There is no doubt about it. Investment arbitration is under attack. Originally intended as a means of providing a neutral forum for determining whether investor protections have been violated, investor-state arbitration is now accused by various public policy groups and politicians around the world of being non-transparent, excessively costly and undemocratic. Countries are withdrawing from various treaties providing for arbitration when disputes between member states arise, such as the ICSID Convention and the Energy Charter Treaty (ECT). In addition, pressure from political groups has complicated agreements in negotiations regarding new multilateral investment treaties such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), which also foresee arbitration for treaty-related disputes. Moreover, the European Commission, a vocal critic of investment arbitration, announced in July that it would commence punitive measures against member states that have not rescinded intra-EU BITs and the EU parliament voted against investment arbitration provisions in TTIP.

Although the accuracy of the various criticisms regarding investment arbitration is debatable and possibly based on misinformation, the seed of distrust has already been planted – particularly in the mass media and in the political arena. As a result, investment agreements and the economic benefits thereof, risk falling victim to the unpopularity of investment arbitration unless there is some change to the investor-state dispute settlement system. But change has already begun. Various developments indicate that governments, multilateral agencies and institutions are now seriously and openly considering mediation as a means to resolve state-investor disputes. The International Bar Association’s Mediation Committee has created a State Mediation Subcommittee whose main purpose is to propose concrete measures to promote the use of mediation for investor-state disputes. The EU and US are currently considering the insertion of mediation into the dispute resolution provisions of TTIP. In addition, the EU Commission has declared that it will explore means to resolve intra-EU investment disputes through mediation, and recently organised a conference in Brussels on this topic. Similarly, the Secretariat of the ECT is also reflecting on the role mediation should have as a dispute resolution mechanism for disputes under the treaty. Particularly promising is the launch of a project by the United Nations Commission on International Trade Law (UNCITRAL) relating to the creation of a multilateral treaty permitting direct enforcement of mediated settlement agreements, similar to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).

Oct-Dec 2015 issue

ICC International Center for ADR