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.

Photo: Attac / CC BY-SA 2.0

February 2017

EJIL: Talk! | 17-Feb-2021
The Working Group’s focus was structural reforms, first selection and appointment of permanent or fixed-term adjudicators, then an appellate mechanism.
Kluwer Arbitration Blog | 12-Feb-2021
An appeal mechanism is not the panacea to all primary concerns associated with ISDS. There is a need for holistic reform.
Business Recorder | 8-Feb-2021
Sources said that the government will have its own template for a BIT, which will replace the existing treaties with different countries.
European Commission | 1-Feb-2021
The EU and Canada adopted four decisions putting in place the Investment Court System provisions agreed in the EU-Canada Comprehensive Economic and Trade Agreement (CETA).
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?

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