UNCITRAL and Reform of Investment Dispute Settlement

Since 2017, the United Nations Commission on International Trade Law (UNCITRAL) has been formally deliberating possible multilateral reform of investor–state dispute settlement (ISDS).

The deliberation process takes place under Working Group III, which was mandated by the Commission to (1) identify and consider concerns regarding ISDS, (2) consider whether reform is desirable and, if so, (3) develop any relevant solutions to be recommended to the Commission. The Commission issued this mandate following its 50th session in July 2017.

These three main areas of discussion are known as the “phases” of the Working Group III process. The working group dedicated two sessions (November 2017 and April 2018) to the first phase and one session to the second phase (October–November 2018). The working group meets biannually, in April and November, respectively, in New York and Vienna.

These deliberations are taking place as many countries and regions are reassessing the ISDS regime, looking to develop new dispute settlement mechanisms and approaches, examine other options for dispute prevention, and negotiate alternate types of bilateral and regional treaties and renegotiate or terminate existing ones. Several states have expressed an interest in exploring domestic, regional and multilateral alternatives to the traditional investor–state arbitration model, including a more permanent and judicialized form of dispute settlement. 

IISD supports in principle initiating an inclusive, transparent discussion on reforming the ISDS regime and building a new mechanism for resolving investment-related disputes. There is a need to replace the traditional arbitration model with a more independent and predictable dispute settlement process—one that is better adapted to investment disputes that involve public policy issues and a range of different stakeholders and interests. 

Our participation in the multilateral process in UNCITRAL is aimed at promoting the much-needed development of a comprehensive and inclusive investment-related dispute settlement mechanism. We have held dedicated stakeholder sessions on the UNCITRAL Working Group III process, as well as publish dedicated news updates and analysis in English, French, and Spanish through Investment Treaty News, our online journal on international investment law and policy from a sustainable development perspective .

IISD has observer status with UNCITRAL and has participated in all the sessions of Working Group III on possible ISDS reform as an invited non-governmental organization. At each session, IISD hosts with partner organizations preparatory sessions for developing country delegates to prepare for the deliberations.

• July 2019: IISD, the Columbia Centre on Sustainable Investment (CCSI), and the International Institute for Environment and Development make various joint submissions under Paragraph 83 of Document A/CN.9/970, which refers to the report of the April 2019 session. These submissions are:

  • ​Draft Treaty Language - Withdrawal of Consent to Arbitrate and Termination of International Investment Agreements
  • Draft Text Providing for Transparency and Prohibiting Certain Forms of Third-Party Funding in Investor-State Dispute Settlement (also available in French and Spanish)
  • Third Party Rights in Investor-State Dispute Settlement: Options for Reform
  • Shaping the Reform Agenda: Concerns Identified and Cross-Cutting Issues

• July 2019: IISD holds discussion meetings with developing country negotiators online to discuss proposed reform solutions for the upcoming UNCITRAL WG III session in October.

• April 2019: UNCITRAL Working Group III reconvenes, looking to prepare a work plan for Phase 3 discussions. IISD publishes preview blog for UNCITRAL meetings in late March.

• March 2019: IISD publishes report from its 12th Annual Forum of Developing Country Investment Negotiators, including an annex on possible outcomes of the UNCITRAL process, as well as a special ITN article on the “other matters” discussion under Phase 2.

• March 2019: IISD, in partnership with the South Centre, CCSI, and the Friedrich Ebert Foundation organize strategy meeting in Geneva on UNCITRAL reform process.

• February 2019: IISD, South Centre, and Government of Colombia hold 12th Annual Forum of Developing Country Investment Negotiators, with the theme of “Shifting International Investment Law Toward Sustainable Development: Strategies for renegotiation, reform and defence” and dedicated sessions on the UNCITRAL process to reform ISDS.

• November 2018: UNCITRAL Working Group III reconvenes, continues Phase 2 discussions.

• October 2018: IISD hosts stakeholder session alongside UNCITRAL meetings for October/November, in partnership with CCSI and the International Institute for Environment and Development (IIED).

• April 2018: IISD hosts stakeholder session alongside UNCITRAL meetings, in partnership with the CCSI and IIED. The session brought together stakeholders from multiple sectors and disciplines to examine UNCITRAL developments and give their feedback. UNCITRAL Working Group III meetings resume.

• November 2017: Working Group III deliberations begin; delegates launch into Phase 1 discussions.

• July 2017: At its 50th session, UNCITRAL entrusts its Working Group III with a broad mandate to work on the possible reform of ISDS. The working group is tasked with identifying concerns regarding ISDS, consider whether reform is desirable and, if so, develop recommendations. 

• June 2017: IISD makes its first written submission to the UNCITRAL Commission on a multilateral process to reform investment dispute settlement.

• 2015–2016: The UNCITRAL Secretariat conducted a study on whether the United Nations Convention on Transparency in Treaty-based Investor–State Arbitration (Mauritius Convention) could provide a useful model for possible reforms in the field of investor–state arbitration. The secretariat presented the result of a study prepared by the Geneva Centre for International Dispute Settlement (the CIDS Report). After discussions, UNCITRAL decided to retain the issue on its agenda for further consideration at its 2017 session and to decide whether to mandate a working group to undertake related work.