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*Karl P. Sauvant, PhD*
*Resident Senior Fellow*
*Columbia Center on Sustainable Investment**
 Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 645, New York, NY 10027
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* Formerly the Vale Columbia Center on Sustainable international Investment.

“The negotiations of the United Nations Code of Conduct on
Transnational Corporations: Experience and lessons learned” and K. P.
Sauvant and F. Ortino, *Improving the International Investment Law and
Policy Regime: Options for the Future are* available at
http://www.works.bepress.com/karl_sauvant/.




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       *Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 146   April 27, 2015
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Adrian P. Torres ([log in to unmask])
       *Why we need a global appellate mechanism for international
investment law*
<http://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=9c6bc2dd6d&e=dd153d6a25>
by
Anna Joubin-Bret* <#14cfb6d65f0f3863__edn1>

The European Union’s (EU) proposal to include an appellate mechanism in its
international investment agreements (IIAs) is a response to concerns about
the inconsistency of awards rendered by investment-treaty arbitration
tribunals and to criticism about the legitimacy of investor-state
arbitration.

The proposal is not new. It had already been included in the IIAs concluded
by the United States (US) since 2004, to respond to similar concerns, and
had been discussed in 2006 as part of the revision process of the rules of
the International Centre for Settlement of Investment Disputes (ICSID).[1]
<#14cfb6d65f0f3863__edn2> While it can be argued that provisions regarding
the establishment of an appellate mechanism have remained open-ended, and
that contracting parties have not shown a strong appetite for their
implementation, there was always the excuse that a future multilateral
regime, to which the contracting parties to any IIA could adhere, was
preferable to an appellate mechanism set up treaty-by-treaty.

As an appellate mechanism for investment treaty arbitration gains renewed
momentum, its discussion should not be carried out solely by the EU and
Canada in the context of their Comprehensive Economic and Trade Agreement
(CETA), or with the US in the context of the Transatlantic Trade and
Investment Partnership (TTIP) negotiations with the EU, or with a focus on
each individual treaty. The discussion needs to address the impact an
appellate mechanism can have on the body of international investment law as
it applies to thousands of treaties.

Accordingly, it is important that a global debate takes place, facilitated
and supported by international organizations, such as ICSID (the forum that
would be impacted first by an appellate facility), drawing on broad
membership to evaluate the impact and the costs and benefits for all
investment treaties – not only a selected few – be they of first, second or
third generation.

It could build on the experience of the international trading system,
specifically the WTO Appellate Body, which for the past two decades has
generally received positive feedback from the states using it. Criticisms
about the increase in costs and duration of the proceedings and the process
of appointment of members of the Appellate Body have gradually subsided as
workable jurisprudence has emerged in interpreting and applying WTO
treaties. Even though investment law is not based on a single treaty, but
rather upon thousands, useful lessons for institutional arrangements and
procedural mechanisms can be learned from the WTO experience.

The discussion should also focus on establishing a facility that could work
for all treaties and parties, which would not require a major reopening of
existing treaties and conventions. This could be achieved by an initiative
along the lines of the ICSID Additional Facility Rules, or by a specific
convention such as the one adopted in July 2014 by UNCITRAL on transparency,
[2] <#14cfb6d65f0f3863__edn3> to which treaty parties can then decide to
opt in or out. This was suggested by ICSID in a 2004 paper that proposed an
Appeals Facility for cases under ICSID, UNCITRAL and other rules.[3]
<#14cfb6d65f0f3863__edn4> Such an approach offers the best hope for
enhancing consistency and coherence. Technical features, such as strict
time limits, a precise scope for appeals, the selection of appellate
tribunals – whether standing or selected for each case from the roster of
chairpersons, as contemplated by the draft EU-CETA text – are all good
starting points. Although the challenges (not only technical but also
political) are formidable, there are feasible means to draft a functional
appellate system for the international investment regime.

The parties to CETA and TTIP clearly benefit from significant experience in
investment arbitration and can be considered like-minded, or at least as
having a common interest in high standards of investment protection, while
preserving the right and the duty of states to regulate for public
purposes. However, the design of a bilateral appellate mechanism in these
mega-treaties should not come at the expense of improvements to the system
of international arbitration agreements as a whole, and should not operate
in isolation of investment-treaty arbitration across treaties. The risk of
further fragmentation of international investment law and of deepening the
divide between older generation BITs and modern free trade agreements is
high.

------------------------------
* <#14cfb6d65f0f3863__ednref1> Anna Joubin-Bret is Avocat à la Cour and
founding partner of Cabinet Joubin-Bret in Paris. The author is grateful to
Steffen Hindelang, Meg Kinnear, Bart Legum, and Antonio Parra for their
helpful peer reviews. *The views expressed by the author of this
Perspective do not necessarily reflect the opinions of Columbia University
or its partners and supporters. Columbia FDI Perspectives (ISSN 2158-3579)
is a peer-reviewed series.*
[1] <#14cfb6d65f0f3863__ednref2> Barton Legum, “Options to establish an
appellate mechanism for investment disputes”, in Karl P. Sau-vant and
Michael Chiswick Patterson, eds., *Appeals Mechanism in International
Investment Disputes* (New York: OUP, 2008), pp. 231- 240; *see also* Barton
Legum, “Appellate mechanisms for investment arbitration: Worth a second
look for the trans-pacific partnership and the proposed EU-US FTA?”*,*
*Transnational
Dispute Management*, vol. 11 (2014); Gabriel Bottini*, *“Reform of the
investor state arbitration regime: the appeal proposal”, *Transnational
Dispute Management*, vol. 11 (2014; Jaemin Lee, “Introduction of an
appellate review mechanism for international investment disputes expe-cted
benefits and remaining tasks”, *Transnational Dispute Management*, vol. 11
(2014); Kristina Andelic, “Why ICSID doesn't need an appellate procedure,
and what to do instead”, *Transnational Dispute Management*, vol. 11
(2014); Eun Young Park*, *“Appellate review in investor-state
arbitration”, *Transnational
Dispute Management*, vol. 11 (2014).
[2] <#14cfb6d65f0f3863__ednref3> UNCITRAL, “Draft Convention on
Transparency in Treaty-Based Investor-State Arbitration”, adopted July 9,
2014, available at
http://daccess-dds-ny.un.org/doc/UNDOC/GEN/V14/014/50/PDF/V1401450.pdf?OpenElement
.
[3] <#14cfb6d65f0f3863__ednref4> ICSID, “Possible improvements of the
framework for ICSID arbitration”, ICSID Discussion Paper, October 22, 2004,
available at
https://icsid.worldbank.org/ICSID/FrontServlet?requestType=ICSIDPublicationsRH&actionVal=ViewAnnouncePDF&AnnouncementType=archive&AnnounceNo=14_1.pdf
.
       *The material in this Perspective may be reprinted if accompanied by
the following acknowledgment: “Anna Joubin-Bret, ‘Why we need a global
appellate mechanism for international investment law,’ Columbia FDI
Perspectives, No. 146, April 27, 2015. Reprinted with permission from the
Columbia Center on Sustainable Investment (www.ccsi.columbia.edu
<http://www.ccsi.columbia.edu>).” A copy should kindly be sent to the
Columbia Center on Sustainable Investment at [log in to unmask]
<[log in to unmask]>.*
For further information, including information regarding submission to the
*Perspectives*, please contact: Columbia Center on Sustainable Investment,
Adrian Torres, [log in to unmask] or [log in to unmask]

*Most recent Columbia FDI Perspectives*
<http://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=f230161b1c&e=dd153d6a25>


   - No. 145, Charles-Emmanuel Côté, “Toward arbitration between
   subnational units and foreign investors?,” April 13, 2015.
   - No. 144, Herfried Wöss, “Legitimacy in WTO law and investment
   arbitration: the role of the contracting parties,” March 30, 2015.
   - No. 143, Alvaro Cuervo-Cazurra and Ravi Ramamurti, “The escape
   motivation of emerging market multinational enterprises,” March 16, 2015.

*All previous FDI Perspectives are available at *
*http://ccsi.columbia.edu/publications/columbia-fdi-perspectives/*
<http://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=c5d5d47821&e=dd153d6a25>
*. *

*Other relevant CCSI news and announcements*

   - *On July 13-17, 2015, *CCSI will host its first Executive Training on
   Investment Arbitration for Government Officials
   <http://columbia.us6.list-manage1.com/track/click?u=ab15cc1d53&id=fd6a3d9e68&e=dd153d6a25>
at
   Columbia University. Through an intensive week-long course, government
   officials involved in managing investment treaty disputes or negotiating
   investment treaties will increase their knowledge of crucial procedural and
   substantive aspects of investment law. Sessions will be taught by leading
   academics and practitioners and will be tailored to uniquely address issues
   relevant to governments. *For more information about the program,
   please download the 2015 Executive Training Brochure here
   <http://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=cc4a67d019&e=dd153d6a25>
and
   application here
   <http://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=2da3aa3bcb&e=dd153d6a25>.
   The application deadline to be considered for admission is April 30, 2015.*


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