View this email in your browser

*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Riccardo Loschi ([log in to unmask])

*The Columbia FDI Perspectives are a forum for public debate. The views
expressed by the authors do not reflect the opinions of CCSI or our
partners and supporters.*

No. 327   March 21, 2022
*A managed dispute-resolution insurance scheme for countries in
investor-state arbitration: Ensuring early legal representation of
Ucheora Onwuamaegbu* <#m_1332365906941816929__edn1>

It is impractical for most governments to maintain a standing team of
expert legal representatives focused on international arbitration
proceedings with foreign investors, especially when such cases are a rarity
for most countries.[1] <#m_1332365906941816929__edn2> Consequently, at the
onset of many international arbitration proceedings, governments often lose
valuable time while decisions are made on whether and how to quickly
procure and finance the services of qualified external counsel.[2]

This initial period coincides with the time during which many important
procedural deadlines occur, such as those relating to the constitution of
the arbitral tribunal.[3] <#m_1332365906941816929__edn4> Indeed, within the
first 60-90 days of a proceeding, respondents are under significant
pressure to meet case deadlines, while contending with procurement and
funding issues surrounding the selection and appointment of external
counsels and facing an opponent whose team has undergone months or more of

This uneven start of arbitration proceedings can be harmful to investors
and countries alike. It creates an imbalance that may persist throughout
the proceedings, sometimes resulting in outcomes that undermine the
legitimacy of the investor-state dispute settlement (ISDS) system.

This problem can be addressed through a new form of insurance cover. It
would vary in scope according to the needs of client governments and could
be based on time or specific proceedings-related milestones. It could, for
example, specify a payout of a particular sum or provide for legal
representation financing for the first six months, or until tribunals are
constituted. Actuaries and other insurance professionals would devise
formulae for calculating the pricing of the insurance cover considering, *inter
alia*, the level of exposure to risk of the insured country and how likely
it is to use the insurance. Real market forces would determine the cost of
the insurance coverage. As a result, the prospect of impossibly high
premium assessments would help mitigate any possibility of governments
becoming emboldened by the availability of legal representation to engage
in activities contrary to their stated pro-foreign investment policies. The
insurance would, thus, not be a license for host countries to act
irresponsibly toward foreign investors.

The payout under an insurance cover would facilitate prompt access to
expert legal representation, especially in the early stages of
arbitrations. At its most basic, the insurance would simply provide ready
funds for governments to pay for services they procure from the open market
as and when the covered event occurs.

For still greater efficiency, the insurance could, under a scheme
administered by a stand-alone entity or as part of an existing body, enable
the prompt recommendation of qualified counsel to governments. In this
scenario, the scheme’s administrator would promptly assign cases to
pre-qualified legal representatives in a regularly updated pool, which
could include law firms and individual experts. The pool could also include
service providers under the various initiatives offering *pro-bono* or
low-cost legal assistance to governments involved in investor-state
arbitration, such as the Advisory Centre on International Investment Law
currently being considered by UNCITRAL.

Early—and almost “automatic”—activation of the scheme would be essential.
This could be achieved by stipulating, in the instrument of consent to
arbitration or in the applicable procedural rules, a requirement for early
notification of the existence of the dispute to the scheme’s administrator.
However, governments could decide not to rely on the insurance—they would
always retain discretion to accept, reject or discontinue their engagement
of any assigned counsel.

If an established organization, such as ICSID, UNCITRAL or UNCTAD, were to
administer the scheme, it could, where applicable, devote a minimal
percentage of member countries’ dues to its administration. Administration
by an independent entity could be funded from dues of participating
governments and/or the insurance companies that offer coverage. Countries
that are unable to easily afford the insurance premium could seek support
from their investment treaty partners, for example, as part of the
“technical” and other support that have become a regular feature in trade
and investment treaties.

Undoubtedly, early and proper representation of each side in investment
arbitration proceedings will help ensure that the proceedings are more
efficient and result in better quality outcomes, including awards that are
less susceptible to successful challenge. The idea of “dispute resolution
insurance in ISDS” would thus be beneficial to countries and investors
alike.[4] <#m_1332365906941816929__edn5>

* <#m_1332365906941816929__ednref1> Ucheora Onwuamaegbu (
[log in to unmask]) is an international arbitrator and
international arbitration practitioner, ArentFox Schiff LLP, Washington,
D.C. The author takes sole responsibility for any errors that may be found
to exist. The author wishes to thank Jose Alvarez, Stephen Schwebel and an
anonymous peer reviewer for their helpful peer reviews, and Lee Caplan,
Alejandro Escobar, Timothy Feighery, John Gaffney, and Ruth Teitelbaum for
their useful comments.
[1] <#m_1332365906941816929__ednref2> Over three quarters of the countries
in UNCTAD’s investment-treaty-disputes database have either never been
involved in any case or have faced only ten or fewer cases.
[2] <#m_1332365906941816929__ednref3> ICSID Secretariat’s records indicate
that governments are taking at least three-to-four months after ICSID’s
registration of an arbitration request to appoint external counsel. Yet,
governments would have known about the disputes for months, due to the
cooling-off period required in most instruments of consent, and the time
ICSID takes to review the request before registration.
[3] <#m_1332365906941816929__ednref4> See, e.g., ICSID, UNCITRAL and the
SCC Rules, which provide for strict deadlines for the constitution of
tribunals, the initial procedural session and certain jurisdictional
[4] <#m_1332365906941816929__ednref5> While this proposal focuses on ISDS,
the same mechanism could also apply to other types of cases involving a
country as respondent.
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Ucheora Onwuamaegbu, ‘A managed
dispute-resolution insurance scheme for countries in investor-state
arbitration: Ensuring early legal representation of respondents,’ Columbia
FDI Perspectives, March 21, 2022. 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,
Riccardo Loschi, [log in to unmask]; Luca Jobbagy,
[log in to unmask]

*Most recent Columbia FDI Perspectives*

   - No. 326, Meg Kinnear, “The launch of a new generation of the ICSID
   Rules,” Columbia FDI Perspectives, March 7, 2022
   - No. 325, James Otto, “How FDI in the mining sector can assist
   communities to achieve sustainable development,” Columbia FDI Perspectives,
   February 21, 2022
   - No. 324, Charlie Garnjana-Goonchorn, “An Advisory Centre on
   International Investment Law: Is perfect the enemy of good?,” Columbia FDI
   Perspectives, February 7, 2022

*All previous FDI Perspectives are available at

*Other relevant CCSI news and announcements*

   - *CCSI is hiring a Policy Researcher* on the Energy Transition and
   Carbon Accounting. The position will collaborate with the Director and
   Research Staff at CCSI to execute the Center’s applied research agenda on
   the energy transition, specifically work that will make a significant and
   sustainable difference in the quantification of greenhouse gas emissions
   through the Coalition on Materials Emissions Transparency (COMET)
   Framework. *For further details, and to apply by March 26, please
   see here
   *Applications will be reviewed on a rolling basis.
   - *CCSI is hiring a Program Associate*. Reporting to the Director of
   CCSI, the Program Associate will support a wide range of research,
   operational, and administrative responsibilities. This position is ideal
   for graduating students. *Please see here
   for more details and to apply*. Applications will be reviewed on a
   rolling basis.
   - CCSI's 2022 *Executive Training Program on Extractive Industries and
   Sustainable Development* will take place online from June 6-17, 2022.
   The program is designed to equip participants with the necessary skills to
   promote the responsible development of the extractive industries sector in
   resource-rich developing countries and to encourage a rich dialogue about
   best practices from around the globe. The two-week training emphasizes the
   interdisciplinary nature of resource-based development. By working through
   real case studies and with practitioners and experts in the field,
   participants will be able to apply analytical tools and frameworks to the
   unique context of the extractive industries in their country. For more
   information, and to apply by March 31, 2022, visit our website
   - CCSI's 2022 *Executive Training Program on Sustainable Investments in
   Agriculture* will take place online from May 3-13, 2022. The training
   provides an interdisciplinary approach to addressing the challenges and
   opportunities of agricultural investments. The program is designed to equip
   participants with the necessary knowledge and skills to address some of the
   key challenges posed by international investments in agriculture, and to
   encourage a rich dialogue about practices from around the globe.
   Applications will be considered on a rolling basis until March 31, 2022.
   For more information, and to apply, visit our website

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: (212) 854-0689 <%28212%29%20854-0689>
Fax: (212) 854-7946 <%28212%29%20854-7946>
*Copyright © 2022 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]


*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

"What foreign investors want: Findings from an investor survey", "Incentivising
Sustainable FDI", "Leveraging Digital FDI for Capacity and
Competitiveness", "Green FDI: Encouraging carbon-neutral investment",
Sustainable Investment to Build Back Better", "Extending International
Legal Aid from Trade to Investment: An Advisory Centre on International
Investment Law", "Increasing Transparency in Investment Facilitation:
Focussed Support is Needed", *Investment Facilitation for Development: A
Toolkit for Policymakers*, "More Attention to Policies! Improving the
Distribution of FDI Benefits. The Need for Policy-oriented Research, Advice
and Advocacy", "More and Better Investment Now!", "Facilitating Sustainable
FDI in a WTO Investment Facilitation Framework: Four Concrete
Proposals", "Multinational
Enterprises and the Global Investment Regime: Toward Balancing Rights and
Responsibilities”, "An Inventory of Concrete Measures to Facilitate the
Flow of Sustainable FDI: What? Why? How?", are available at .

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.