Unpacking National Investment Laws
Dispute settlement function
This report analyzes the dispute settlement functions of national investment laws as part of IISD’s Rethinking International Investment Governance project. Building on the 2023 foundational study, this deep dive explores how national investment laws regulate dispute settlement function and provides the comparative knowledge needed to design dispute settlement mechanisms fit for the 21st century.
Key Findings
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National investment law is not always the best tool to address policy problems of dispute settlement.
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Creating new dispute settlement mechanisms always diverts resources from the general justice system.
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Laws may recognize arbitration as an available option subject to specific, case-by-case agreement. Laws should not provide unilateral, open-ended advance consent to an undefined class of investors—the practice exposes states to significant and largely uncontrollable legal and financial risks.
National investment laws are increasingly replacing international treaties as the primary tool for shaping sustainable development. However, many of these domestic frameworks inadvertently replicate the high financial and legal risks of international arbitration through provisions that give "advance consent" to investor–state dispute settlement.
This report provides a framework for policy-makers to move beyond these risks. It offers a data-driven guide to strengthening domestic judiciaries and designing dispute mechanisms that protect national interests while maintaining investor confidence in the 21st century.
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