POSSIBLE REFORMS TO THE INVESTOR STATE DISPUTE SETTLEMENT REGIME
From 29 October to 3 November 2018, the 36th Session of UNCITRAL Working Group III (WG III) convened in Vienna to discuss possible reforms to the investor state dispute settlement regime (ISDS). WG III includes 60 Member States, as well as 103 observers comprised of 40 states, two state entities, six inter-governmental organisations, and 55 non-governmental organisations (NGOs).
In prior sessions, WG III laid out a plan for addressing its mandate that is segmented into three phases. In Phase I, completed during the 34th and 35th Sessions, WG III identified the concerns regarding ISDS. The 36th Session was the first session in Phase II of the plan. The mandate for the session was to consider whether reform was desirable considering the identified concerns. The key agreement reached by the group in the 36th Session was that reform of the current ISDS system is indeed desirable. Since this was decided, the 37th Session will be the beginning of Phase III where the mandate will be to develop relevant solutions to recommend to the EU Commission.
The discussions over the course of the week fell under three main themes: arbitrators, arbitral decisions and the efficiency of the ISDS process. All three themes encompass areas of increasingly vociferous public criticism.
Decisions
States expressed concerns over the divergent interpretations of substantive standards that can be seen in awards rendered in ISDS arbitrations. Arbitrators are not bound to any previous legal interpretations in their awards and may determine their own jurisdiction under the principle of competence-competence. Divergent interpretations relating to jurisdiction and admissibility are inevitable across disputes. States also raised concerns regarding procedural inconsistency which can vary based on the rules, institution and arbitrators involved in the dispute.
Jan-Mar 2019 issue
CIArb