Investor-State Dispute Settlement and Impact on Investment Rulemaking (United Nations Conference on Trade and Development)
By admin • Mar 16th, 2009 • Category: Economics
Investor-State Dispute Settlement and Impact on Investment Rulemaking (United Nations Conference on Trade and Development)
by: United Nations
Investor-State Dispute Settlement and Impact on Investment Rulemaking (United Nations Conference on Trade and Development)
By United Nations
(January 18, 2008)
Publisher: United Nations
Number Of Pages: 120
ISBN-10 / ASIN: 9211127203
ISBN-13 / EAN: 9789211127201
Product Description:
The aim of this study is to take stock of and to analyze the major developments in the interpretation of procedural and substantive international investment agreement (IIA) provisions as contained in bilateral investment treaties and economic integration agreements with investment provisions. It addresses the implications of those developments for countries, emphasizing the particular needs of developing countries. It presents some conclusions and reflections on possible next steps that countries could take to implement the lessons learned from the investor-State dispute settlement experience.
The secretariat of the United Nations Conference on Trade and Development (UNCTAD) is
implementing a programme on international investment arrangements. The programme seeks to help
developing countries participate as effectively as possible in international investment rulemaking. It
embraces policy research and development, including the preparation of a series of issues papers; human
resources capacity-building and institution-building, including national seminars, regional symposia and
training courses; and support to intergovernmental consensus-building. The programme is implemented by
a team led by James Zhan. Khalil Hamdani provides overall guidance to the Programme.
This paper is part of a new Series on International Investment Policies for Development. It builds on
and expands UNCTAD’s Series on Issues in International Investment Agreements. Like the previous one,
this new series is addressed to government officials, corporate executives, representatives of nongovernmental
organizations, officials of international agencies and researchers.
The series seeks to provide balanced analysis of issues that may arise in the context of international
approaches to investment rulemaking and their impact on development. Its purpose is to contribute to a
better understanding of difficult technical issues and their interaction, and of innovative ideas that could
contribute to an increase in the development dimension of international investment agreements.
The series is produced by a team led by James Zhan. The team members are Amare Bekele, Hamed
El-Kady, Anna Joubin-Bret, Joachim Karl, Marie-Estelle Rey and Jorg Weber. Khalil Harndani provides
overall guidance. The members of the Review Committee are Mark Kantor, Mark Koulen, Peter
Muchlinski, Antonio Parra, Patrick Robinson, Pierre SauvC, Karl P. Sauvant, M. Sornarajah and Kenneth
Vandevelde.
The present paper was prepared by Roberto Echandi on the basis of inputs from the secretariat. It
served as the UNCTAD background document for the APEC Investment Facilitation Initiative: A
Cooperative Effort with UNCTAD and Other Multilateral Institutions, held in Mexico on 1 and 2 October
2006. It was subsequently revised in the light of that meeting’s discussions and comments received from
participants. Those comments are gratefully acknowledged. Hamed El-Kady, Anna Joubin-Bret and Jorg
Weber helped finalize the study. The paper was desktop published by Teresita Ventura.
The contribution of the APEC secretariat to this study is gratefully acknowledged. The Mexico
meeting of the APEC Investment Facilitation Initiative was financed through the APEC TILF (Trade and
Investment Liberalization and Facilitation) Fund, which was contributed by Japan.
Supachai Panitchpakdi
Secretary-General of UNCTAD
EXECUTIVE SUMMARY
Investment treaty provisions on investor-State dispute settlement have frequently been used in
recent years, and as a result there has been in an increase in arbitral tribunal awards touching upon key
procedural and substantive aspects of investment law. This has contributed to the development of a
jurisprudence that, although it is still taking shape, has impacted on the evolution of investment rulemaking,
as witnessed in recent bilateral investment treaties and economic integration agreements with
investment provisions.
Indeed, as demonstrated by this paper, the experience with the investor-State dispute settlement of a
number of countries (mostly in the Asia-Pacific region) appears to have influenced the development of
new international investment agreements (IIAs) by those countries. Observing how previous IIAs were
interpreted and applied by arbitral tribunals, their Governments have come up with new provisions and
new language, which address most of the problems that arose in the context of investment disputes. Thus,
the definition of “investment” has been made more precise, several provisions dealing with standards of
protection have been redrafted and clarified, the concept of transparency in the context of investment
agreements has been improved and redefined, and it has been made clear that investment protection and
liberalization must not be pursued at the expense of other key public policy objectives. Furthermore,
investor-State dispute settlement procedures have been updated and modernized through, inter alia,
fostering the provision of more information for civil society and its increased participation in those
procedures.
Although inferring trends in jurisprudence arising from investor-State dispute settlement cases has
to be handled with caution, this study suggests that two important lessons can be derived from practice
over the last decade. First, the increase in investment disputes has tested the wisdom of negotiating IIAs
with extremely broad and imprecise provisions delegating to arbitral tribunals the task of identifying the
meaning that the disputed provision should have. Second, when negotiating IIAs countries should pay
attention not only to the wording of the agreement, but also to the interaction between the IIA and the
arbitration convention(s) referred to in the IIA.
From a systemic perspective, it is noteworthy that most countries that are parties to the emerging
new generation of IIAs that reflect investor-State dispute settlement experience are also still parties to
numerous “old” IIAs containing provisions using the same broad and imprecise language that has
triggered investment disputes elsewhere. The resultant risk of incoherence is especially high for
developing countries that lack expertise and bargaining power in investment rule-making, and that may
have to conduct negotiations on the basis of divergent model agreements of their negotiating partners.
However, the growing legal sophistication of investment dispute resolution also points to a further
strengthening of the rule of law at the international level that should benefit developing countries that lack
the political and economic power of developed nations. Furthermore, the increased number of arbitrations
may also motivate developing host countries to improve domestic administrative practices and laws in
order to avoid future disputes; this would further strengthen the predictability and stability of the legal
framework that the conclusion of IIAs was supposed to produce in the first place.
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