This is from Todd Tucker, formerly of Global Trade Watch and now doing a PhD at Cambridge University:
Right now, investment treaty arbitration is making few people happy. Investors take years to launch and litigate them, and, best case scenario, they get payment – usually far less than what they asked for. Governments are certainly not happy: even having one of the cases brings their reputation into question, not to mention considerable financial resources to defend themselves and pay out.
So, and I am just spitballing here, instead of a 42-page, 13,975-word Model Bilateral Investment Treaty (as the US currently uses), how about the following roughly 250 words (or about 10 tweets):
- “When an investor has a problem with a government action or policy, it has a right to ask a panel of independent arbitrators to help mediate the dispute.
- The arbitrators will present information to both parties about mutually advantageous current and potential benefits of their partnership.
- If mediation fails after three months, the panel of arbitrators will issue an award within three months recommending the government to engage in supervised bilateral negotiations, compensation or policy changes, or recommending that investors drop their complaint and return to normal relations with the host government. Arbitrators must adjust these recommendations to take into account governments’ obligations to regulate without excessive transaction costs above any normal domestic legal procedure.
- Either the government or investor can appeal the arbitrators’ recommendation to a standing body of international civil servant arbitrators, with mixed expertise in commercial, administrative and international law. (The arbitrators in this standing body will serve for ten year terms and be selected by a vote of not less than three-fourths of the government signatories to the Washington Convention.)
- If the appellate body finds that the lower panel’s award does not comport with the requirements herein, it may modify the award, or issue a new one that does within three months.
- Governments will implement these final recommendations within three months to the satisfaction of the lower panel (and if relevant, the appellate body of arbitrators), or the panel will issue a cash award to the investor redeemable under the procedures of the Convention.”
The nice thing about this for the investors is that it allows them to bring up a dispute over ANYTHING, not just the kinds of problems that are covered by the (admittedly already malleable) standards like fair and equitable treatment. The nice thing about this for governments is that any recommendation from the arbitrators requires a recommendation that MUST be adjusted to take into account their policy prerogatives, or can be appealed to a group of appellate arbitrators controlled by states. But, again, another nice thing for investors is that they will get something within a year, even if that something is just finality and a recommendation to play nice with the host government. (Contrast this with 2-10 years under the current investment treaty system, before you end up with a cash award you can take to courts.)
Would this new approach make either side happy?
