A Sustainability Toolkit for Trade Negotiators:

Trade and investment as vehicles for achieving the 2030 Sustainable Development Agenda

5.5.3 Replacing Existing Investor–State Arbitration System with a Permanent Court

As with the introduction of an appellate mechanism, the transition from an ad hoc arbitration system to a court could further improve predictability and accountability, consistency and coherence in investor–state jurisprudence. In particular, tenured judges or dispute settlement members in a judicial system are typically more independent from the disputing parties than they would be under an arbitration model, where disputing parties choose their arbitrators case by case.

There are several options for a permanent court. It could be set up specifically for the investment agreement or at the multilateral level. It could be responsible for investor–state disputes only, or could include state–state disputes. Depending on the content of the treaty, or if a court is set up in a multilateral context, the court’s competence could extend to cases involving affected communities. It is important to find a way for affected communities—for example, victims of environmental damage—to have a voice and be part of the solution when disputes are resolved.

In anticipation of efforts to create a permanent court, parties may want to include provisional arrangements for ISDS in the investment treaty while building a multilateral or regional investment-related dispute settlement mechanism.

Option 1:Replace existing investor–state arbitration system with a permanent court

The transition from an ad hoc arbitration system to a court could further improve predictability and accountability, consistency and coherence in investor–state jurisprudence. It would enhance trust in the system and lead to higher-quality decisions.

Examples

Both CETA and the EU-Vietnam FTA establish a standing Tribunal to hear claims under their Investment chapters (CETA Article 8.27; EU-Vietnam FTA Chapter 8 Part II [Investment], Article 12), and a permanent Appeal Tribunal (CETA Article 8.28; EU-Vietnam Chapter 8 Part II [Investment], Article 13).

The EU has also proposed a similar standing body (“Investment Court System”) [EU TTIP negotiating text, Chapter II, Section 3, sub-section 4] in the context of its TTIP negotiations.

How Commonly Used

Previous Scroll to top Next