Proposal of the European Union (“EU”) to set up an international investment court, composed of a first instance court and an appeal body. Such court would adjudicate claims brought under investment treaties that member States have decided to assign to its authority. Both of its bodies would be staffed by tenured adjudicators chosen and remunerated on a permanent basis by the member States and assisted by a secretariat. The precise design, functioning and technicalities of the multilateral investment court ("MIC") would depend on the outcome of ongoing international negotiations.
Recent investment treaties concluded between the EU and third countries provide for a break from the traditional ad hoc Investor-State Dispute Settlement (ISDS) mechanism and refer to a permanent and institutionalised bilateral investment court (the investment court system. Following a public consultation and impact assessment in 2016-2017, the European Commission made a recommendation to the Council of the EU on 13 September 2017 to start international negotiations on a MIC, with the aim of “having one, multilateral institution to rule on investment disputes covered by all the bilateral agreements in place,” rather than multiple bilateral investment court.1 The Council adopted negotiating directives on 20 March 2018.2
In the meantime, a report by the Centre for International Dispute Settlement (CIDS), co-written by Gabrielle Kaufmann-Kohler and Michele Potestà, was submitted to the United Nations Commission on International Trade Law (UNCITRAL) in 2017, along comments by States and international organizations.3 This report highlighted some procedural weaknesses of the existing ISDS ad hoc tribunals, as well as paths for potential improvement. During its 50th session (November – December 2017), UNCITRAL entrusted its Working Group III with a broad mandate to work on possible ISDS reforms.4
Negotiations for the setting up of a MIC are currently taking place within the framework of Working Group III (“Investor-State Dispute Settlement Reform”) of the United Nations Commission on International Trade Law (UNCITRAL).5 UNCITRAL had identified the setting up of an international investment court as one of the “option[s] for reform” of ISDS during its 50th session in July 2018.6 Issues related to (i) the enforcement of the decisions that the Multilateral Investment Court would render, (ii) the financing of the permanent body, including the tribunal members and (iii) the selection and appointment of the tribunal members are currently in debate.7
While the EU is an active proponent of the reform,8 other States and actors are opposed to the establishment of a MIC. During UNCITRAL negotiations, various actors such as Mr. Charles Brower, have warned that adjudicators appointed to a permanent multilateral court could be subject to political bias, which would discourage investors and impact the development of investments globally.9 States such as the United States, Japan, Chile and Russia also objected to a systemic reform, preferring bilateral tools and drafting techniques to address defaults of the current system.10 Options different from the MIC are currently under discussions at UNCITRAL, including the creation of a multilateral advisory centre or the setting up of a stand-alone review mechanism.11
The trade and investment agreements providing for an investment court system, namely the agreements concluded between the EU and Canada (Article 8.29 of CETA),12 Vietnam (Article 3.41 of the EU-Vietnam Investment Protection Agreement), Singapore (Article 3.12 of the EU-Singapore Investment Protection Agreement) and Mexico (Section C of the Chapter on Investment of the EU-Mexico Agreement in Principle), all contain a clause pursuant to which the parties to these agreements shall pursue the establishment of a multilateral investment tribunal and a multilateral appellate mechanism for the resolution of investment disputes. These agreements leave to the relevant joint committee the adoption of specific provisions ensuring the transition from the investment court system to the MIC.
Howse, R., Designing a Multilateral Investment Court: Issues and Options, Yearbook of European Law, 2017, pp. 209-236.
Taton, X. and Croisant, G., 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, pp. 66-74
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