Gosis, Gomm & Smith P.A.


* Appellate Mechanisms for Investment Arbitration: Worth a Second Look for the Trans-Pacific Partnership and the Proposed EU-US FTA?
by B. Legum, Dentons

* Appellate Review in Investor State Arbitration
by E.Y. Park, Kim & Chang

* Reform of the investor-State arbitration regime: the appeal proposal
by G. Bottini, Arbitrator and Advisor on Issues of Int'l Law and Int'l Litigation

* Introduction of an Appellate Review Mechanism for International Investment Disputes - Expected Benefits and Remaining Tasks
by J. Lee, School of Law, Seoul National University

* Why ICSID Doesn't Need an Appellate Procedure, and What to Do Instead
by K. Andelic, University of Niš, Faculty of Law


* Mediation use in ISDS
by F. Khalifa, Egyptian State Lawsuits Authority (ESLA)

* Enabling Early Settlement in Investor-State Arbitration - The Time to Introduce Mediation Has Come
by J. Lack, Independent ADR Neutral & Attorney-at-Law; M. Leathes, International Mediation Institute (IMI); W.J. von Kumberg, Northrop Grumman Corporation

* Integrating Mediation Into Investor-State Arbitration
by N.A. Welsh, Penn State Law; A. Schneider, Marquette Law School

* The Advantages of Mediation and the Special Challenges to its Utilization in Investor State Disputes
by E. Sussman, SussmanADR

* Alleviating the Disruptive Nature of Investment Arbitration: Some Remarks on Restitution and Post-Arbitration ADR
by N. Angelet, Liedekerke Wolters Waelbroeck Kirkpatrick

* Investor-State Conflict Management: A Preliminary Sketch
by R. Echandi, International Finance Corporation, World Bank


* The Sixth Path: Reforming Investment Law from Within
by S.W. Schill, Max Planck Institute for Comparative Public Law and International Law

* The Margin of Appreciation in International Investment Law
by J. Arato, Columbia Law School

* By Equal Contest of Arms: Jurisdictional Proof in Investor-State Arbitrations
by F.G. Sourgens, Washburn University School of Law

* Interim Costs Orders: The Tribunal's Tool to Encourage Procedural Economy
by J. Sullivan, Allen & Overy LLP; D. Ingle, Allen & Overy LLP

* Reforming the Approach to Costs in Investment Treaty Arbitration
by M. Hodgson, Allen & Overy LLP

* Distinguishing Investors from Exporters under Investment Treaties
by M. Feldman, Peking University School of Transnational Law

* Collective Action in Investment Arbitration to Enforce Small Claims Justice to the Deprived or Death Knell for the System of Investor-State Arbitration?
by S. Wilske, Gleiss Lutz Rechtsanwälte

* ICSID Treaty Counterclaims: Case Law and Treaty Evolution
by J.A. Rivas, Arnold & Porter LLP

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