The International Court System: A Solution to the Crisis in Investor-State Arbitration?

Authors

DOI:

https://doi.org/10.17159/1727-3781/2024/v27i0a14259

Keywords:

Economic and trade agreements, investor-state dispute settlement, investor-state arbitration, investment court system, multilateral investment court

Abstract

Most known investor-state disputes are referred to a form of international arbitration known as investor-state arbitration (ISA) or investor-state dispute settlement (ISDS). The rest are referred to domestic arbitration or litigation before the courts of host states. The International Centre for Settlement of Investment Disputes (ICSID) is the largest ISDS institution, having handled 829 out of 1190 cases by December 2021. However, in recent years the ISDS regime has faced challenges that have reached crisis proportions. States have responded to these challenges in different ways. For example, during 2014 the European Union (EU) intended to provide for ISDS in its anticipated trade agreements with the United States of America and Canada. In preparation the EU held public consultations wherein the public was invited to comment on whether ISDS could be used in these agreements. Over 90 per cent of the voters rejected the inclusion of ISDS therein. In response the EU abandoned ISDS and created a bilateral Investment Court System (ICS). The final death knell for ISDS in the EU came in 2018 and 2021 when the Court of Justice of the European Union (CJEU) ruled that ISDS among EU states is unlawful and incompatible with its legal order. This paper aims to assess the legal nature of the ICS, as well as whether the ICS can resolve the challenges that face ISDS worldwide. The paper concludes that firstly, the ICS is a hybrid of a court and a tribunal; secondly, that the ICS fails to fully address all the challenges faced by ISDS. It is a work in progress that must be interrogated further and be improved upon over time.

Downloads

Download data is not yet available.

Metrics

Metrics Loading ...

Author Biography

Tinyiko Lawrence Ngobeni, University of Zululand

Senior Lecturer University of Zululand, South Africa.

References

BIBLIOGRAPHY

Literature

Arafa A and Dexiang G "Evaluating an International Investment Court for International Investment Disputes under European Union's Proposal" 2021 Journal of Politics and Law 74-83

Arato J, Brown C and Ortino F "Parsing and Managing Inconsistency in ISDS" 2020 Journal of World Investment and Trade 336-373

Baetens F "The European Union's Proposed Investment Court System: Addressing Criticisms of Investor-State Arbitration While Raising New Challenges" 2016 LIEI 367-384

Baltag C "Reforming the ISDS System: In Search of Balanced Approach" 2019 Contemporary Asia Arbitration Journal 279-312

Behn D, Langford M and Létourneau-Tremblay L "Empirical Perspectives on Investment Arbitration: What Do We Know? Does It Matter?" 2020 Journal of World Investment and Trade 188-250

Benedetti JPC "The Proposed Investment Court System: Does It Really Solve the Problems?" 2019 Revista Derecho del Estado 83-115

Bjorklund AK et al "The Diversity Deficit" 2020 Journal of World Trade and Investment 410-440

Bottini G et al "Excessive Costs and Recoverability of Cost Awards in Investment Arbitration" 2020 Journal of World Trade and Investment 251-299

Brower JCN and Ahmad J "Why the 'Demolition Derby' that Seeks to Destroy Investor-State Arbitration?" 2018 S Cal L Rev 1139-1196

Bungenberg M and Reinisch A CETA Investment Law (Bloomsbury London 2022)

Bungenberg M et al (eds) Studies in International Investment Law, Vol 37 (Nomos Baden-Baden 2021)

Carroll L "Parallel Proceedings in Investment Arbitration: Moving Forward after Orascom TMT Investments v Algeria" 2017 Australian Journal of International Law 147-152

Chaisse J "Delays Expected but Duration of Delays Unpredictable: Causes, Types, and Symptoms of Procedural Applications in Investment Arbitration" 2021 Arb Int'l 863-901

Cruz N "Investment Court System: The Evolution of Traditional Investment Arbitration?" January 2020 Young Arbitration Review 52-58

De Luca A et al "Responding to Incorrect ISDS Decision-Making: Policy Options" 2020 Journal of World Trade and Investment 374-409

Dietza T, Dotzauera M and Cohen ES "The Legitimacy Crisis of Investor-State Arbitration and the New EU Investment Court System" 2019 Review of International Political Economy 749-772

Fanou M "The Independence and Impartiality of the Hybrid CETA Investment Court System: Reflections in the Aftermath of Opinion 1/17" 2020 Europe and the World: A Law Review 1-17

Gathii T "War's Legacy in International Economic Law" 2009 Int C L Rev 353-386

Ghori M "Investment Court System or Regional Dispute Settlement: The Uncertain Future of Investor-State Dispute Settlement" June 2018 Bond LR 83-118

Giorgetti C et al "Lack of Independence and Impartiality of Arbitrators" 2020 Journal of World Investment and Trade 441-474

Hogas D "Insights on the Arbitrator's Requirement of Independence" 2015 Journal of Law and Administration Science 235-248

Horn P "A Matter of Appearances: Arbitrator Independence and Impartiality in ICSID Arbitration" 2014 New York University Journal of Law and Business 349-396

Langford M, Potesta M and Kaufmann-Kohler G "UNCITRAL and Investment Arbitration Reform: Matching Concerns and Solutions" 2020 Journal of World Investment and Trade 167-187

Lenk H The EU Investment Court System: A Viable Reform Initiative? (PhD-thesis University of Gothenburg 2019)

Moseley SE "Disclosing Third-Party Funding in International Investment" 2019 Tex L Rev 1181-1203

Nappert S "Escaping from Freedom: The Dilemma of an Improved ISDS Mechanism" 2016 European Investment Law and Arbitration Review 71-190

Ngobeni L "The African Justice Scoreboard: A Proposal to Address Rule of Law Challenges in the Resolution of Investor-State Disputes in the Southern African Development Community" 2019 CILSA 1-24

Ngobeni L "Do the SALINI Criteria Apply to the Definition of an Investment Provided in Annex 1 of the 2006 and 2016 SADC Protocol on Finance and Investment? An Assessment" 2020 PELJ 1-34

Ngobeni L and Fagbayibo B "Recent Developments in the Regulation of Investor-State Dispute Resolution: Any Lessons for the Southern African Development Community?" 2017 African Journal of Legal Studies 180-204

Nowrot K and Sipiorski E "Approaches to Arbitrator Intimidation in Investor-State Dispute Settlement: Impartiality Independence, and the Challenge of Regulating Behaviour" 2018 LPICT 178-196

Palombo E "Evaluating a Permanent Court Solution for International Investment Disputes" 2019 U Rich L Rev 799-833

Perez de las Hera G "The European Union in International Investment Governance: A Hybrid Approach to Dispute Settlement" 2018 Romanian Journal of European Affairs 87-93

Reinisch A "Will the EU's Proposal Concerning an Investment Court System for CETA and TTIP Lead to Enforceable Awards? The Limits of Modifying the ICSID Convention and the Nature of Investment Arbitration" 2016 J Int'l Econ L 761-786

Sahani VS "Judging Third-Party Funding" 2016 UCLA L Rev 388-448

Sahani VS "Reshaping Third-Party Funding" 2017 Tul L Rev 405-472

Sahani VS "Global Laboratories of Third-Party Funding Regulation" 2021 AJIL Unbound 34-39

Sardinha E "Towards a New Horizon in Investor-State Dispute Settlement: Reflections on the Investment Tribunal System in the Comprehensive Economic Trade Agreement (CETA)" 2018 Can Yb Int'l L 311-365

Schwieder RW "TTIP and the Investment Court System: A New (and Improved?) Paradigm for Investor State Adjudication" 2016 Colum J Transnat'l L 178-227

Sornarajah M "An International Investment Court: Panacea or Purgatory?" 2016 Perspectives on Topical Foreign Direct Investment Issues 1-3

Van den Berg AJ "Justifiable Doubts as to the Arbitrator's Impartiality or Independence" 1997 LJIL 509-520

Van Harten G "Arbitrator Behaviour in Asymmetrical Adjudication: An Empirical Study of Investment Treaty Arbitration" 2012 Osgoode Hall LJ 211-268

Vandenvelde KJ "A Brief History of Bilateral Investment Treaties" 2005 University of California Davis Journal of International Law and Policy 157-194

Zara G "The Issue of Incoherence in Investment Arbitration: Is There Need for a Systemic Reform?" 2018 Chinese JIL 137-185

Zarate JMA "Legitimacy Concerns of the Proposed Multilateral Investment Court: Is Democracy Possible?" 2018 BC L Rev 2765-2790

Zarate JMA et al "Duration of ISDS Proceedings" 2020 Journal of World Investment and Trade 300-335

Case law

Fedax NV v The Republic of Venezuela (ICSID Case No ARB/96/3) Decision of the Tribunal on Objections to Jurisdiction 11 July 1997

Philip Morris Brands Sàrl, Philip Morris Products SA and Abal Hermanos SA v Oriental Republic of Uruguay (ICSID Case No ARB/10/7) Decision on Jurisdiction of 2 July 2013

Philip Morris Asia Limited v The Commonwealth of Australia (UNCITRAL, PCA Case No 2012/12) Award on Jurisdiction and Admissibility of 17 December 2015

Piero Foresti, Laura de Carli v Republic of South Africa (ICSID Case No ARB(AF)/07/1)

République de Moldavie v Komstroy LLC (2021 C-741/19) Judgment of the Court (Grand Chamber) of 2 September 2021

Salini Construttori SPA and Italstrade SPA v Kingdom of Morocco (ICSID Case No ARB00/4) Decision on Jurisdiction of 16 July 2001

Slowakische Republik v Achmea BV (J C-284/16) Judgment of the Court (Grand Chamber) of 6 March 2018

International instruments

Comprehensive Economic and Trade Agreement between Canada and the European Union (and Its Member States) (2017)

Convention on the Settlement of Investment Disputes between States and Nationals of Other States (with Rules and Regulations) (1965) (ICSID Convention)

Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (New York Convention)

Energy Charter Treaty (1994)

International Centre for Settlement of Investment Disputes Additional Facility Rules (2006)

UNCITRAL Arbitration Rules (2021)

Internet sources

Alvarez JE 2016 Is Investor-State Arbitration "Public"? Institute of International Law and Justice Working Paper 2016/6 https://www.iilj.org/wp-content/uploads/2016/09/Alvarez-Is-Invest-State-Arbitration-Public-IILJ-WP-2016_6-GAL.pdf accessed 7 June 2023

Ebenhart P 2016 Investment Court System (ICS): The Wolf in Sheep's Clothing https://publicservices.international/resources/news/investment-court-system-ics-the-wolf-in-sheeps-clothing?id=9192&lang=en accessed 20 February 2023

EU Commission 2015 Report: Online Public Consultation on Investment Protection and Investor-to-State Dispute Settlement (ISDS) in the Transatlantic Trade and Investment Partnership Agreement (TTIP) https://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153044.pdf accessed 14 May 2022

EU Parliament 2022 Multilateral Investment Court (MIC) in a Stronger World https://www.europarl.europa.eu/legislative-train/theme-a-balanced-and-progressive-trade-policy-to-harness-globalisation/file-multilateral-investment-court-(mic) accessed 20 June 2022

ICSID 2021 Caseload Statistics 2021-1 https://icsid.worldbank.org/

sites/default/files/Caseload%20Statistics%20Charts/The%20ICSID%20Caseload%20Statistics%202021-2%20Edition%20ENG.pdf accessed 26 April 2023

ICSID 2022 The ICSID Caseload Statistics https://icsid.worldbank.org/resources/publications/icsid-caseload-statistics accessed 22 May 2022

ICSID 2022 Caseload Statistics 2022-1 https://icsid.worldbank.org/sites/default/files/documents/The_ICSID_Caseload_Statistics.1_Edition_ENG.pdf accessed 22 May 2022

ICSID 2023 Cases https://icsid.worldbank.org/cases/case-database accessed 06 June 2022

ICSID 2023 Schedule of Fees (2022) https://icsid.worldbank.org/services/content/schedule-fees accessed 14 May 2022

Koeth W 2016 Can the Investment Court System (ICS) Save TTIP and CETA? European Institute of Public Administration Working Paper 2016/W/01 https://www.eipa.eu/wp-content/uploads/2022/01/20161019072755_Workingpaper2016_W_01.pdf accessed 7 June 2023

PCA 2023 Schedule of Fees and Costs https://pca-cpa.org/fees-and-costs/ accessed 14 May 2022

UN Date unknown The 17 Goals https://sdgs.un.org/goals accessed 25 April 2023

UNCITRAL 2014 UNCITRAL Rules on Transparency in Treaty-Based Investor-State Arbitration https://uncitral.un.org/en/texts/arbitration/

contractualtexts/transparency accessed 15 June 2022

UNCITRAL Working Group III 2018 Investor-State Dispute Settlement Reform on the Work of Its Thirty-Sixth Session (A/CN.9/964) https://uncitral.un.org/en/working_groups/3/investor-state accessed 22 May 2022

UNCITRAL Working Group III April 2019 Possible Reform of Investor-State Dispute Settlement (ISDS) Third-Party Funding (A/CN.9/WG.III/WP.157) https://uncitral.un.org/en/working_groups/3/investor-state accessed 22 May 2022

UNCITRAL Working Group III October 2019 Possible Reform of Investor-State Dispute Settlement (ISDS) Third-party Funding: Possible Solutions (A/CN.9/WG.III/WP.172) https://uncitral.un.org/en/working_groups/3/investor-state accessed 22 May 2022

UNCTAD 2023 International Investment Agreements Navigator https://investmentpolicy.unctad.org/international-investment-agreements accessed 25 April 2023

UNCTAD 2023 Investment Dispute Settlement Navigator https://investmentpolicy.unctad.org/investment-dispute-settlement accessed 25 April 2023

Published

17-01-2024

How to Cite

Ngobeni, T. L. (2024). The International Court System: A Solution to the Crisis in Investor-State Arbitration?. Potchefstroom Electronic Law Journal, 27, (Published on 17 January 2024) pp 1–35. https://doi.org/10.17159/1727-3781/2024/v27i0a14259

Issue

Section

Articles