APPELLATE REVIEW OF ICSID AWARDS: INTER SE MODIFICATION AND WGIII REFORM

Investor-state dispute settlement (ISDS) reform has now reached a juncture at which questions of institutional architecture and treaty design are no longer capable of coherent treatment in isolation from one another.

Within the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WGIII), the reform process has progressively evolved from a broad identification of perceived structural deficiencies in the existing ISDS regime toward the elaboration of increasingly concrete institutional proposals, including draft statutes for a standing first-instance tribunal and a permanent appellate mechanism for international investment disputes.

One prominent dimension of the reform agenda contemplates a decisive shift away from the traditional model of ad hoc arbitral adjudication and toward a more judicialised framework characterised by permanent adjudicators, an enduring institutional structure and the availability of appellate review.

That institutional ambition sits uneasily with one of the central features of the existing ISDS system, the ‘1966 Convention on the Settlement of Investment Disputes between States and Nationals of Other States’ (commonly referred to as the ‘ICSID Convention’), which remains the primary institutional mechanism for the settling of investor-state disputes, and has been ratified by 158 countries as at the date of writing.

Article 53(1) of the ICSID Convention provides that an ICSID award “shall not be subject to any appeal or to any other remedy except those provided for in this Convention”. The Convention does contain an annulment mechanism, but that mechanism is narrow and does not operate as a merits appeal.

If WGIII’s proposed appellate tribunal is to review ICSID awards, the legal architecture must therefore address a threshold question: how can an appellate mechanism be made available where the treaty most commonly used for investment arbitration expressly precludes appeal?

Jul-Sep 2026 issue

Akin Gump Strauss Hauer & Feld LLP