This paper argues that reforming the mechanical aspects of the investor-state dispute settlement system alone is not sufficient to solve the current problems associated with the global BIT regime. Equal attention must be paid to substantive reforms. This especially includes the reform of the underlying treaties in a manner that addresses the political criticism of investment treaties. The current initiatives led by bodies such as UNCITRAL and ICSID focus almost exclusively on the ISDS. In doing so, they ignore that the purpose of investment treaties is not only to allow investment claims, but also to foster political stability and sustainable development. Reform measures that do not include the protection of labor, human rights and the environment, recognize the policy space for states to regulate in the public interest, and promote responsible investment, will in the long run undermine the integrity of the BIT regime.
Almost everyone associated with the International Investment Agreement (IIA) regime, save for a few exceptions, recognizes that it needs urgent reform. The “backlash” against the IIA regime has been steadily brewing over the past decade.