Dear Sir or Madam,
I wish to share with you the special topic of UNCTAD World Investment Report 2015: Reforming the International Investment Regime. As is evident from the heated public debate and parliamentary hearing processes in many countries and regions, a shared view is emerging on the need for reform of the International Investment Agreements (IIA) regime to ensure that it works for all stakeholders. The World Investment Report 2015 offers an action menu for such reform.

The key findings of the Report are:

1) Current IIA reform efforts can build on the lessons learned from almost six decades of IIA rule making. These lessons include the fact that: (i) IIAs "bite" and may have unforeseen risks, and protections/precautions need to be put in place; (ii) IIAs have limitations as an investment promotion and facilitation tool, but also underused potential; and (iii) IIAs have wider implications for national and international policies and regulatory coherence.
2) IIA reform should address five main challenges. It should aim at (i) preserving the right to regulate in the public interest so as to ensure that IIAs' limits on the sovereignty of States do not unduly constrain public policymaking; (ii) reforming investment dispute settlement to address the legitimacy crisis of the current system; (iii) expanding the effective investment promotion and facilitation dimension in IIAs; (iv) ensuring responsible investment to maximize the positive impact of foreign investment and minimize its potential negative effects; and (v) enhancing the consistency of the global IIA regime so as to overcome the gaps, overlaps and inconsistencies of the current system and establish coherence in investment relationships.
3) UNCTAD proposes a variety of policy options for meeting these challenges while examining their pros and cons:
·        Preserving the right to regulate: Options include clarifying or circumscribing provisions such as most favoured‐nation (MFN) treatment, fair and equitable treatment (FET), and indirect expropriation, as well as including exceptions, e.g. for public policies or national security.
·        Reforming investment dispute settlement: Options include (i) reforming the existing mechanism of ad hoc investment arbitration while keeping its basic structure  (e.g. improving the arbitral process, avoiding frivolous claims), ii) adding new elements (e.g. building in alternative dispute resolution or introducing an appeals facility), or (iii) replacing existing ad hoc investment arbitration systems (e.g. establishing a standing international investment court, or relying on State‐State dispute resolution).
·        Promoting and facilitating investment: Options include adding inward and outward investment promotion provisions (i.e. host‐ and home‐country measures), as well as joint and regional investment promotion and facilitation.
·        Ensuring responsible investment: Options include adding "not lowering of standards" clauses and establishing provisions on investor responsibilities, such as clauses on compliance with domestic laws and on corporate social responsibility.
·        Enhancing the consistency of the global IIA regime: Options include improving the coherence of the IIA regime, consolidating and streamlining the IIA network, managing the interaction between IIAs and other bodies of international law.
4) In terms of process, IIA reform actions should be synchronized at the national, bilateral, regional and multilateral levels. In each case, the reform process includes (i) taking stock and identifying the problems, (ii) developing a strategic approach and an action plan for reform, and (iii) implementing actions and achieving the outcomes.
5) Reform efforts should be guided by the goal of harnessing IIAs for sustainable development, focusing on the key reform areas and following a multilevel, systematic and inclusive approach.

6) In the absence of a multilateral investment system, given the huge number of existing IIAs (over 3,270 treaties), the best way is to collectively reform the regime with a global support structure. Only a common and systematic approach will deliver an IIA regime in which stability, clarity and predictability help achieve the objectives of all stakeholders: effectively harnessing international investment relations for the pursuit of sustainable development.

With kind regards,

James Zhan
Director, Investment and Enterprise
Team leader, World Investment Report
Palais des Nations, Geneva
+41 22 917 5797 (World Investment Reports)