View this email in your browser

*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 248  March 25, 2019
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Marion A. Creach ([log in to unmask])
*Investment dispute settlement à la carte within a multilateral
institution: A path forward for the UNCITRAL process?*
* <#m_-540980756250763295__edn1>
Stephan W. Schill and Geraldo Vidigal** <#m_-540980756250763295__edn2>

In November 2018, the consensus that investor-state dispute settlement
(ISDS) needs to be reformed received multilateral imprint: UNCITRAL’s
Working Group III agreed that reform is “desirable” with respect to (1)
consistency, coherence, predictability, and correctness of arbitral
rulings; (2) independence, impartiality and diversity of decision-makers;
and (3) costs and duration of proceedings.[1] <#m_-540980756250763295__edn3>

Recent investment agreements entered into by key international actors
demonstrate a willingness to advance along the same lines. The Comprehensive
and Progressive Agreement on Trans-Pacific Partnership
(CPTPP) (which succeeded the Trans-Pacific Partnership
(TPP) after the US withdrawal), the United States-Mexico-Canada Agreement
(USMCA), the Comprehensive Economic and Trade Agreement
(CETA) concluded between the EU and Canada, Brazil’s Cooperation and
Investment Facilitation Agreements (CIFAs)
,[2] <#m_-540980756250763295__edn4> and India's 2016 model bilateral
investment treaty
(BIT), all seek increased transparency, enhanced efficiency and the
implementation of mechanisms for more effective state control over
substantive rules and their interpretations.

However, in relation to dispute-settlement design, these key models diverge
starkly. The CPTPP and the USMCA, which texts reflect the US position,
retain investor-state arbitration but reform it. The EU is proposing the
establishment of a Multilateral Investment Court (MIC) that would replace
investment arbitration entirely.[3] <#m_-540980756250763295__edn5> India's
model BIT strengthens the role of domestic courts by re-introducing the
exhaustion of local remedies rule. Finally, Brazil's CIFAs feature
inter-state adjudication rather than ISDS.

It is of course tempting to seek multilateral consensus by opening a debate
about the pros and cons of each model; in fact, this is what the proponents
of each model currently do, within UNCITRAL and beyond. At the same time,
it is unlikely that one model will find universal support, as the different
positions on investment dispute-settlement design reflect largely
entrenched political stances. The predictable outcome of every party
sticking to its own model—institutional fragmentation—threatens the
achievement of key objectives of the current reform process, in particular
the aim to enhance consistency, coherence and predictability. Therefore,
the question arises whether the Gordian Knot can be cut, and the mutually
incompatible dispute-settlement design models reconciled.

We propose adding to UNCITRAL’s agenda discussions on the establishment of
a Multilateral Institution for Dispute Settlement on Investment (MIDSI),
which could provide an umbrella for “dispute settlement à la carte”.
Building on the idea of an “open architecture”[4]
<#m_-540980756250763295__edn6> and the approach to dispute settlement under
the United Nations Convention on the Law of Sea,[5]
<#m_-540980756250763295__edn7> a MIDSI would not feature compulsory
jurisdiction, but would rather allow states and organizations to opt into
the dispute-settlement mechanism of their choice. Apart from administering
inter-state and investor-state arbitrations, the MIDSI would also
encompass, as one of its pillars, the proposed MIC.

On an opt-in basis, the MIC could perform different roles for different
states, serving as a fully-fledged two-tiered investment court for some and
as an appeals body or annulment institution for others. Even for those that
do not opt to use it for adjudication, the MIC could carry out such
procedural functions as deciding on challenges to arbitrators or rendering
provisional measures before an arbitral tribunal is constituted. Finally,
the MIC could perform “systemic” functions that are currently absent in
investment dispute settlement, such as issuing advisory opinions or rulings
on preliminary references by arbitral tribunals or even national courts,
thus providing clarity on specific points of interpretation and resolving
inconsistencies that have arisen under the current system.

The MIDSI, of which the MIC is part, could also serve as a forum for future
investment treaty negotiations. While at the outset it could be expected
that the law applicable to investment disputes would remain fragmented,
over time states could use the MIDSI to collectively develop new rules,
addressing for example standards of protection or investor obligations.

A key challenge in reforming investment dispute settlement is to prevent
the divergent models and proposals currently being floated from leading to
a fragmented system. The establishment of a MIDSI would address that risk.
It would provide a solution for disagreements on dispute-settlement design
by establishing an institutional framework within which participants can
agree to disagree—and still effectively cooperate multilaterally in
settling investment disputes and shaping the future of the international
investment regime. Such an institutional framework would not only promote
procedural convergence in investment dispute settlement, but could also
provide states with a long-term tool for building a comprehensive
investment governance system, including substantive matters.

While details of organizational structure, mandate, competence, and
relations to existing institutions, including the International Centre for
Settlement of Investment Disputes or the Permanent Court of Arbitration,
would need to be negotiated, establishing a MIDSI would create a structure
for consensus-building, adjudication and negotiation at the multilateral
level and reassure states that they remain sovereign to decide on their
preferred model for settling investment disputes.

* <#m_-540980756250763295__ednref1> *The Columbia FDI Perspectives are a
forum for public debate. The views expressed by the author(s) do  not
reflect the opinions of CCSI or Columbia University or our partners and
supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a peer-reviewed
** <#m_-540980756250763295__ednref2> Stephan W. Schill ([log in to unmask])
and Geraldo Vidigal ([log in to unmask]) are, respectively, Professor and
Assistant Professor at the University of Amsterdam. This *Perspective *draws
on ideas presented in Stephan W. Schill and Geraldo Vidigal, “Cutting the
Gordian Knot: Investment dispute settlement à la carte,” *RTA Exchan*ge
(Geneva: ICTSD, 2018)
The authors are grateful to Jan Paulsson, Anthea Roberts and Giorgio
Sacerdoti for their helpful peer reviews.
[1] <#m_-540980756250763295__ednref3> UNCITRAL, “Draft report of Working
Group III (investor-state dispute settlement reform) on the work of its
thirty-sixth session,” A/CN.9/964, November 6, 2018
[2] <#m_-540980756250763295__ednref4> A list of CIFAs signed so far is
available at
[3] <#m_-540980756250763295__ednref5> See “Submission of the European Union
and its Members States to UNCITRAL Working Group III” (18 January 2019)
[4] <#m_-540980756250763295__ednref6> Ibid,, para. 39.
[5] <#m_-540980756250763295__ednref7> United Nations Convention on the Law
of Sea, Part XV
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Stephan W. Schill and Geraldo Vidigal,
‘Investment dispute settlement à la carte within a multilateral
institution: A path forward for the UNCITRAL process?,’ Columbia FDI
Perspectives, No. 248, March 25, 2019. Reprinted with permission from the
Columbia Center on Sustainable Investment (**
<>**).” 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,
Marion A. Creach, [log in to unmask]

*Most recent Columbia FDI Perspectives*

   - No. 247, Karl P. Sauvant, “The state of the international investment
   law and policy regime,” March 11, 2019
   - No. 246, Joachim Pohl, “Is international investment threatening or
   under threat?,” February 25, 2019
   - No. 245, Carlos Esplugues, “A future European FDI screening system:
   solution or problem?,” February 11, 2019

*All previous FDI Perspectives are available at
<>**. *

*Other relevant CCSI news and announcements*

   - CCSI is hiring a new *Special Assistant to the Director* to begin in
   late spring/early summer 2019. *To apply for the position, please see
   our website here
   for more information.*
   - *In February 2019*, CCSI released a new Emerging Market Global Players
   (EMGP) Report: Uncertain Expectations of Mexican-American Economic and
   Trade Relations and Slowdown of Overall Mexican FDI
   EMGP project, a collaborative effort led by CCSI, brings together
   researchers on FDI from leading institutions in emerging markets to gather
   original data from company surveys and additional research and to produce
   annual reports based on their findings.
   - *In January 2019*, CCSI submitted comments to the Drafting Team
   of the Hague Rules on Business and Human Rights Arbitration

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: (212) 854-0689
Fax: (212) 854-7946
*Copyright © 2019 Columbia Center on Sustainable Investment (CCSI), All
rights reserved.*
[log in to unmask]

*Our mailing address is:*
Columbia Center on Sustainable Investment (CCSI)
Columbia Law School - Earth Institute, Columbia University
435 West 116th Street
New York, NY 10027

Add us to your address book

unsubscribe from this list
update subscription preferences

[image: Email Marketing Powered by Mailchimp]

Not spam
Forget previous vote


*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 825, New York, NY 10027
| p: (212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask]
| w: | t: @CCSI_Columbia

"The State of the International Investment Law and Policy Regime", "Towards
G20 Guiding Principles on Investment Facilitation for Sustainable
Development", "Five Key Considerations for the WTO Investment-facilitation
Discussions, Going Forward", "Arriving at Sustainable FDI Characteristics",
"Putting FDI on the G20 Agenda", "International Investment Facilitation: By
Whom and for What?", "Moving the G20's Investment Agenda Forward",
"Emerging Markets and the International Investment Law and Policy Regime",
"Sustainable FDI for Sustainable Development", "Towards an Investment
Facilitation Framework: Why? What? When?", "Beware of FDI Statistics!",
"Towards an Indicative List of FDI Sustainability Characteristics", "The
Next Step in Governance: The Need for Global Micro-regulatory Frameworks",
and "The Evolving International Investment Law and Policy Regime: Ways
Forward" *are* available at and

AIB-L is brought to you by the Academy of International Business.
For information:
To post message: [log in to unmask]
For assistance:  [log in to unmask]
AIB-L is a moderated list.