Originally from Investment Treaty Arbitration and International Law - Volume 10

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But in this, as in most questions of state, there is a middle.  There is something else than the mere alternative of absolute destruction or unreformed existence….  A disposition to preserve and an ability to improve, taken together, would be my standard of a statesman.  Everything else is vulgar in the conception, perilous in the execution. – Edmund Burke 

I.    INTRODUCTION

Imagine for a moment that you are a doctor in the early 1800s.  One of your patients has an illness, and you have every intention to help.  The question is which method you will apply.  One option has been applied in similar circumstances, and you – in full compliance with the Hippocratic Oath – decide that you will follow this practice:  bloodletting.  Will this help?  No, and indeed it will likely worsen the patient’s condition.  Many blame the practice for the death of notable figures in history, such as the first U.S. President, George Washington.   

Imposing an investment court is akin to bloodletting.  Investor-state dispute settlement (ISDS) may have some illnesses, and the European Union’s proposal may have good intentions for addressing them.  Intentions aside, however, the proposed investment court fails to address the true challenges that ISDS faces.  These challenges must be properly understood and diagnosed before a remedy can be applied.  Many reforms are underway in ISDS—as reflected in the Trans-Pacific Partnership (TPP)—and this young system should be given time to overcome its growing pains before it is bled to death.  

This paper begins with an overview of the TPP and the Transatlantic Trade and Investment Partnership (TTIP).  These potential international agreements offer immense benefits to the world, but they hang in the balance as States weigh competing domestic political interests, including pockets of vehement opposition to ISDS.  The EU’s proposed investment court has become a touchstone of this opposition.  

The complaints against ISDS will then be analyzed.  Public clamor and academic debate have called into question the system’s legitimacy—infusing the dialogue with politics, straying from the facts, and veering into myth and demagoguery.  ISDS faces true and significant challenges, but they must be separated from unfounded allegations.  Each of these complaints can be dissected and rebutted, but the details of this debate will not be repeated here.  Suffice to say that one common thread of the public criticism is that it relates principally to the substance of ISDS cases, not to the procedure.