Editors’ Note: For the rest of this week, we are featuring successive posts by certain individual members of the Academic Forum of the UNCITRAL Working Group III (UNCITRAL WG III) on Investor-State Dispute Settlement Reform, in parallel with ongoing UNCITRAL WG III meetings in New York. EJIL:Talk! will thereafter feature invited contributions to respond to the posts.
Over the last few years, growing criticism over investor-State arbitration has triggered demands for reform of the existing framework from States, international organizations, and civil society groups. At its fiftieth session in July 2017, Member States of the United Nations Commission on International Trade Law (UNCITRAL) decided to entrust Working Group III (WGIII) with a three-phase mandate on investor-State dispute settlement (ISDS) reform, whereby WGIII would first identify concerns regarding ISDS; second, consider whether reform was desirable in the light of those concerns; and third, if WGIII were to conclude that reform was desirable, develop solutions to be recommended to UNCITRAL (see here, paras. 263-264).
Although the UNCITRAL process is government‐led, it is open to consider views of various stakeholders, including civil society and academia. In that context, in 2018 the Geneva Center for International Dispute Settlement (CIDS) facilitated the creation of an “Academic Forum on ISDS”, the purpose of which is for academics active in the field of ISDS to exchange views, explore issues and options, test ideas and solutions, and hopefully make a constructive and research-based contribution to the ongoing discussions on possible reform of ISDS, in particular the discussions in the context of WGIII.PluriCourts at the University of Oslo is the current administrator of the Academic Forum, which presently counts more than 120 members and is led by a Steering Committee, which Prof. Malcolm Langford chairs.
The concept papers project: Matching concerns and reform options
Among other projects, the Academic Forum engaged in a collective exercise exploring which reform options could meet the various criticisms voiced against the current ISDS regime. To that end, it took as a starting point the main concerns identified by WGIII in phase 1 (see here, here, here, here, and here), namely:
- Excessive costs of proceedings (including insufficient recoverability of cost awards);
- Excessive duration of proceedings;
- Lack of consistency and coherence in the interpretation of legal issues;
- Incorrectness of decisions;
- Lack of diversity among adjudicators; and
- Lack of independence, impartiality, and neutrality of adjudicators.
It then assigned each concern to a working group composed of 5 to 9 of its members. Each Forum working group prepared a paper examining whether and how the relevant concern would be addressed under four reform options, namely:
- Improvement of the current investor-State arbitration system (“IA improved”, IA standing for investment arbitration) (for instance by modifying the appointment rules or enacting rules of conduct and/or ethics for arbitrators);
- Addition of an appellate mechanism to the current investment arbitration regime (“IA + appeal”);
- Introduction of a multilateral investment court (with or without an built-in appeal) (“MIC”);
- No ISDS at all, with two sub-scenarios, namely (i) recourse to domestic courts only, and (ii) State-to-State arbitration (“No ISDS”).
For instance, the paper on diversity explores whether the lack of diversity among adjudicators would be cured and, if so, how and to what extent, in the “IA improved”, “IA + appeal”, “MIC”, and “No ISDS” reform options.
Furthermore, in light of the preoccupation which is often voiced that discussions on a possible reform should be based on verifiable data, this project has put particular emphasis on the collection and analysis of empirical data relating to ISDS, through the creation of a specific working group. The empirical working group has supported the other working groups with empirical evidence related to each concern and has summarized its main findings in a separate paper.
Over the coming days, EJIL: Talk! will host a series of posts, in which the Academic Forum working groups will present their main findings and conclusions.
As WGIII is nearing completion of the first two phases of its work, it is hoped that this Academic Forum project will be of assistance to policy-makers who are about to embark on designing reform solutions.
*Contributors’ Note: The papers benefited from comments from the entire Academic Forum and in particular were discussed at a Forum meeting at the University of Vienna in October 2018 and at a workshop held on 1-2 February 2019 at the University of Oslo. While the concept papers benefited from these broad consultations, each paper remains the sole responsibility of the members of the respective Forum working group.