EU submits paper and work plan to UNCITRAL Working Group III advocating systemic reform as the only answer to concerns about investor-state dispute resolution

In advance of the next meeting of UNCITRAL Working Group III (WG III) in April 2019, the European Union and its Member States have made a submission on “Establishing a standing mechanism for the settlement of international investment disputes” (the Submission), as well as a possible work plan for achieving this aim.  As described in our blog post here, WG III has identified a number of concerns in relation to the resolution of investor-state disputes by ad hoc tribunals. In the Report of the 36th Session, WG III encouraged governments to submit proposals as to how the concerns about ISDS identified in the 36th Session should be addressed by way of reform.

The Submission advocates systemic structural change, proposing a two tier “standing mechanism” as “the only available option that effectively responds to all the concerns identified in the working Group” and “the only option that captures the intertwined nature of those concerns“.  The features of the “standing mechanism” proposed in the Submission are unsurprising given the previously published views of the EU’s institutions, in particular the European Commission (the Commission). The rhetoric in the Submission differs from the previous articulations coming out of the EU institutions which refer overtly to an “investment court system“. However, the Commission’s news page makes clear that the “standing mechanism” described in the Submission is a “multilateral investment court“. In addition, whilst the Submission makes reference to “adjudicators” rather than judges, the characteristics of the “adjudicators” are those described in the EU’s previous papers on this topic (see here).

The Commission has historically been the flag-bearer for the EU’s reform of ISDS. In the Submission however, it is emphasised that the proposal represents the views of the EU “and its Member States“.  This proposition may be tested if the proposed standing mechanism ultimately finds support: further to CJEU Opinion 2/15 on the European Union–Singapore Free Trade Agreement (FTA) on May 16, 2017, the instrument establishing a standing mechanism will need to be ratified by each of the Member States.

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