International: UNCITRAL, ICSID Review International Investment Law Rules

(Sept. 30, 2019) The United Nations Commission on International Trade Law (UNCITRAL) and the International Center for the Settlement of Investment Disputes (ICSID) are both currently reviewing their international investment law rules.

International investment law, and investor-state dispute settlement (ISDS) in particular, are under increasing scrutiny.  A recent study notes that “[i]nvestment arbitration is increasingly making the headlines because of both its potential to overly restrict the policy space of states and its significant costs for parties. Against this background of negative side effects, it is worth asking whether it is used predominantly in situations that at least appear legitimate.”

Current Revisions of International Investment Law Rules at UNCITRAL and ICSID

At UNCITRAL’s 52nd session in Vienna at the end of July, the Commission’s Working Group III considered whether reform of ISDS was desirable. The Working Group focused on the issue of legitimacy concerns as they related to (a) lack of consistency, coherence, predictability, and correctness of arbitral decisions by ISDS tribunals, (b) arbitrators and decision makers, and (c) cost and duration of ISDS cases. This latest session and Working Group III report follow on several years of research and analysis by UNCITRAL regarding ISDS.

The next Working Group III on ISDS reform is planned for mid-October 2019, and will consider reform options, including a code of conduct, the establishment of an advisory center, the selection and appointment of adjudicators, the issue of reflective loss, and third party funding in ISDS.

ICSID, for its part, published its third working paper in August 2019 regarding proposals for an amendment to the ICSID rules, which would apply to proceedings under the ICSID Convention. The amendment process began in October 2016, and ICSID will hold a consultation for Member States in November 2019 to potentially complete the rules amendment process. As the ICSID Secretariat notes:

the changes are intended to modernize the rules based on case experience. Given ICSID’s administration of more than 650 cases, a number of lessons can be learned. The amendments will make the process increasingly time and cost effective while maintaining due process and a balance between investors and States.

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