Investor-State dispute resolution mechanism, which constitutes a break from the traditional ad hoc investment arbitration mechanisms by instituting permanent and institutionalised investment courts. ICS are provided for by recent investment treaties concluded between the European Union (EU) and third States1, and also feature in current projects for a multilateral reform of investor-State dispute settlement.
Recent years have seen an increase in criticism of the traditional investor-State dispute resolution (ISDS) mechanisms, because of their alleged lack of transparency, legitimacy, consistency, as well their costs and the absence of sufficient review of the arbitral tribunals’ decisions.2 Since 2015, in order to address those criticisms, the EU is attempting to institutionalise the resolution of investment disputes by the inclusion of provisions on ICS within the trade and investment agreements it concludes with third States and through its participation to the UNCITRAL Working Group III on Investor-State Dispute Settlement Reform3. The compatibility of the ICS with EU law (in particular with the principle of autonomy of the EU legal order) has been confirmed by the Court of Justice of the European Union in its Opinion 1/17 rendered on 30 April 2019.4
III. Main characteristics
Traditional ISDS mechanisms provide for the appointment of arbitrators on a case-by-case basis by the investor and the State involved in the dispute. In the ICS system,5 on the contrary, the courts’ members (subject to strict independence and impartiality requirements) would be appointed in advance by a joint committee of the States party to the treaty. The decisions of the courts would be subject to appeal before an appeal body. Subject to the mandatory provisions of the treaty, the arbitral procedure before the courts would still be conducted in accordance with the ICSID or UNICTRAL Arbitration Rules (or any other rules agreed upon by the parties). The ICSID Secretary General and Secretariat would remain entrusted with administrative tasks. Although they share the same basic features, administrative and procedural aspects of each ICS may be different, depending on the applicable treaty.
IV. Treaty practice
An ICS is envisaged in projects for the establishment of a multilateral investment court (‘MIC’), currently under international negotiations under the auspices of the UNCITRAL Working Group III.6
An ICS is also provided for by various investment agreements concluded between the EU and third States. Provisions for a court system can be found in trade and investment agreements concluded between the EU and Canada (Chapter 8 of CETA), Vietnam (Chapter 3 of the EU-Vietnam Investment Protection Agreement) and Singapore (Chapter 3 of the EU-Singapore Investment Protection Agreement). With the exception of CETA, these treaties have yet to enter into force.7 As for CETA, Chapter 8 on investment protection remains to be adopted.
The Unified Agreement for the Investment of Arab Capital States provides for the establishment of the Arab Investment Court (‘AIC’)8. The AIC was established in 19859. It is based in Cairo. The AIC is composed of 5 Judges, who cannot be of the nationality of one of the parties to a case. The AIC rendered its first award in 200410 and has so far concluded 14 disputes11.
European Commission, concept paper “Investment in TTIP and beyond – the path for reform. Enhancing the right to regulate and moving from current ad hoc arbitration towards an Investment Court”, 5 May 2015.
Xavier Taton and Guillaume Croisant, Judicial protection of investors in the European Union: the remedies offered by investment arbitration, the European Convention on Human Rights and EU law, Indian Journal of Arbitration Law (2019), vol. 7, issue 2, spec. pp. 66-74.
Amr Arafa Hasaan, The 2013 Amendments to the Arab Investment Agreement, ICSID Review, (2019), p. 2