Reformed ISDS

The investor-state dispute settlement (ISDS) mechanism has come under fire in the past few years. As a result of many controversial cases, civil society groups, international organisations, academics, lawyers and state officials have argued that the arbitration process has had a negative impact on public interest and is need of reform or should be scrapped altogether.

Therefore tweaked versions of the system have been proposed to avoid the most undesired “side effects” of standard ISDS rules. At least 45 countries and four regional blocs are revising or have recently revised their investment model agreements.

In 2012, South Africa, the government started to withdraw from its bilateral investment treaties and amended domestic legislation to make it compatible with BIT-like investor protections while incorporating exceptions where warranted by public interest considerations.

In 2014, Indonesia decided to terminate 67 bilateral investment treaties and has also been developing a new model BIT that supposedly reflects a more balanced approach between the country’s right to regulate and foreigner investor protection.

In 2015, the European Commission established a new ’Investment Court System’ to replace the current ISDS mechanism in its trade deals. The ICS has been incorporated in the EU deals with Canada (CETA) and Vietnam. It has also been proposed for the ongoing negotiations with Mexico, the Philippines and the US (TTIP). However many critics claim that this new system is largely window-dressing.

In December 2015, India released a revised model BIT which, for instance, requires investors to exhaust domestic remedies (Indian courts) before turning to international arbitration and leaves out “fair and equitable treatment” provisions.

In 2016, members of the Southern African Development Community (SADC) (Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland) amended the SADC Finance and Investment Protocol that included ISDS provisions. The amendments eliminate the ISDS mechanism (only state-to-state arbitration remains) and narrow the scope of investors’ rights, including exclusion of “fair and equitable treatment”, limitations to “national treatment” to allow for local preferences, obligation for investors to follow host state domestic law and exception from investment rules for policies enacted to comply with international treaties.

In South America, experts from the Union of South American Nations (UNASUR) have been developing an investment settlement centre, as an alternative to the World Bank’s ICSID.

February 2017

Lexology | 4-Nov-2020
The working papers focus on an appellate mechanism and enforcement issues and the selection and appointment of ISDS tribunal members.
The Express Tribune | 3-Nov-2020
Prime Minister Imran Khan has approved the formation of a working group of experts for reforming Pakistan’s international investment regime.
Michigan Journal of International Law | 27-Oct-2020
The problem with the ISDS is not the format of the dispute settlement. The problem is that it is designed to give corporations power to go after government policies.
TWN | 23-Oct-2020
Meaningful reform aligned with sustainable development seems less likely
EJIL: Talk! | 21-Oct-2020
Why retain ISDS, this neo-colonial vestige that is not supported by consistent evidence that it contributes to advancing development or the rule of law?
IISD | 15-Oct-2020
En los últimos años, el Gobierno de Tanzania ha introducido cambios importantes a la legislación que rige la inversión extranjera en recursos naturales, y mecanismos relacionados con la solución de controversias, con el objetivo de librar a este sector de los vestigios de las relaciones “coloniales”.
EJIL: Talk! | 13-Oct-2020
Does moving online mean more governments and more officials participate? Or does it lessen the prestige and priority of the negotiations, leading to less engagement by key officials?
IISD | 13-Oct-2020
La Tanzanie a promulgué des modifications profondes de la législation régissant les investissements étrangers dans le secteur des ressources naturelles, dans le but de débarrasser le secteur des vestiges des relations « colonialistes ».
IISD | 13-Oct-2020
Tanzania has enacted significant changes to the legislation governing foreign investment in natural resources with the aim of ridding the sector of the vestiges of “colonial” relationships.
EJIL: Talk! | 8-Oct-2020
Effective and holistic reform must go beyond procedural matters and cover substantive matters in order to rebalance the system and address recurring concerns that threaten the legitimacy of the ISDS system.

0 | 10 | 20 | 30 | 40 | 50 | 60 | 70 | 80 | ... | 330