UNCTAD | May 2015
IIA Issues Note nº 2
Investor-State Dispute Settlement: Review of Developments in 2014
Investors continue to use the investor–State dispute settlement (ISDS) mechanism. In 2014, claimants initiated 42 known treaty-based ISDS cases. The total number of known ISDS cases reached 608.
40 per cent of new cases were initiated against developed countries (the historical average is 28 per cent). A quarter of all new disputes are intra-EU cases.
The two types of State conduct most commonly challenged by investors in 2014 were cancellations or alleged violations of contracts and revocations or denials of licences. The sectors where most cases were filed in 2014 are the generation and supply of electric energy (at least eleven cases), followed by oil, gas and mining (ten), construction (five) and financial services (three).
The Energy Charter Treaty (ECT) surpassed the North American Free Trade Agreement (NAFTA) as the most frequently invoked IIA.
ISDS tribunals rendered at least 43 decisions in 2014, 34 of which are public. The overall number of concluded cases has reached 356, with 37 per cent decided in favour of the State, 25 per cent in favour of the investor and 28 per cent of cases settled.
Arbitral decisions adopted in 2014 touch upon a number of important legal issues concerning the scope of treaty coverage, the conditions for bringing ISDS claims, the meaning of substantive treaty protections, the calculation of compensation and others. On a number of issues, tribunals continue to arrive at divergent conclusions.
The IIA regime is going through a period of reflection, review and revision. Investment dispute settlement is at the heart of this debate, with a number of countries reassessing their positions. There is a strong case for a systematic reform of ISDS.
UNCTAD’s forthcoming World Investment Report 2015 will present an action menu for investment regime reform.