In investor–state dispute settlement (ISDS), ironies do occasionally occur. Sometimes they’re bitter. Sometimes they’re carbon-intensive. Sometimes they’re radioactive.
Global investment governance needs to be redesigned for the 21st century, with people and the planet at the core.
In the end, states have the power to decide collectively what reforms to pursue, in what order and in what form. Individually, they will also have choice about which particular reform options to adopt.
This process is likely to end with a plural solution in which both models (ISDS and a permanent court), and possibly others, exist.
Several states participating in the UNCITRAL process have already adopted viable alternatives to ISDS.
The European Commission today presented to the Council four proposals for specific rules putting in place the Investment Court System provisions in the EU-Canada trade deal.
Should AfCFTA member states opt for an ISDS mechanism, a reformed mechanism should be expected.
Their submissions conclude that the system is detrimental to public budgets, regulations in the public interest, democracy and the rule of law.
South Africa makes clear that in its view, procedural reform is not enough. A wider agenda that includes substantive issues is needed.
The traditional mechanism of investment arbitration between the investor and the host State has been under attack for some time now from a range of actors and for a variety of reasons.
Campaigners are urging reform of an obscure system that allows coal, oil and gas companies to sue governments if climate policies hit their profits.
Multinational companies will increasingly file massive cases against host countries when climate change policies affect their profits, Nobel Prize-winning economist Joseph Stiglitz said.
Caribbean States and investors are not only participating, but being harmed by the ills and abuses of the current system of ISDS.
The 37th session in New York was devoted to addressing and identifying some additional concerns and creating a workplan for carrying out phase three of the mandate—developing possible ISDS reform options.
But legality should not be our main concern here. There are much better approaches to international investment and we should be considering them.
If the investment regime is to be made supportive of development and overcome its legitimacy crisis confronting, something more is required than procedural reforms to ISDS.
The proposed amendments signal an effort to improve the procedural rules governing ICSID arbitration, but fail to appropriately address many concerns expressed and fall short of promoting meaningful reform of investor–state dispute settlement (ISDS).
A permanent Multilateral Investment Court pushed by the European Union could make ISDS worse by scaling it up.
ISDS lawyers appear to hold administrative positions within the working group and are represented in large numbers in the advisory bodies that have been established for the working group.
Advocates of ISDS (industrialised countries and lawyers from the ‘arbitration industry’) dominate the running of the Working Group and its advisory bodies. Civil society is underrepresented.