International Investment Agreements: Recent Trends in Investor-State Case Law and Treaty Negotiation Roberto Echandi Taipei, March, 2011 New Trends in Investor-State Dispute Settlement (ISDS)

International Investment Law in the making… Known investment treaty arbitrations (cumulative and newly instituted cases) Source: UNCTAD

Sectors involved in known investment treaty arbitration Source: UNCTAD

Industry Involved in Arbitration *Susan Franck: Empirically Evaluating Claims About Investment Treaty Arbitration

Who uses the system?* Average 1.3 investors in each case There have been cases with more than 100 investors Investors from 23 different countries (out of more than 175 countries which have IIAs) have submitted claims Most frequent nationality of claimants: –U.S. –Canada –Italy –Netherlands –U.K. –Spain –France In 2008: –92 percent of cases brought by investors of developed countries –20 cases brought by investors of developing countries –9 cases brought by investors of transition economies – (UNCTAD) *Source: UNCTAD and Susan Franck: Empirically Evaluating Claims About Investment Treaty Arbitration

Respondent Governments In 2008, 77 governments had faced investor-State arbitration: –47 developing countries Middle income countries LDCs rarely tend to be respondents (3) –17 developed countries –13 transition economies *Source: UNCTAD and Susan Franck: Empirically Evaluating Claims About Investment Treaty Arbitration

Countries facing more ISDS arbitration claims *Source. UNCTAD 2008

Arbitrated Treaties Source: UNCTAD 2008

Arbitrated Treaties *Susan Franck: Empirically Evaluating Claims About Investment Treaty Arbitration

Most Frequently Arbitrated BITs *Source. UNCTAD 2008

Most Frequently Arbitrated Plurilateral IIAs *Source. UNCTAD 2008

Percentage of Ultimate Winners in Treaty Cases *Source:UNCTAD 2008

Damages Claimed vs. Damages Awarded to Investors *Susan Franck: Empirically Evaluating Claims About Investment Treaty Arbitration

Innovations in ISDS  Greater control of the Contracting Parties over ISDS  Detailed regulation of arbitral proceedings  Parties’ binding interpretations for arbitral tribunals  Promotion of Judicial Economy  Procedures to deal with frivolous claims  Consolidation of claims  Mechanisms to avoid disputes in more than one forum: improving the “fork-in-the-road”

Innovations in ISDS  Promotion of a consistent and sound jurisprudence on international investment law  Clarification of certain key investment protection provisions  Appeal mechanism  Legitimacy of ISDS vis-á-vis civil society  Transparency of ISDS procedures  Participation through “amicus curiae”

ISDS: areas for improvement  Cost  Arbitral proceedings  Legal fees  Potential awards  SMEs  Potential conflicts of interest  Inadequacy to deal with public policy issues  Lack of jurisprudencial consistency  Multiplicity of disputes on the same measure

Final reflections Current dynamics are generating an agenda including different categories of systemic issues related to the international investment regime:  Impact of ISDS  Dispute prevention  International governance dimension  Mechanisms to foster greater coherence international investment law  Balance between investment protection/liberalization and other public policy objectives  The domestic dimension  impact of IIAs over developing countries  Lock-in reforms, improvement of rule of law infrastructure, coherence in investment policy implementation

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