Want to understand the UNCITRAL debates about ISDS reform?
I’ve put the draft of my new AJIL essay on “Incremental, Systemic, and Paradigmatic Reform of Investor-State Arbitration” up on SSRN.
This essay complements a great forthcoming AJIL article by Greg Shaffer & Sergio Puig on “Imperfect Alternatives: Institutional Choice and the Reform of Investment Law.”
In the coming week, I will be posting four blogs on EJIL: Talk! and IELPB on “States’ Concerns about ISDS” co-authored with Zeineb Bouraoui.
The abstract for the essay is copied below:
Abstract: Although the legitimacy of investor-state arbitration has come under fire, states have not (yet) converged on which reforms to pursue. In simplified terms, three main camps have emerged to date:
- Incrementalists view the criticisms of the current system as overblown and argue that investor-state arbitration remains the best option available. Hence, they favor retaining the existing dispute resolution system but instituting modest reforms that would redress specific concerns.
- Systemic reformers see merit in retaining investors’ ability to file claims directly on the international level, but view investor-state arbitration as a seriously flawed system for dealing with such claims. They champion more significant, systemic reforms, such as replacing investor-state arbitration with a multilateral investment court and appellate body.
- Paradigm shifters dismiss the existing system as irrevocably flawed and in need of wholesale replacement. They reject the utility of investors’ making international claims against states, whether before arbitral tribunals or international courts. They embrace a variety of alternatives, such as domestic courts, ombudsmen, and state-to-state arbitration.
Against this backdrop, the United Nations Commission on International Trade Law (UNCITRAL) gave one of its working groups a three-staged mandate to investigate the possible reform of investor-state dispute settlement, which required it, first, to identify and consider concerns about investor-state dispute settlement (ISDS); second, to consider whether reform was desirable in light of any identified concerns; and, third, if reform was desirable, to develop relevant solutions to be recommended to the Commission.
This essay (1) conceptualizes the three main reform approaches that have been advocated to date and identifying the likely strategies of, and risks faced by, the different reform champions; and (2) analyzes UNCITRAL’s role in these reforms as both a venue and an actor navigating a complex series of relationships with other key stakeholders. Pointing to the future, I conclude by identifying the likelihood of ongoing pluralism with respect to different institutional processes for resolving investment disputes and sketching how actors might proceed to develop flexibility both among and within different reform options.
