Julian Arato
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Author:Julian Arato

January 27, 2020 In Investment Court System, Investment Law, Uncategorized By Julian Arato

ISDS Reform: Designing Permanent Institutions at Working Group III

Last week, the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WGIII) turned squarely to designing permanent adjudicative institutions for the resolution of investment disputes. As readers of this blog may be aware, WGIII is charged with developing multilateral reforms to the current ad hoc system of investor-state dispute resolution (ISDS). This government-led process involves delegations from around a hundred States, with active participation by dozens of observer delegations from international organizations, arbitral institutions, NGOs, business associations, and learned societies. Beginning in WGIII’s 34th Session in 2017, this work has continued through biannual sessions in Vienna and New York. From 2017 to 2018, delegations registered substantial concerns with ISDS, relating to fragmented arbitral outcomes; arbitrator independence, impartiality, and diversity; duration and cost; multiple proceedings; and third-party funding (Phase 1). In the fall of 2018, WGIII decided to work multilaterally to reform such concerns within UNCITRAL (Phase 2). As of its 37th Session in 2019, WGIII has moved firmly into working on concrete reform options (Phase 3) (discussed here).

WGIII’s 38th Session in Vienna marked a key transition into detailed discussion of reform options. Meeting initially in October 2019, the WGIII held discussions on a series of reform options according to a pre-determined project schedule. This work was grounded in proposals by over forty-five governments, across twenty-three submissions (here); complemented by several Secretariat papers; submissions by observer delegations (here); and concept papers by the Academic Forum on ISDS Reform (here). In this initial meeting, WGIII focused on (i) developing a multilateral advisory center; (ii) a code of conduct; and (iii) reforms to third-party funding (discussed here). Discussions centered on high level values, trade-offs and prioritization, with the goal of guiding the Secretariat as it turns to developing more concrete reform options.

Resuming its 38th Session in Vienna last week (January 2020), WGIII turned squarely to designing permanent institutions: (iv) a standing appellate mechanism; and (v) a multilateral investment court (MIC); as well as the cross-cutting question of (vi) selecting and appointing adjudicators. As with the discussions last fall, the goal was to discuss each reform option at a high level, to provide guidance to the Secretariat. The Working Group is not yet taking firm decisions on the desirability or ultimate form of any reforms, although some States are already revealing their preferences. Later this year, WGIII will develop a new project schedule and begin circling back to each topic, seriatim, with the benefit of new responsive work by the Secretariat, the Academic Forum, and other organizations (such as the OECD, ICSID, the PCA, and several NGOs).READ MORE

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October 22, 2019 In Investment Court System, Investment Law By Julian Arato

ISDS Reform: Working Group III Gets Down to Brass Tacks

Last week, multilateral efforts to reform investor-state dispute resolution (ISDS) entered a new phase, with substantive discussions of reform options beginning in earnest. As readers of this blog are aware, delegations from around a hundred States have been working multilaterally toward reforming ISDS in the United Nations Commission on International Trade Law (UNCITRAL), Working Group III (WGIII) over the last two years.

This work began in earnest in WGIII’s 34th Session in Vienna (2017) and has continued through biannual Sessions in Vienna and New York. From 2017–2018, Delegations registered substantial concerns with ISDS, relating to fragmented arbitral outcomes; the arbitrators charged with adjudicating disputes; matters of duration and cost; the lack of a framework to address multiple proceedings; and third-party funding (Phase 1). In Vienna last year, WGIII decided to work multilaterally to reform such concerns within UNCITRAL (Phase 2) – discussed further here. Last week proved to be a key hinge in the process. WGIII has now moved firmly into working on concrete reform options (Phase 3).

WGIII’s 37th Session in New York this past Spring 2019 appeared as something of a lull in the process, but it culminated in a key compromise on working methods that preserved consensus for the time being. WGIII spent much of that week debating working procedures, ultimately adopting a compromise plan to divide working time between developing “structural reforms” (i.e., large scale institutional reform options like a standing investment court or a standalone appellate body), and “functional reforms” (i.e., specific targeted reforms on problematic aspects of ISDS, like the lack of code of conduct, the lack of a mechanism to address multiple claims and shareholder claims more generally, third party funding, and security for costs). But it deferred actually developing a concrete project schedule until the fall.

WGIII’s 38th Session in Vienna last week marked the fruition of that compromise, and a transition into detailed discussions on reform options.READ MORE

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March 13, 2019 In State immunity By Julian Arato

Equivalence and Translation: Further thoughts on IO Immunities in Jam v. IFC

At the end of February, the Supreme Court of the United States issued a landmark judgment on the immunity of international organizations in Jam v. International Finance Corporation, 58 U.S. (2019). The case concerned the meaning of the 1945 International Organizations Immunities Act (IOIA), which affords international organizations “the same immunity from suit […] as is enjoyed by foreign governments“[1]. Writing for a 7-1 majority, Chief Justice Roberts found that the IOIA incorporates a dynamic immunities regime, equivalent to whatever immunities US law affords to foreign states. The immunities of international organizations are keyed to sovereign immunity. The former evolve to meet the latter. Thus, as the US law of sovereign immunity has shifted from an absolute to a restrictive paradigm with the enactment of the 1952 Foreign Sovereign Immunities Act (FSIA), so too does the IOIA today incorporate merely restrictive immunity for international organizations.READ MORE

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November 5, 2018 In Investment Court System, Investment Law By Julian Arato

A Watershed Moment for ISDS Reform

Last week marked a watershed moment for the movement to reform investor-state dispute settlement (ISDS). Meeting in Vienna, Delegates to the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WGIII) agreed to work multilaterally to reform the resolution of investment disputes. Delegates agreed to focus on responding to key systemic concerns with ISDS, as identified in WGIII’s two previous sessions.[1]

WGIII began its work on ISDS in Vienna last year, at its 34th Session. From the start, Delegates divided the process into three broad phases: identifying concerns about ISDS (Phase I); deciding which concerns, if any, were ripe for multilateral reform in UNCITRAL (Phase II); and designing options for reforms responding to any such concerns (Phase III). Phases I and II would be of prime importance in setting the frame. Though additional concerns can always be raised, any agenda for reform would be largely grounded in the problems identified in these early meetings. WGIII began its work identifying concerns with ISDS in 2017 and essentially concluded Phase I at its 35th Session in New York last Spring. By the end of that meeting, WGIII had identified a range of procedural and structural concerns with ISDS, relating to: (i) fragmented arbitral outcomes; (ii) the arbitrators charged with adjudicating disputes; (iii) matters of duration and cost; and (iv) third-party funding.READ MORE

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