Originally from Dispute Resolution Journal

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In a reaction to criticisms raised against traditional investor-state arbitration, the European Commission proposes the introduction of what it calls interchangeably an investment court system or an improved investor-to-state arbitration system. The European Commission intends to introduce this new dispute resolution mechanism under the Comprehensive Economic and Trade Agreement between the EU, including its Member States, and Canada (CETA), which was signed by the EU and Canada on 30 October 2016. This article critiques the new dispute resolution mechanism proposed by the European Commission. It suggests that the agreement to take decisions in the CETA Joint Committee regarding matters within the Member States’ competence by agreement among the EU, its Member States, and Canada might ultimately stifle effective government control over arbitrators, a result that would be contrary to the proclaimed aim of introducing greater government control over arbitrators. 

Efforts to institutionalise investor-state dispute resolution have reached a new peak with the recent proposal by the European Commission to introduce an investment court system under international investment agreements such as the proposed Comprehensive Economic and Trade Agreement between the EU, its Member States, and Canada (CETA)  and the proposed Transatlantic Trade and Investment Partnership between the EU, its Member States, and the U.S. (TTIP).  Canada has agreed to the proposal by the European Commission, but, to date, the US has not warmed to the idea of institutionalised investor-state dispute resolution. This article will compare the envisaged investment court system to traditional investor-state arbitration and will explain why scepticism of institutionalisation is reasonable given its potential drawbacks.  With the European Union already pursuing the establishment of a multilateral investment court,  it is time to reflect on the desirability of institutionalisation in investor-state dispute resolution in the first place.