Thanks to Reforms Proposed Under the Auspices of the ICSID and UNCITRAL, Investor-State Dispute Settlement is Finally Headed in the Right Direction - Chapter 7 - Investment Treaty Arbitration and International Law - Volume 14
The world has dramatically changed since the ICSID Convention was concluded in 1965. At the time the convention was drafted, the authors anticipated that 95% of cases would be under investment contracts and concessions, rather than treaties. As of December 2019, these disputes comprise only 16% of ICSID’s overall caseload. Further, the convention drafters could not have contemplated the vast network of international investment agreements (IIAs) that exist today. The United Nations Conference on Trade and Development (UNCTAD) currently estimates that there are 3,287 bilateral investment treaties and treaties with investment provisions exist, compared to just 72 bilateral investment treaties in 1969.
Investor-State dispute resolution (ISDS) was initially conceived as a way to depoliticize disputes, providing a direct means for investors to address claims without resorting to diplomatic protection. ISDS facilitates foreign direct investment, contributes to the rule of law and global governance, and allows states to conduct international relations free from the pressure of bringing claims on behalf of their nationals.
In recent years, the benefits of ISDS have increasingly been questioned, and currently a number of reform measures are being explored, including through the International Center for Settlement of Investment Disputes (ICSID) and by the United Nations Commission on International Trade Law (UNCITRAL). This paper provides a brief overview of the ICSID and UNCITRAL reform process, and examines the underlying issues that the reforms are intended to address.