TOWARD A JUDICIAL MODEL OF ISDS: UNCITRAL WGIII’S TRIBUNAL ARCHITECTURE
The Addis Ababa Action Agenda of the Third International Conference on Financing for Development (United Nations General Assembly resolution A/RES/69/313) identifies “private international capital flows, particularly foreign direct investment” as “vital complements to national development efforts”, situating cross-border investment within the UN’s broader financing for development framework.
This policy framing has coincided with the expansion of treaty-based instruments governing investment relations, including bilateral investment treaties and investment chapters in free trade agreements, which commonly articulate standards of treatment and access to dispute settlement with a view to structuring legal expectations around the provision of foreign capital.
Investor-state dispute settlement (ISDS) is commonly structured as a treaty-based mechanism through which a host state and a foreign investor submit disputes to adjudication on the basis of advance consent expressed in an investment treaty.
That consent is frequently implemented through arbitration conducted under the International Centre for Settlement of Investment Disputes (ICSID) Convention or, in ad hoc proceedings, pursuant to the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules. Within this architecture, tribunals are often constituted on a three-member basis, with each disputing party appointing one arbitrator and the presiding arbitrator selected by agreement or, failing that, through a default appointment mechanism; the tribunal then applies the applicable treaty and governing law to the dispute.
Indeed, in his writings on the origins of the ICSID Convention, Ibrahim Shihata, the then general counsel of the World Bank and a principal architect of ICSID, characterised the ICSID’s foundational objective as relocating investment disputes from the register of diplomatic protection to a neutral, law-governed forum designed to insulate dispute resolution from political intervention.
Apr-Jun 2026 issue
Akin Gump Strauss Hauer & Feld LLP