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The Notion and Development of International Investment Court

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Handbook of International Investment Law and Policy

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Abstract

While the creation of an investment court system based on bilateral investment treaties has now been incorporated in the EU-Canada CETA, the EU-Singapore IPA and the EU-Vietnam IPA, the EU’s proposal to eventually set up a multilateral investment court is also being discussed by the UNCITRAL Working Group III with participation of more than 100 states, international governmental organizations, and nongovernmental organizations. Not any other noble idea of international investment law has ever attracted such an overwhelming reaction as the notion of a multilateral investment court in today’s treaty-based investment dispute settlement system. Such a treaty can be bilateral between states, regional such as the USMCA, and multilateral such as the Energy Charter Treaty. The driving forces for, the key features of the investment court as embedded in existing international investment agreements, and the possible paths toward the realization of a truly multilateral investment court are the main issues to be addressed in this chapter.

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Notes

  1. 1.

    European Commission (2015) Transatlantic trade and investment partnership: trade in services, investment and e-commerce, chapter II – investment. http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_153955.pdf

  2. 2.

    A survey of 1660 BITs revealed that about 93% of them contain language on ISDS. See Pohl J, Mashigo K, Nohen A. Dispute settlement provisions in international investment agreements: a large sample survey. OECD Working Papers on International Investment 2012/02. https://www.oecd-ilibrary.org/docserver/5k8xb71nf628-en.pdf?expires=1580461100&id=id&accname=guest&checksum=E672E5C2D22829E561FDA22B72D56795

  3. 3.

    Shihata IFI (1986) Towards a greater depoliticization of investment disputes: the roles of ICSID and MIGA. ICSID Rev 1(1):1–25. See also Chaisse J, Bellak C (2015) Navigating the expanding universe of investment treaties – creation and use of critical index. J Int Econ Law 18(1):79–115

  4. 4.

    The number of 2019 showed in the chart covers only the first 7 months of the year. See UNCTAD. Investment policy hub, investment dispute settlement navigator. https://investmentpolicy.unctad.org/investment-dispute-settlement/advanced-search. The exact number of ISDS cases varies a bit according to different sources. For instance, ICSID statistics show that there were 4 cases in 1987, 1 in 1989 and 2 in 1992. See ICSID. ICSID caseload –statistics. Issue 2019-1. https://icsid.worldbank.org/en/Documents/resources/ICSID%20Web%20Stats%202019-1(English).pdf

  5. 5.

    Shan W (2019) Oxford-style debate: the permanent investment court system is the solution to the concerns over ISDS. In: Proceedings ISDS Reform Conference 2019: mapping the way forward. Asian Academy of International Law, Hong Kong, pp 219–261, at 224. ICSID statistics shows that, as of 31 December 2018, 74% of cases it registered or administrated originated from IIAs, 16% from investment contract between the investor and the host-state, and 9% from investment law of the host-state. See ICSID. Caseload –statistics. Issue 2019-1. https://icsid.worldbank.org/en/Documents/resources/ICSID%20Web%20Stats%202019-1(English).pdf

  6. 6.

    Among the known ISDS cases, 29% were against developed countries in 2016, and 45% in 2015. UNCTAD (2017) World investment report 2017. New York/Geneva: UN Publication, p 115

  7. 7.

    Sornarajah M (1997) Power and justice in foreign investment arbitration. J Int Arbitr 14(3):103–140. Eberhardt P, Olivet C (2012) Profiting from injustice. Brussels/Amsterdam: Corporate Europe Observatory and the Transnational Institute

  8. 8.

    Langford M, Behn D, Lie RH (2017) The revolving door in international investment arbitration. J Int Econ Law 20(2):301–332; Sands P (2013) Conflict and conflicts in investment treaty arbitration: ethical standards for counsel. In: Rovine A (ed) Contemporary issues in international arbitration and mediation: the Fordham papers 2012. Brill, Leiden, pp 28–49

  9. 9.

    Franck SD (2007) Integrating investment treaty conflict and dispute systems design. Minn Law Rev 92:161–230, at 224–225

  10. 10.

    Van Harten G (2008) A case for an international investment court. Society of International Economic Law (SIEL) Inaugural Conference 2008 Paper, 30 June 2008. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1153424, pp 1–46, at 3. For more early publications on the idea of investment court, see Franck SD (2005) The legitimacy crisis in investment treaty arbitration: privatizing public international law through inconsistent decisions. Fordham Law Rev 73(4):1521–1626, at 1594, 1600; Blackaby N (2003) Public interest and investment treaty arbitration. In van den Berg AJ (ed) International commercial arbitration: important contemporary questions. Kluwer Law International, The Hague, pp 355–365, at 364

  11. 11.

    Gus Van Harten, ibid., at.3.

  12. 12.

    Gus Van Harten, ibid., at 30.

  13. 13.

    Subedi SP (2008) International investment law reconciling policy and principle, 3rd edn. Hart Publishing, Oxford, p 208

  14. 14.

    UNCTAD (2013) World investment report 2013 overview. UN Publication, New York/Geneva, p 112. https://unctad.org/en/PublicationsLibrary/wir2013overview_en.pdf

  15. 15.

    Ibid., at 116.

  16. 16.

    Ibid., at 116.

  17. 17.

    See Chaisse J (2012) Promises and pitfalls of the European Union policy on foreign investment – how will the new EU competence on FDI affect the emerging global regime. J Int Econ Law 15(1):51–84. For further reading, see ‘Reclaiming Public Interest in Europe’s International Investment Policy EU investment agreements in the lisbon treaty era: a reader. Seattle to Brussels Network, July 2020. https://www.somo.nl/wp-content/uploads/2010/07/A-Reader.pdf

  18. 18.

    Business & Human Rights Resource Centre (2016) 220+ Law and economics professors urge congress to reject the TPP and other prospective deals that include Investor-State Dispute Settlement (ISDS). https://www.citizen.org/wp-content/uploads/isds-law-economics-professors-letter-sept-2016.pdf

  19. 19.

    Philip Morris Brands Sàrl, Philip Morris Products S.A. and Abal Hermanos S.A. v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7. Philip Morris Asia Limited v. The Commonwealth of Australia, UNCITRAL, PCA Case No. 2012-12.

  20. 20.

    Lone Pine Resources Inc. v. Canada, ICSID Case No. UNCT/15/2 (2013).

  21. 21.

    Tienhaara K (2011) Regulatory chill and the threat of arbitration: a view from political science. In: Brown C, Miles K (eds) Evolution in investment treaty law and arbitration. Cambridge University Press, Cambridge, pp 606–628, at 606

  22. 22.

    European Commission (2014) Online public consultation on investment protection and investor-to-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership Agreement (TTIP). http://trade.ec.europa.eu/consultations/index.cfm?consul_id=179

  23. 23.

    European Commission (2015) Report: online public consultation on investment protection and investor-to-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership Agreement (TTIP). Brussels, 13.1.2015, SWD(2015) 3 final, p 10. http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153044.pdf

  24. 24.

    Reinisch A (2016) The European Union and investor-state dispute settlement: from investor-state arbitration to a permanent investment court. CIGI Investor-State Arbitration Series Paper No. 2, pp 1–29, at 13–14; Chaisse J, Vaccaro-Incisa M (2018) The EU investment court: challenges on the path ahead. Columbia FDI Perspect 218:1–3.

  25. 25.

    Reinisch A (2016) Will the EU’s proposal concerning an investment court system for CETA and TTIP lead to enforceable awards? The limits of modifying the ICSID convention and the nature of investment arbitration. J Int Econ Law 19(4):761–786, at 762

  26. 26.

    European Commission. Concept paper: investment in TTIP and beyond – the path for reform, p 4. http://trade.ec.europa.eu/doclib/docs/2015/may/tradoc_153408.PDF

  27. 27.

    European Commission (2015) Commission proposes new investment court system for TTIP and other EU trade and investment negotiations. http://trade.ec.europa.eu/doclib/press/index.cfm?id=1364

  28. 28.

    Ibid.

  29. 29.

    European Commission (2015) Transatlantic trade and investment partnership: trade in services, investment and e-commerce, chapter II – investment. http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_153955.pdf. The slight changes are concerning small and medium sized companies.

  30. 30.

    This is evidenced by the adoption of the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, which became effective on 1 April 2014 and the Mauritius Convention which transformed transparency into a general principle of international investment law. See Schill SW (2015) Editorial: the Mauritius convention on transparency. J World Invest Trade 16(2):201–204

  31. 31.

    Schill SW, Vidigal G (2018) Reforming dispute settlement in trade: the contribution of mega-regionals. International Centre for Trade and Sustainable Development (ICTSD), RTA Exchange, p 8. https://e15initiative.org/wp-content/uploads/2015/09/reforming_dispute_settlement_in_trade-stephan_schill-rta_exchange-final.pdf

  32. 32.

    The document is available at https://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153846.pdf

  33. 33.

    European Commission (2015) Transatlantic trade and investment partnership: trade in services, investment and e-commerce, chapter II – investment. http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_153955.pdf

  34. 34.

    IISD (2017) European Union and Canada co-host discussions on a multilateral investment court. https://www.iisd.org/itn/2017/03/13/european-union-and-canada-co-host-discussions-on-a-multilateral-investment-court/

  35. 35.

    The video record was posted on https://webcast.ec.europa.eu/stakeholder-meeting-on-a-multilateral-reform-of-investment-disput-resolution, but is no longer available.

  36. 36.

    Council of the European Union (2018) Negotiating directives for a Convention establishing a multilateral court for the settlement of investment disputes. 12981/17 ADD 1. http://data.consilium.europa.eu/doc/document/ST-12981-2017-ADD-1-DCL-1/en/pdf

  37. 37.

    UNCITRAL Working Group III (2019) Possible reform of investor-State dispute settlement (ISDS): submission from the European Union and its member states. A/CN.9/WG.III/WP.159/Add.1. https://undocs.org/en/A/CN.9/WG.III/WP.159/Add.1. For the record some NGOs remain extremely hostile to the EU’s approach on a MIC. Some view a MIC ‘threatens to lock in an undemocratic investor-state dispute settlement (ISDS) scheme that undermines national democratic authority and prioritizes corporate profits above all else.’ A MIC ‘is a dangerous effort to salvage the controversial investor-state dispute settlement system by replacing it with a rebranded copy’, ‘is a wolf in sheep’s clothing. A world court for corporations would be the capstone in the architecture of corporate impunity.’ A MIC ‘would enshrine, expand, and entrench the current system of corporate privilege in future trade deals.’ See, Centre for International Environmental Law (2017) World court for corporations is a “wolf in sheep’s clothing” – new report exposes dangers of proposed multilateral investment court. http://www.ciel.org/news/world-court-corporations-wolf-sheeps-clothing-new-report-exposes-dangers-proposed-multilaterial-investment-court/

  38. 38.

    UNCITRAL Working Group III (2019) Possible reform of investor-State dispute settlement (ISDS): submission from the European Union and its member states. A/CN.9/WG.III/WP.159/Add.1, pp 9–12. https://undocs.org/en/A/CN.9/WG.III/WP.159/Add.1

  39. 39.

    UNCITRAL Working Group III (2017) Possible reform of investor-State dispute settlement (ISDS): note by the secretariat. A/CN.9/WG.III/WP.142. https://undocs.org/en/A/CN.9/WG.III/WP.142

  40. 40.

    UNCITRAL Working Group III (2019) Possible reform of investor-State dispute settlement (ISDS): note by the secretariat. A/CN.9/WG.III/WP.166. https://undocs.org/en/A/CN.9/WG.III/WP.166

  41. 41.

    Ibid.

  42. 42.

    European Commission (2017) Commission staff working document impact assessment – multilateral reform of investment dispute resolution, accompanying the document, recommendation for a council decision authorising the opening of negotiations for a convention establishing a multilateral court for the settlement of investment disputes. SWD/2017/0302, p 28. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52017SC0302&from=hr

  43. 43.

    UNCITRAL Working Group III (2020) Possible reform of investor-State dispute settlement (ISDS): multilateral instrument on ISDS reform, note by the secretariat. A/CN.9/WG.III/WP194. https://uncitral.un.org/sites/uncitral.un.org/files/wp194_multilateral_instrument_for_submission.pdf

  44. 44.

    UNCITRAL Working Group III (2019) Possible reform of investor-State dispute settlement (ISDS): submission from the European Union and its member states. A/CN.9/WG.III/WP.159/Add.1. https://undocs.org/en/A/CN.9/WG.III/WP.159/Add.1, para. 39

  45. 45.

    Schill SW, Vidigal G (2019) Designing investment dispute settlement à la carte: insights from comparative institutional design analysis. Law Pract Int Courts Tribunals 18:311–334. Amsterdam Law School Research Paper No. 2020-03, Amsterdam Center for International Law No. 2020-02. Available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3519259

  46. 46.

    Roberts A (2018) Incremental, systemic, and paradigmatic reform of investor-state arbitration. Am J Int Law 112(3):410–432

  47. 47.

    Ibid., at 410.

  48. 48.

    Ibid., at 419.

  49. 49.

    Puig S, Shaffer G (2018) Imperfect alternatives: institutional choice and the reform of investment law. Am J Int Law 112(3):361–409, at 401

  50. 50.

    Roberts A (2018) Incremental, systemic, and paradigmatic reform of investor-state arbitration. Am J Int Law 112(3):410–432, at 418

  51. 51.

    European Commission (2017) Commission staff working document impact assessment -multilateral reform of investment dispute resolution, accompanying the document, recommendation for a council decision authorising the opening of negotiations for a convention establishing a multilateral court for the settlement of investment disputes. SWD/2017/0302. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52017SC0302&from=hr, at 32–33

  52. 52.

    Council of the Europe Union. Joint interpretative instrument on the comprehensive economic and trade agreement (CETA) between Canada and the European Union and its member states. http://data.consilium.europa.eu/doc/document/ST-13541-2016-INIT/en/pdf, at 6

  53. 53.

    European Commission (2017) Commission staff working document impact assessment -multilateral reform of investment dispute resolution, accompanying the document, recommendation for a council decision authorising the opening of negotiations for a convention establishing a multilateral court for the settlement of investment disputes. SWD/2017/0302. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52017SC0302&from=hr, at 50

  54. 54.

    Ibid., at 52.

  55. 55.

    Kaufmann-Kohler G, Potestà M (2016) Can the Mauritius convention serve as a model for the reform of investor-state arbitration in connection with the introduction of a permanent investment tribunal or an appeal mechanism? Analysis and roadmap. CIDS – Geneva Center for International Dispute Settlement. https://www.uncitral.org/pdf/english/CIDS_Research_Paper_Mauritius.pdf

  56. 56.

    Bungenberg M, Reinisch A (2018) From bilateral arbitral tribunals and investment courts to a multilateral investment court: options regarding the institutionalization of investor-state dispute settlement. Springer, Berlin, p 3. The book provides a comprehensive examination on most of the issues relating to a future MIC.

  57. 57.

    UNCITRAL Working Group III (2019) Possible reform of investor-State dispute settlement (ISDS): submission from the European Union and its member states. A/CN.9/WG.III/WP.159/Add.1. p 2. https://undocs.org/en/A/CN.9/WG.III/WP.159/Add.1

  58. 58.

    UNCTAD. Investment policy hub, investment dispute settlement navigator, nationality of the parties. https://investmentpolicy.unctad.org/investment-dispute-settlement/advanced-search

  59. 59.

    Lavranos N (2019) The EU Plurilateral draft termination agreement for all intra-EU BITs: an end of the post-Achmea Saga and the beginning of a new one. Kluwer Arbitration Blog. http://arbitrationblog.kluwerarbitration.com/2019/12/01/the-eu-plurilateral-draft-termination-agreement-for-all-intra-eu-bits-an-end-of-the-post-achmea-saga-and-the-beginning-of-a-new-one/

  60. 60.

    The other 13 members are Australia, Brazil, Chile, Colombia, Costa Rica, Guatemala, South Korea, Mexico, New Zealand, Panama, Singapore, Switzerland and Uruguay. See Blenkinsop P, Baker L (2020) EU, China, Aust agree to temporary WTO fix. The Standard, 25 January. https://www.standard.net.au/story/6597846/eu-china-aust-agree-to-temporary-wto-fix/?cs=5461

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  1. Law School of Erasmus University Rotterdam, Rotterdam, The Netherlands

    Yuwen Li

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Correspondence to Yuwen Li .

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Editors and Affiliations

  1. School of Law, City University of Hong Kong, Kowloon, Hong Kong

    Julien Chaisse

  2. School of Business and Law, University of Portsmouth, Portsmouth, UK

    Leïla Choukroune

  3. Institute of Malaysia and International Studies, National University of Malaysia, Bangi, Selangor, Malaysia

    Sufian Jusoh

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Li, Y. (2020). The Notion and Development of International Investment Court. In: Chaisse, J., Choukroune, L., Jusoh, S. (eds) Handbook of International Investment Law and Policy. Springer, Singapore. https://doi.org/10.1007/978-981-13-5744-2_12-1

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