Report

Investment Dispute Prevention and Management Agencies

Toward a more informed policy discussion

The establishment of an agency to prevent and manage investment disputes is often perceived as a way for countries to attract investment while managing the risks associated with disputes—but little is known about the design, operation, or effectiveness of such agencies. This report starts to fill that gap so policy-makers can make more informed decisions.

By Jonathan Bonnitcha, Zoe Williams on January 28, 2022
  • While investment DPMAs are often promoted as a solution to investment disputes, few states have established such agencies, and there is considerable variation in their design and operation.

  • There are some major risks associated with DPMAs that are not reflected in claims they can solve current challenges associated with investment disputes.

  • Governments should consider their investment goals, the different options for achieving them, and the risks involved before deciding whether to establish a dispute prevention and management agency.

Foreign investment can provide much-needed financial resources for developing countries, but the risk of costly claims under the investor-state dispute settlement (ISDS) system can counteract these benefits. Investment dispute prevention and management agencies (DPMAs) are therefore frequently touted as a potential solution to the ISDS challenge, but how much do we know about them?

Only a relatively small number of states have established such agencies and there is considerable variation in their design and operation. This report reviews and analyzes how they operate and what effects they have had. It seeks to contribute to a more informed and evidence-based policy discussion.

The report starts by situating DPMAs in the context of wider discussions about investment governance, pulling apart some of the assumptions regarding the inevitability of ISDS risks and the underlying drivers of investment disputes. It then reviews and compares existing DPMAs in seven different states, drawing attention to the risks and benefits associated with them and how they operate in relation to other systems of investment governance.

Report details

Topic
Investment Law & Policy
Focus area
Economies
Publisher
IISD
Copyright
IISD, 2022