Reformed ISDS

The investor-state dispute settlement (ISDS) mechanism has come under fire in the past few years. As a result of many controversial cases, civil society groups, international organisations, academics, lawyers and state officials have argued that the arbitration process has had a negative impact on public interest and is need of reform or should be scrapped altogether.

Therefore tweaked versions of the system have been proposed to avoid the most undesired “side effects” of standard ISDS rules. At least 45 countries and four regional blocs are revising or have recently revised their investment model agreements.

In 2012, South Africa, the government started to withdraw from its bilateral investment treaties and amended domestic legislation to make it compatible with BIT-like investor protections while incorporating exceptions where warranted by public interest considerations.

In 2014, Indonesia decided to terminate 67 bilateral investment treaties and has also been developing a new model BIT that supposedly reflects a more balanced approach between the country’s right to regulate and foreigner investor protection.

In 2015, the European Commission established a new ’Investment Court System’ to replace the current ISDS mechanism in its trade deals. The ICS has been incorporated in the EU deals with Canada (CETA) and Vietnam. It has also been proposed for the ongoing negotiations with Mexico, the Philippines and the US (TTIP). However many critics claim that this new system is largely window-dressing.

In December 2015, India released a revised model BIT which, for instance, requires investors to exhaust domestic remedies (Indian courts) before turning to international arbitration and leaves out “fair and equitable treatment” provisions.

In 2016, members of the Southern African Development Community (SADC) (Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland) amended the SADC Finance and Investment Protocol that included ISDS provisions. The amendments eliminate the ISDS mechanism (only state-to-state arbitration remains) and narrow the scope of investors’ rights, including exclusion of “fair and equitable treatment”, limitations to “national treatment” to allow for local preferences, obligation for investors to follow host state domestic law and exception from investment rules for policies enacted to comply with international treaties.

In South America, experts from the Union of South American Nations (UNASUR) have been developing an investment settlement centre, as an alternative to the World Bank’s ICSID.

In 2017 states from around the world began to debate at UNCITRAL (United Nations Commission on International Trade Law) about the possible reform of the ISDS system in a way that would address legitimacy concerns and rebalance the system. As part of these discussions, the EU proposed the creation of a Multilateral Investment Court (MIC), which was slammed by civil society groups, as the MIC would “enshrine, expand, and entrench the current system of corporate privilege in future trade deals.”

Photo: Attac / CC BY-SA 2.0

March 2021

Tele Sur | 24-Jul-2016
For the first time ever, progress is being made at the United Nations for a binging legal instrument that would hold corporations accountable for human rights violations.
Financial Express | 22-Jul-2016
US ambassador to India Richard Verma recently said ‘things have become a bit more difficult’ after India revised the BIT text
Madhyam | 20-Jul-2016
As part of ongoing initiatives towards restructuring its bilateral investment treaty regime, Indii aims to minimize the possibility of arbitral tribunals interpreting the treaty provisions vastly different from what the contracting parties originally had in mind.
The Wire | 18-Jul-2016
India is seeking to terminate BITs signed with 57 countries and sign joint interpretative statements with the other 25 treaty states – all an outcome of the country’s new model BIT.
The Indian Express | 11-Jul-2016
The notifications, issued earlier this year, effectively let governments know they have 12 months to broker new treaties before the old ones expire.
Adital | 9-Jul-2016
Se tratarían de tratados impuestos continente a continente ante el fracaso o la insuficiencia de los tratados más globales.
East Asia Forum | 4-Jul-2016
Public debate over how best to manage the interests of foreign investors and host states has resurfaced in Australia.
E15 Initiative | 30-Jun-2016
In recent years the debate over investor state dispute settlement (ISDS) has heated up and in Europe is reaching boiling point
South Centre | 29-Jun-2016
A growing international community of policy makers and analysts that recognizes that major reforms in the investment treaty regime are needed.
Domain-b | 28-Jun-2016
The new model text on the basis of which India is negotiating its Bilateral Investment Treaties (BIT) is making it difficult for America to hold bilateral talks on the proposed India-US BIT

0 | ... | 260 | 270 | 280 | 290 | 300 | 310 | 320 | 330 | 340 | ... | 380