Suchergebnisse

AbstractMany investment treaties include investor-state dispute settlement (ISDS) provisions which are supposed to protect a foreign investor against opportunistic behavior of a host country. This paper scrutinizes the optimal design of ISDS provisions that solve the holdup problem. It shows that an efficient investor protection mechanism requires an arbitrator as established in investment treaties. However, this arbitrator does neither have to learn nor to evaluate the circumstances of the dispute. Furthermore, any ISDS compensation from the government to the investor should not be based on reductions in investor profits but on the host country's welfare effects.

Investor-State Dispute Settlement, a legal provision in Bilateral Investment Treaties (BITs) or other International Investment Agreements that gives investors a right to call for arbitration with a state, has recently become the centre of controversy in a debate over the Transatlantic Trade and Investment Partnership (TTIP). Critics argue that such a provision is either illegitimate, unnecessary, and/or does not have any positive influence on flows of Foreign Direct Investment (FDI). More radical critics argue that ISDS is a provision that allows big companies to sue governments when they have made democratic choices with negative consequences for companies. This study surveys the recent decade of ISDS activity. It concludes that the number of ISDS cases has continued to grow, and that the growth is concentrated to certain sectors with a high degree of government involvement or political patronage.

Professor A. F. M. Maniruzzaman considers the impact of a spectacular growth of investor-state dispute resolution by arbitration over the last two decades, looking at issues raised by excessive investor-state arbitral awards with wider implications beyond the field of arbitration itself, such as concerns about the role of arbitrators vis-à-vis the respondent state's public interest in regulating various matters including environmental protection, low-carbon investments, social and human rights; dire economic consequences flowing from arbitrators' decisions who lack in democratic legitimacy of a domestic or international judicial institution; and inconsistency in arbitral interpretation of investment treaty obligations, hence unpredictability in arbitral decisions on similar or identical issues.

The landscape in which investor-state dispute settlement (ISDS) takes place is undergoing profound change. Although discontent with the current ISDS system is on the rise, most countries have so far not seen a need to modify ISDS provisions in international investment agreements. To move forward, countries should take a pro-active approach toward reforming the ISDS mechanism.

This issue of Commonwealth Trade Hot Topics offers a preliminary insight into what it means for developing country governments to commit to investor-state dispute settlement, and how this commitment entails linkages to their development policy space and regulatory decisions.

This chapter provides a tour d'horizon of the development of the EU's investment policy and is intended as an introduction for the subsequent chapters. The first part tracks the scope of the EU's competence regarding foreign direct investments and the investor-State dispute settlement (ISDS) system as it has been developed in particular by the Court of Justice of the EU (CJEU). The second part analyses the tension of investment law and EU law regarding the intra-EU BITs and the Achmea judgment of the CJEU. The question is then discussed whether, and if so, to what extent the internal market provisions of the EU Treaties already provide a sufficient level of investment protection. The third main part focuses on the EU's recent external investment policy as illustrated by the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada as well as the EU's ISDS reform efforts within UNCITRAL Working Group III.

In recent years, more developed countries have been drawn into investment disputes. As of end 2011, at least 18 developed countries had faced investment arbitration -- as compared to 55 developing countries and 16 economies in transition. Governments face a dilemma. While many governments consider ISDS a key element of international investment protection, ISDS is becoming increasingly risky. For one, governments' risk of being sued by foreign investors is growing. Second, when a dispute arises, the defence requires enormous resources; if a case is lost, damages can be very high. Third, governments live with an unpredictable arbitration practice without having the legal safety net of an appellate body like in the WTO. Fourth, complex domestic legal issues reaching beyond international investment law are examined by international arbitrators. Fifth, as more disputes are directed against countries with highly developed domestic judicial systems, governments need to ask themselves how positive discrimination of foreign investors in respect of ISDS can be justified.

The negotiation of several mega-treaties in 2015, including the Trans-Pacific Partnership (TPP), the Trans-Atlantic Trade and Investment Partnership (TTIP), the EU-Canada Comprehensive Economic and Trade Agreement (CETA), and other regional agreements, has generated substantial public discussion about the protections and privileges afforded to multinational enterprises through the investor-state dispute settlement (ISDS) mechanism in these treaties. ISDS has increasingly raised concerns among certain governments and civil society groups, particularly as a growing number of ISDS cases involve investors challenging a range of governmental measures taken in good faith and in the public interest, including measures related to environmental protection, public health and safety, and financial stability. Even representatives of international businesses – the purported beneficiaries of these texts – have voiced concerns about the costs of ISDS proceedings, uncertainty regarding outcomes of disputes, and an absence of rules to ensure the independence and impartiality of arbitrators.