There are several efforts underway at multiple levels—national, bilateral, regional and multilateral—aimed at reforming theregime. These reform efforts are operating in parallel to developments in other areas of international investment governance, some of which have advanced quickly over the past year, including the structured discussions on investment facilitation at the , as well as efforts in the UN context to craft a binding treaty on business and human rights. This year’s High-Level IIA Conference assessed the progress made to date since launching UNCTAD’s 10 Options for Phase 2 of IIA Reform, looking at trends across multiple areas of international investment governance, as well as across world regions. This Insight summarizes the key takeaways from the 2019 event and considerations for Phase 2 going forward.
The upcoming meeting of Working Group III ofin January 2020 will be a valuable opportunity to intensify the push for real reform of . This Insight provides an update from the October 2019 discussions in Vienna, where countries set out a workplan for their upcoming talks on reform solutions, outlining when to discuss which options. The authors review lessons learned to date and look ahead to the topics slated for discussion in January 2020: a stand-alone review or appellate mechanism; a standing ; and the selection and appointment of arbitrators and adjudicators. Taking a deep dive into each, they highlight key issues for negotiators to consider.
A set of documents purporting to capture the discussions of the United States–United Kingdom Trade and Investment Working Group from 2018 has recently been released into the public domain.
Michael Ballantine and Lisa Ballantine v. The Dominican Republic,Case No. 2016-17
As claimants lacked a protected investment and could not import consent to arbitration via MFN, UNCITRAL tribunal dismisses case against Mauritius on jurisdictional grounds
Professor Christian Doutremepuich and Antoine Doutremepuich v. Republic of Mauritius,Case No. 2018-37
Lao Holdings N.V. v. Lao People’s Democratic Republic,Case No. ARB(AF)/12/6, and Sanum Investments Limited v. Lao People’s Democratic Republic, , Case No. 2013-13
From October 14 to 18, 2019, negotiators will gather in Vienna for the next session of theWorking Group III on reform, where they will move from considering concerns with the current system to assessing possible solutions. In this Insight, Jane Kelsey discusses various examples of how some countries have tested out alternatives to ISDS, such as state–state arbitration, alternative dispute resolution, domestic legislation and enforcement, and the exhaustion of domestic remedies. For each ISDS alternative, she examines what benefits and challenges arose, and how the lessons learned can help inform the next phase of UNCITRAL deliberations.
ICSID Rule Amendment: An attempt to remedy some of the concerns regarding ISDS identified by UNCITRAL WG III
The process for updating’s rules has been taking place in parallel to the Working Group III deliberations on reform, prompting an important conversation of how these efforts may complement each other. In this new Insight, Rafael Ramos Codeço and Henrique Martins Sachetim examine the ICSID rule amendment process, taking a close look at a few key amendments under consideration and examining the extent to which these might help address some of the ISDS-related concerns that have been identified at UNCITRAL.
The idea of entrusting party-appointed arbitrators with powers to decide investor–state disputes through final and binding awards, inherited from commercial arbitration and traditionally accepted as appropriate, now causes discomfort among critics.
UNCITRAL secretariat publishes documents to be considered at October 2019 session of Working Group III on ISDS reform
Delegates to theWorking Group III process on multilateral reform will meet again in Vienna during the week of October 14–18, 2019.
The European Council has approved negotiating directives for the’s participation in talks to modernize the , confirming its decision during a meeting on July 2, 2019.
Clorox Spain S.L. v. Bolivarian Republic of Venezuela,Case No. 2015-30
This piece examines recent trends in the use of third-party funding (TPF) in treaty-basedand the implications of TPF for investor conduct, developments in investment law and host state conduct. TPF has been raised in two multilateral processes currently underway: the talks to amend arbitration rules and to consider multilateral reform of ISDS at . Given the narrow nature of the TPF discussions in ICSID, the authors make the case for policy-makers to consider full or partial bans of TPF at UNCITRAL.
Spain has faced approximately 40 arbitrations since it made the decision in 2010 to rescind or revise various regulatory measures aimed at drawing in greater investments into renewable energy projects. This article examines the awards issued in four of those cases, looking in particular at how the tribunals interpreted and applied thestandard. The author looks at the potential problems that can emerge when states are unsure of how any given tribunal may interpret FET or other key standards and presents some potential solutions.
Delegates involved in theWorking Group III process on multilateral reform have until July 15, 2019 to submit to the UNCITRAL Secretariat their reform proposals and the timing for when such items may be considered in an overarching project schedule. That schedule would help guide the working group under Phase 3 of its mandate, which is devoted to crafting solutions to ISDS-related concerns.
India found in breach of BIT with Germany by UNCITRAL tribunal in respect of agreement for lease of electromagnetic spectrum
DEUTSCHE TELEKOM AG V. THE REPUBLIC OF INDIA,CASE NO. 2014-10
ICSID tribunal constituted by virtue of an MFN clause holds Turkmenistan liable for FET breach for requiring investors to produce “smeta,” a cost estimate required by Turkmen law
GARANTI KOZA LLP V. TURKMENISTAN,CASE NO. ARB/11/20
The April 2019 deliberations on multilateralreform at Working Group III were due to tackle a series of questions that emerged in Phase 2 of the process. This piece breaks down why the scope of these discussions should be expanded to include important concerns raised by developing countries, and describes three core issues that must not be ignored. These involve the right to participation by affected parties; the rule of law and domestic courts’ jurisdiction; and the chilling of sovereign states’ authority and responsibility to govern.
The European Economic and Social Committee (EESC) has weighed in on the European Commission’s recommendation for a European Council decision to launch negotiations on the proposed, supporting discussions on reform while noting areas for improvement.
Delegates had a new round of deliberations for multilateral reform ofat from April 1 to 5. The meeting of Working Group III, which is tasked with this process, was held in New York.
Tribunal finds expropriation of investment by Bolivia due to non-payment of compensation but awards only sunk costs to British investor
SOUTH AMERICAN SILVER LIMITED (BERMUDA) V. THE PLURINATIONAL STATE OF BOLIVIA,CASE NO. 2013-15
conferred a broad mandate on Working Group III to consider possible reform of . In Phase 1 governments identified and considered concerns about ISDS. Phase 2, where they consider whether reform is desirable in light of those concerns, is well advanced. The next meeting in New York in April 2019 is expected to conclude this phase and decide how to pursue the final phase, in which governments will develop any relevant solutions to recommend to the Commission. This note addresses three issues at the heart of the legitimacy crisis confronting the international investment regime that should inform the remainder of Phase 2.
Multilateral ISDS Reform Is Desirable: What happened at the UNCITRAL meeting in Vienna and how to prepare for April 2019 in New York
Working Group III has decided that multilateral reform is desirable to address various concerns regarding . Its next session will identify other concerns that may have been missed and prepare a work plan to develop solutions. This article reviews the UNCITRAL process so far and helps governments prepare for the upcoming session.
UNCITRAL Working Group III decides that multilateral reform of ISDS desirable; governments to submit proposals to develop work plan for reform
Working Group III continued discussions on possible reform of investor–state dispute settlement ( ) at its 36th session, held October 28–November 2, 2018 in Vienna.
Working Group III is scheduled to continue discussions on possible reform of at its 36th session, to be held October 29–November 2, 2018 in Vienna.
Transparency in International Investment Arbitration: A guide to the UNCITRAL Rules on Transparency in Treaty-Based Investor–State Arbitration
This book explains the underlying debate and provides an in-depth commentary on theRules on Transparency in Treaty-Based Investor–State Arbitration, paragraph by paragraph.
In May 2018, the Dutch Ministry of Foreign Affairs published its new draft model bilateral investment treaty (), in hopes to foster rethinking of existing and future Dutch BITs. Will this revised model achieve this goal, or does it fall short of the promised policy reset?
Working Group III of the United Nations Commission on International Trade Law () continued discussions on possible reform of investor–state dispute settlement ( ) at its 35th session, held April 23–27, 2018 in New York.
It will take time for dialogues onreform to produce results. In the interim, rather than continue to assume the unjustified risks associated with the flawed ISDS system, states could consider two near-term options. This piece looks at the advantages and disadvantages of each.
The 35th session of Working Group III of the United Nations Commission on International Trade Law () takes place April 23–27, 2018
Council of the European Union adopts negotiating directives: EU Commission to negotiate a convention establishing a multilateral investment court
On March 20, 2018, the Council of the European Union adopted negotiating directives authorizing the European Commission to negotiate a convention establishing a multilateral court for the settlement of investment disputes.
During the week of November 27–December 1, 2017, Working Group III of the United Nations Commission on International Trade Law () held its first meeting on possible reform of investor–state dispute settlement ( ).
Claims brought by a company controlled by an Egyptian billionaire against Algeria are held inadmissible
Orascom TMT Investments S.à r.l. v. People’s Democratic Republic of Algeria,Case No. ARB/12/35
UNCITRAL tribunal dismisses allegations of Hungarian investor’s bribery and refuses to set aside contract with Croatia
The Republic of Croatia v. MOL Hungarian Oil and Gas Plc,Case No 2014-15
Two African developing countries respond to criticisms against the investment regime. The innovative treaty offers protection to foreign investors without compromising on the host state’s capacity to regulate in the public interest.
UNCITRAL receives mandate to work on ISDS reform; Transparency Convention to enter into force on October 18, 2017
On July 14, 2017, the United Nations Commission on International Trade Law () entrusted its Working Group III with a broad mandate to work on the possible reform of investor–state dispute settlement ( ).
In theory, the common European market works based on principles that protect intra-cross-border investments. In practice, can these principles be reconciled with dozens of intra-EU still in place?
Argentina has come back to thenegotiation arena after a 15-year halt, concluding a treaty with Qatar and engaging in ongoing negotiations with Japan. The new treaty includes traditional along with innovative provisions.
Eli Lilly and Company v. The Government of Canada,, Case No. UNCT/14/2
tribunal dismisses claims brought against Indonesia based on forged mining licences Churchill Mining PLC and Planet Mining Pty Ltd v. Republic of Indonesia, ICSID Case No. ARB/12/14 and ICSID Case No. ARB/12/40 Inaê Siqueira de Oliveira [*] After rendering separate decisions on jurisdiction¾one for the case brought by British company Churchill Mining PLC under the United […]
Renco Group Inc. v Republic of Peru, UNCT/13/1 An arbitral tribunal under the Arbitration Rules of the United Nations Commission on International Trade Law () declared that U.S.-based investor Renco Group Inc. (Renco) failed to comply with the waiver requirement under the United States–Peru Trade Promotion Agreement (TPA). Accordingly, the tribunal declined to exercise jurisdiction […]
Windstream Energy LLC v. Government of Canada,Case No. 2013-22 An arbitral tribunal under Chapter 11 of the North American Free Trade Agreement ( ) has reached the award stage. Although dismissing the discrimination and indirect expropriation claims, the tribunal upheld the claim of failure to provide fair and equitable treatment ( ), and ordered Canada […]
On February 1, 2016, the Singapore International Arbitration Centre (SIAC) released draft rules tailored to investment arbitration (Draft SIAC Rules), to be finalized in May following public consultation.
Transparency in International Investment Arbitration: A guide to the UNCITRAL Rules on Transparency in Treaty-Based Investor–State Arbitration
This in-depth commentary analyses each paragraph of theTransparency Rules, and explains the underlying debate for a broader context.
Tribunal found Mongolia liable for unlawful expropriation and awarded more than US$80 million in damages
Khan Resources Inc., Khan Resources B.V. and CAUC Holding Company Ltd. v. The Government of Mongolia and MonAtom LLC,Case No. 2011-09
UNCITRAL tribunal finds Canada’s environmental assessment breached international minimum standard of treatment and national treatment standard
William Ralph Clayton, William Richard Clayton, Douglas Clayton, Daniel Clayton and Bilcon of Delaware Inc. v. Government of Canada,
In July 2013, the United Nations Commission on International Trade Law () adopted a package of rules aiming to ensure transparency in investor-State arbitration, ratifying the work done by delegations to UNCITRAL—comprised of 55 Member States, additional observer States and observer organizations—over the course of nearly three years of negotiations. With the adoption of the new rules, there is now a carefully negotiated and widely approved template that can serve as a model for how to conduct investor-State arbitrations transparently.
From October 1-5, 2012, a working group of the United Nations Commission on International Trade Law met in Vienna to continue work on how to ensure transparency in treaty-based investor-state arbitration. It was the working group’s fifth week-long meeting on the topic, but will not be the last.
US court vacates award against Argentina BG Group Plc v. Argentina Lise Johnson A US appellate court has vacated an award against Argentina in a decision that may give investors pause before attempting to bypass treaty provisions requiring that they first pursue their claims in the host state’s courts. The long course of the dispute […]
Negotiations over transparency in investor-state arbitrations have reached a critical juncture heading into an October 2012 meeting in Vienna. During the last meeting in February 2012, a large number of countries, developed and developing, strongly supported options to ensure transparency in investor-state disputes that are settled under the arbitration rules of the United Nations Commission […]