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Responding to Incorrect ISDS Decision-Making: Policy Options

Published on April 5, 2019        Author: 

Editors’ Note:  This is the latest post in our ongoing series of posts (see introduction here, first post on costs here, second post on duration of proceedings here, third post on the diversity deficit in investment arbitration here, fourth post on the impartiality and independence of arbitrators here, fifth post on an empirical assessment of ISDS here) authored by individual members of the Academic Forum of the UNCITRAL Working Group III (UN WG III) on Investor-State Dispute Settlement Reform, in parallel with the ongoing UN WG III sessions taking place this week in New York.  The series features summaries of more detailed concept papers prepared by various working groups of the Academic Forum.  This post summarizes a more detailed concept paper prepared by members of Academic Forum Working Group 4 (members Daniel Behn, Chi Manjiao, Eric De Brabandere, Anna De Luca, Jaemin Lee, Martins Paparinskis, Catharine Titi).

In UNCITRAL Working Group IIIdiscussions, concerns have been raised about the consistency, as well as the correctness, of investor-State dispute settlement (ISDS) decisions. Consistency and correctness are distinct concepts: inconsistent ISDS decisions can be correct, and consistent ISDS decisions can be incorrect. Developing potential policy responses to incorrect ISDS decision-making first requires an understanding of how achieving correctness requires more than achieving consistency.

Working Group Four of the Academic Forum on ISDS has prepared a report analyzing the “correctness” of ISDS decision-making. That analysis balances two competing considerations. First, the legal reasoning and outcomes of many ISDS decisions have faced significant criticism from a range of actors – including States, organizations, and scholars– which has raised questions of correctness and, more generally, the substantive legitimacy of the ISDS regime. Second, criticism of particular ISDS decisions, even when widespread and intense, does not necessarily establish the incorrectness of those decisions, due to a number of factors, including how investment treaty obligations are drafted (often in open-textured terms) and interpreted (where, under principles of treaty interpretation reflected in the Vienna Convention on the Law of Treaties, factors beyond the ordinary meaning of treaty text must be considered). Particularly with respect to disapproval of ISDS decisions by States, such disapproval might, in some instances, reflect State views that the decisions were incorrectly decided, but in other instances might only reflect a perceived need by States to provide clearer policy guidance to ISDS tribunals. Read the rest of this entry…

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