Investor-state dispute settlement (ISDS) Reform

This CIDS project on ISDS reform has developed against the background of the criticism that has emerged over the last years towards investor-State arbitration. States and other stakeholders have begun to reflect about both the achievements and shortcomings of the existing ISDS system, reacting in different ways to its perceived limitations. Against this backdrop, a move for reform has developed over the past years, which currently has the United Nations Commission on International Trade Law (UNCITRAL) as the focal point of discussions.

The CIDS project seeks to provide fact-based study of the concerns over the ISDS system as well as contribute analysis and ideas for concrete reform proposals going forward. While the options for the reform of the ISDS regime are multiple and are ultimately for policy-makers (i.e., States) to make, the CIDS aims to accompany the ongoing discussions between stakeholders which are likely to touch on systemic and other complex issues of investment law, treaty law, and international dispute settlement.

With those objectives in mind, the CIDS has contributed two research papers to UNCITRAL and organized or co-organized a series of seminars or workshops. It has also facilitated the creation of an Academic Forum on ISDS, which comprises a number of leading academic experts in the ISDS field. 

Although the project was completed in 2020, Prof. Gabrielle Kaufmann-Kohler and Dr. Michele Potestà continued to participate as experts for Switzerland for the inter-state negotiations at UNCITRAL.

• First CIDS Report, “Can the Mauritius Convention serve as a model for the reform of investor-state arbitration in connection with the introduction of a permanent investment tribunal or an appeal mechanism?” - external link 

The first CIDS report, co-authored by Gabrielle Kaufmann-Kohler and Michele Potestà, was issued on 3 June 2016. It considers the perceived need and possible options for reforming ISDS. It outlines the current features of ISDS and the commonly raised issues underlying calls for reform, such as the perceived lack of legitimacy of the system, arbitrators’ appointment, the costs of the system for the actors involved, the lack of a review mechanism and of transparency. It also describes the previous and current initiatives proposed by States, inter-governmental organizations and other stakeholders to reform the current ISDS system.

It then explores two options for reform of the ISDS framework: a multilateral investment court, referred to as the International Tribunal for Investments (ITI) and/or an Appeal Mechanism (AM) for investor-State arbitral awards me. Further, the study analyses whether a mechanism similar to the one of the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (the “Mauritius Convention”) could be used to extend the application of any such reform to the 3000+ investment treaties in existence. By so doing, the CIDS report proposes a roadmap that could be followed should there be an endeavour to undertake a reform of ISDS on a multilateral basis.

At its annual session held in New York in July 2016, the UN Commission on International Trade Law (UNCITRAL) heard an oral presentation of the CIDS report. UNCITRAL also considered a note providing an update on the research and a short overview of its conclusions (A/CN.9/890 link to UNCITRAL document/page).

• CIDS Supplemental Report, “The Composition of a Multilateral Investment Court and of an Appeal Mechanism for Investment Awards” - external link 

As the title suggests, this report analyzes in more depth one of the aspects addressed in the first report, namely the composition of a multilateral investment court and of an appeal mechanism for investment awards.
It seeks to identify issues that could arise in this respect if States were to consider setting up a permanent or semi-permanent body for the settlement of investment disputes. For that purpose, the study presents a comparative analysis of the composition of existing international adjucatory bodies and in part also arbitral institutions, and seeks to chart the main options for the composition of a prospective international investment tribunal and appeal mechanism.

• Joint CIDS/UNCITRAL Expert Group Meeting – Geneva, 2-3 March 2017

Within the framework of the research carried out by the CIDS for the United Nations Commission on International Trade Law - external link (UNCITRAL) on the reform of investor-state arbitration, an expert group meeting was held in Geneva, hosted by the Swiss government and organised jointly by the CIDS and UNCITRAL.

The welcome addresses were delivered by Ambassador Didier Chambovey, Permanent Representative of Switzerland to the UN, WTO and EFTA, Professor Gabrielle Kaufmann-Kohler, Director of the CIDS and Mr Renaud Sorieul, then Secreatry of UNCITRAL.

Delegates representing 35 States and the European Union, officials, representatives of arbitral institutions and international organizations, and investment arbitration experts debated the findings and roadmap presented by the CIDS Report on ISDS reform. Participants discussed the need and possible avenues of a reform at a multilateral level.

The purpose of the meeting was to consider how the project of investor-State dispute settlement reform might be carried forward at a multilateral level, if approved as a topic for future work, on the basis of the issues and suggested roadmap outlined in the CIDS report.
The meeting adopted the format of UNCITRAL expert group meetings, so participants were invited in their personal capacity as experts to contribute their views on the topic, with the understanding that the views expressed did not necessarily represent those of their Governments or organizations.

• UNCITRAL/CIDS/ICC Informal Roundtable on investor-State Dispute Settlement – Paris, 16 November 2017

Following the decision of the UN Commission on International Trade Law - external link (UNCITRAL) to consider possible reforms of the current investor-State dispute settlement regime, UNCITRAL and CIDS, in collaboration with the International Chamber of Commerce (ICC) organized an informal meeting with investors in Paris.

The purpose of the meeting was to receive input from the private sector (in particular, potential claimants in investment arbitration) in response to the possible reform of the investor-State dispute settlement system at a multilateral level. As a brainstorming session, participants were invited in their personal capacity to contribute their views on the topic, with the understanding that the views expressed did not necessarily represent those of their corporations or organizations.

Corporate representatives of EXXON, China Investment Corporation, Iberdrola and EDF, among others,participated in the roundtable.

• A permanent investment tribunal system? - 2nd Annual Conference on Energy Arbitration and Dispute Resolution in the Middle East and Africa – London, 16-17 May 2017 (Dr. Michele Potestà)
• Roadmap for a reform of ISDS - Joint UNCITRAL-LAC Conference – Ljubljana, 4 April 2017 (Dr. Michele Potestà)
• Reform of investor-state arbitration - 3rd Annual Harvard International Arbitration Conference (HIAC) – Cambridge, 30-31 March 2017 (Prof. Gabrielle Kaufmann-Kohler)
• The Idea of an International Investment Court: Prospect and Challenges in Times of Legitimacy Crisis - Institute of State and Law of Academy of Science of the Czech Republic in cooperation with Czech Society of international Law – Prague, 23 March 2017 (Dr. Michele Potestà)

The purpose of the Forum is for academics active in the field of ISDS to exchange views, explore issues and options, test ideas and solutions, and hopefully make a constructive contribution to the ongoing discussions on possible reform of ISDS, in particular discussions in the context of UNCITRAL’s Working Group III (WGIII).

Statement of purpose

Read the Forum’s Statement of Purpose here - external link.

Members of the Forum

The list of individuals who are members of the Academic Forum is available here - external link.

Projects and initiatives

The Academic Forum on ISDS has undertaken a number of projects and initiatives, which include the following:

• Concept paper project: Matching concerns and reform options

Seven working groups composed of Forum members have prepared a series of “concept papers”, which analyze how the issues or concerns with ISDS that have emerged in the WGIII sessions may be addressed under a number of possible reform scenarios. This project has been led by Gabrielle Kaufmann-Kohler, Michele Potestà, and George Bermann.

You may download the papers at the following links:

0. Introduction to project – Kaufmann-Kohler & Potestà - external link
1. Costs – WG1 - external link
2. Duration - WG2 - external link
3. Inconsistency - WG3 - external link
4. Incorrectness of ISDS Decisions - WG4 - external link
5. Diversity – WG5 - external link
6. Independence - WG6 - external link
7. Empirical perspectives - WG7
- external link8. Summary conclusions – Table - external link

The main findings of the concept papers project were presented at an Academic Forum event held on Tuesday 2 April at 12:15 PM at the United Nations, in the course of the UNCITRAL WGIII. 

• Bibliography of writings relating to ISDS reform

A CIDS team composed of Brian McGarry, Josef Ostřanský, Michele Potestà, and María Florencia Sarmiento has completed a bibliography on ISDS reform. You may download the bibliography here - external link. 

• Glossary of ISDS terms and concepts

Under the coordination of Catherine Kessedjian and Arnaud de Nanteuil, a working group composed of members of the Forum is preparing a glossary of ISDS terms and concepts in the six United Nations official languages, with a view to assisting the UNCITRAL WG III process and helping delegations and other stakeholders to navigate with more clarity through the technical terms and concepts frequently used in ISDS.

Meetings of the Forum:

- 26 April 2018, New York: kick-off meeting, en marge of the 35th session of WGIII

- 31 October 2018, Vienna, en marge of the 36th session of WGIII

- 1-2 February 2019, Oslo, Workshop on "Reforming International Investment Arbitration"

- 2 April 2019, New York, en marge of the 37th session of WGIII: “Reforming ISDS: Concerns and options – presentation of research papers by the Academic Forum” (open event)

- 4 April 2019, New York (for Forum members)

Related publication:

• Gabrielle Kaufmann-Kohler, Michele Potestà, "Investor-State Dispute Settlement and National Courts. Current Framework and Reform Options", special edition of the European Yearbook of International Economic Law. - external link