Committee on Investment Protection

The Committee on Investment Protection has three aspects to it as its main focus; Alternative Methods of Dispute Prevention, Investor-State Dispute Settlement (ISDS), and State-State Dispute-Settlement (SSDS).

 

Alternative Methods of Dispute Prevention and Dispute prevention policies are possibilities for dispute settlement or prevention that avoid the issues of ISDS and SSDS by replacing the emphasis on legal rights and obligations of investors and states with a focus on a solution recognized as fair by both parties (UNCTAD, 2013a, p. 113). Prevention of conflict, as a measure to avoid dispute settlement, may provide countries with more incentives to conclude investment agreements, as they are then often not legally bound to the outcome of the mediation (UNCTAD, 2017a, p. 5). And whilst these methods of ADR are seen as a cheap solution for dispute prevention, dispute prevention is largely absent from international investment laws and agreements (UNCTAD, 2017a, p. 5). Merely, 32 countries offer dispute prevention policies, which however are mostly a prerequisite to dispute settlement and not seen as an actual dispute resolution (UNCTAD, 2017a, p. 5). The CFIA provides

 

Prevention of conflict may appease many states that are hesitant to discuss ISDS even within bilateral agreements. This hesitancy is evident in agreements because whilst ISDS is seen as a cheap, fast and flexible method for investors to pull states into arbitration, it is also criticized as an imbalance of rights and obligations between investors and the host states (Baruti, 2017, p. 500). Further, it is criticized for limiting states in their policy making, as governments become hesitant to introduce a policy that may open them up to financial claims or other suits (Witkowska, 2017, p. 28). Additionally, it is criticized for being non-transparent, illegitimate and lacking accountability (Baruti, 2017, p. 501). As a result of these arbitration methods, many states have wished for reform and have even begun to terminate, reform or renegotiate Bilateral Investment Treaties (BITs) (Martins, 2017).

 

Lastly, SSDS, which can occur when government actions influence cross-border economic undertakings (UNCTAD, 2003, p. 3), has in recent years taken a less important role compared to ISDS. With cases mainly being filed in response to ISDS claims (Bernasconi-Osterwalder, 2014, p. 1). Whilst it has been critiqued for politicizing investment, SSDS may provide an alternative to ISDS (Bernasconi-Osterwalder, 2014, p. 1). This is due to the possibility of bringing dispute cases before the International Court of Justice or the WTO forum, instead of non-transparent arbitration (Bernasconi-Osterwalder, 2014, p. 1).

 

The Committee shall discuss all three aspects towards investment protection. Firstly, and in the forefront, investment conflict prevention shall be discussed. So far, on a bilateral level, conflict prevention measures involve strengthening institutional governance (Gabriel, 2016, p. 145). This includes using Ombudsmen, that receives investors’ demands and issues, or joint committees between states where representatives of investors and governments involved can discuss issues, have provided prevention tactics (CFIA; Gabriel, 2016, p. 145). The Committee shall discuss these measures and other prevention measures, whereby they discuss which are feasible on a multilateral level. In this regard, the Committee must also discuss the role of the WTO and how it can aid dispute settlement.

 

After exhausting all possibilities of dispute prevention, the committee will discuss opportunities for Investor-State Dispute Settlement and State-State Dispute Settlement. In this regard, the Committee will discuss, how ISDS and SSDS can be adjusted to provide a more positive and balanced outcome for states and investors, instead of a seemingly one-sided arbitration. For example, by providing transparency guidelines for ISDS (UNCTAD, 2012, p. 37). Further, the Committee will discuss, if ISDS and SSDS take place, which courts should discuss dispute settlement in a multilateral setting. In this regard, it must also be discussed if and how ISDS can be implemented so that investors cannot take states to arbitration without local litigation. The Committee will also discuss the possible role of the WTO in dispute settlement, whether it be providing a forum for discussion or arbitration, providing a mediatory role, or other methods of involvement. Finally, the Committee shall bring all of these points of discussion together in either as part of a new regulatory agreement or within an existing agreement.

 

 

Author of the Committees 2018:
Marisa Menzel (marisa.menzel@model-wto.org)
Model WTO Head of Simulation Design