1. The Possibility of an Appellate System in International Investment Arbitration --- An Asian Development Perspective? Asif H Qureshi University of Manchester, UK

2. The basis for the call for an appellate process US Trade Promotion Authority under Section 2102 of the US Trade Act 2002 US Trade Promotion Authority under Section 2102 of the US Trade Act 2002 Annex D of the New Draft US Model Bilateral Investment Treaty (BIT) Annex D of the New Draft US Model Bilateral Investment Treaty (BIT) ICSID Discussion Paper of October 22nd 2004 ICSID Discussion Paper of October 22nd 2004 Growing trend: Annex 10-H US-Chile FTA and The Central American FTA; mid-2005 some 20 countries BITS Growing trend: Annex 10-H US-Chile FTA and The Central American FTA; mid-2005 some 20 countries BITS Weight of opinion Weight of opinion

3. Justifications An appellate system operates as a corrective mechanism An appellate system operates as a corrective mechanism Risk of inconsistent arbitration decisions Risk of inconsistent arbitration decisions Coherence, consistency, predictability, and objectivity Coherence, consistency, predictability, and objectivity Success of the WTO appellate system Success of the WTO appellate system Deter forum shopping in dispute settlement Deter forum shopping in dispute settlement

4. Contra No significant inconsistencies No significant inconsistencies Fragmentation of ICSID Arbitral Regimes Fragmentation of ICSID Arbitral Regimes Cannot de-couple institutional reform from Cannot de-couple institutional reform from investment normative framework investment normative framework Indirect call for multilateral investment regime? Indirect call for multilateral investment regime? Appellate system --- quasi legislative system? Appellate system --- quasi legislative system? OECD MIA and Doha Agenda OECD MIA and Doha Agenda Other concerns that may trump ‘consistency and coherence’ argument for example: human rights, environment and of course the development objectives of the host State. Other concerns that may trump ‘consistency and coherence’ argument for example: human rights, environment and of course the development objectives of the host State.

5. The nature and choice of appellate process? An appellate process added to existing adjudicative systems in the investment sphere ring fenced from other systems? An appellate process added to existing adjudicative systems in the investment sphere ring fenced from other systems? An ICSID Appeals Facility? An ICSID Appeals Facility? The relevance and significance of the appellate process in the WTO The relevance and significance of the appellate process in the WTO A Supreme Investment Court? A Supreme Investment Court?

6. Ring-fenced appellate process? UNCTAD UNCTAD OECD proposals for reform of MAP in DTA OECD proposals for reform of MAP in DTA May run counter to objectives of consistency and coherence. May run counter to objectives of consistency and coherence.

7. An ICSID Appeals Facility? Availability of the appeals process would ‘depend on the consent of the parties’. Availability of the appeals process would ‘depend on the consent of the parties’. Appeals Panel would be established ‘composed of 15 persons elected by the Administrative Council of ICSID on the nomination of the Secretary- General of the Centre’ Appeals Panel would be established ‘composed of 15 persons elected by the Administrative Council of ICSID on the nomination of the Secretary- General of the Centre’ ‘clear error of law’, or ‘any of the five grounds for annulment of an award set out in Article 52 of the ICSID Convention’ or ‘serious errors of fact’. ‘clear error of law’, or ‘any of the five grounds for annulment of an award set out in Article 52 of the ICSID Convention’ or ‘serious errors of fact’. Access to the Facility would be subject to the approval of the Secretary-general of ICSID Access to the Facility would be subject to the approval of the Secretary-general of ICSID

8. Problems? Judges on the panel at the sole behest of a nomination by the Secretary-general. Judges on the panel at the sole behest of a nomination by the Secretary-general. No mention of any geographical distribution, or developed/developing, investor home/host State constituencies within this panel. No mention of any geographical distribution, or developed/developing, investor home/host State constituencies within this panel. Not compulsory but based on its consensual user Not compulsory but based on its consensual user Allows a non-governmental investor entity to affect the nature of the agreement Allows a non-governmental investor entity to affect the nature of the agreement Silent with respect to the submission of amicus briefs. Silent with respect to the submission of amicus briefs.

9. WTO Working Group on the Relationship Between Trade and Investment was mandated to consider inter-alia dispute settlement procedures in the sphere Working Group on the Relationship Between Trade and Investment was mandated to consider inter-alia dispute settlement procedures in the sphere One view, mainly from developed countries: could apply without the need to make major changes One view, mainly from developed countries: could apply without the need to make major changes India: Negative India: Negative

10. WTO (Cont) May well suffer from the imprint of a trade liberalisation regime, and therefore could hinder national policy flexibility in the development sphere. May well suffer from the imprint of a trade liberalisation regime, and therefore could hinder national policy flexibility in the development sphere. Whether to allow investors standing in the dispute settlement system? Whether to allow investors standing in the dispute settlement system? Whether to allow the provisions on compensation and suspension of concessions in the WTO to investment disputes? Whether to allow the provisions on compensation and suspension of concessions in the WTO to investment disputes? Whether the relationship of the WTO dispute settlement system needed to be co-ordinated with existing bilateral and regional agreements? Whether the relationship of the WTO dispute settlement system needed to be co-ordinated with existing bilateral and regional agreements? Whether the trade traditions can automatically be adopted in the investment sphere? Whether the trade traditions can automatically be adopted in the investment sphere?

11. A Supreme Investment Court? A Supreme Investment Court? Role of the International Court of Justice in an appellate context in the sphere of international economic relations generally? Role of the International Court of Justice in an appellate context in the sphere of international economic relations generally? ICJ serves in a number of ways to guard and facilitate some of the principal substantive and procedural pillars upon which international economic relations rest upon ICJ serves in a number of ways to guard and facilitate some of the principal substantive and procedural pillars upon which international economic relations rest upon an important judicial organ of the international economic order; and in that context also has a constitutional role in International Economic Law (IEL) an important judicial organ of the international economic order; and in that context also has a constitutional role in International Economic Law (IEL) Function in the resolution of disputes that draw from the rights of States under General International Economic Law. Function in the resolution of disputes that draw from the rights of States under General International Economic Law. The ICJ has a law determining function The ICJ has a law determining function

12. SIC (cont)? First, a SIC could provide a forum for outsiders not part of the existing investment regimes. First, a SIC could provide a forum for outsiders not part of the existing investment regimes. Second, the court could act as a reservoir for the nurturing of new perspectives in international investment relations not otherwise effectively catered for in existing regimes. Second, the court could act as a reservoir for the nurturing of new perspectives in international investment relations not otherwise effectively catered for in existing regimes. Third, it could facilitate the trumping of the existing investment regimes ---- where there are sound external reasons for such trumping --- in terms for example of development priorities. Third, it could facilitate the trumping of the existing investment regimes ---- where there are sound external reasons for such trumping --- in terms for example of development priorities.

13. The development perspective? That the review process facilitates the development objective. That the review process facilitates the development objective. That the review process reduces or alleviates the burdens that accompany investment liberalisation through the interpretative process. That the review process reduces or alleviates the burdens that accompany investment liberalisation through the interpretative process. That there exist independent, fair and transparent processes in the appellate structure, through for example ensuring effective participation of developing/host countries in the appellate process. That there exist independent, fair and transparent processes in the appellate structure, through for example ensuring effective participation of developing/host countries in the appellate process. That the power of multinational corporations is not unduly strengthened through the abusive use of an appellate process. The availability of the process could result in frivolous and vexatious claims paralysing host State action. That the power of multinational corporations is not unduly strengthened through the abusive use of an appellate process. The availability of the process could result in frivolous and vexatious claims paralysing host State action.

14. Development perspective (cont) That the national legislative ‘policy space’ developing countries need for their development objectives is not undermined through the introduction of an appellate process. If investor- state appeals are permitted (and in particular where they are successful) then this would empower private parties to engage in legislative activity in a sphere where there may be sound national and public policy arguments for preserving the power of the government. That the national legislative ‘policy space’ developing countries need for their development objectives is not undermined through the introduction of an appellate process. If investor- state appeals are permitted (and in particular where they are successful) then this would empower private parties to engage in legislative activity in a sphere where there may be sound national and public policy arguments for preserving the power of the government.

15. Development perspective (cont) That the appellate system does not lead to the multilateralisation of bilaterally negotiated agreements; and thereby compromise the flexibility afforded by a bilateral system along with the collective decision of developing countries not to engage in a multilateral system that is not development friendly. That the appellate system does not lead to the multilateralisation of bilaterally negotiated agreements; and thereby compromise the flexibility afforded by a bilateral system along with the collective decision of developing countries not to engage in a multilateral system that is not development friendly.

16. Conclusion Will a non-ringed fenced appellate system, set against a disorganised bilateral investment normative framework, not add to uncertainty and complexity? Will a non-ringed fenced appellate system, set against a disorganised bilateral investment normative framework, not add to uncertainty and complexity? Might an appellate system not lead to further investor bias in relation to weaker host States, by augmenting the capacity of multilateral companies to pursue an appeal? Might an appellate system not lead to further investor bias in relation to weaker host States, by augmenting the capacity of multilateral companies to pursue an appeal? Is the objection to ‘inconsistency’ not really a call for normative uniformity? Is the objection to ‘inconsistency’ not really a call for normative uniformity?