Investment Arbitration Appellate Mechanism Options: Consistency, Accuracy, and Balance of Power

22 Pages Posted: 10 Jan 2016 Last revised: 15 Feb 2017

See all articles by Mark Feldman

Mark Feldman

Peking University School of Transnational Law

Date Written: June 2, 2016


For policymakers exploring appellate mechanism options for the international investment law regime, the competing interests of efficiency and finality will receive due consideration. But two additional — and possibly overlooked — risks also merit close analysis.

First, gains in the consistency of treaty interpretation by a standing, permanent appellate body would not guarantee corresponding gains in the accuracy of treaty interpretation. As illustrated by two lines of case law applying denial of benefits provisions under a number of investment treaties, consistent treaty interpretation does not ensure accurate treaty interpretation.

Second, a shift from an ad hoc to a more institutionalized international investment dispute settlement regime would significantly impact the balance of power between States and adjudicators. In general terms, standing, permanent tribunals are associated with greater levels of independence than ad hoc tribunals. The experience of the WTO Appellate Body illustrates how standing, permanent tribunals can develop as institutions through bold acts of independence. Greater levels of tribunal independence give rise to a greater need for control mechanisms to address the risk of tribunals exceeding their mandate. That risk is heightened in the context of the international investment arbitration, where, even under the current ad hoc regime, the level of tribunal independence is significant.

Legitimate policy arguments — based on goals of achieving greater consistency, coherence, and predictability — can be made in favor of the development of one or more appellate mechanisms within the international investment law regime. But policymakers exploring appellate mechanism options should give careful consideration to all competing policy interests, which are not limited to the goals of efficiency and finality. The two additional risks analyzed in this article — the gap between consistent and accurate treaty interpretation, and the balance of power consequences of greater institutionalization — should be part of the policy discussion. That policy discussion also should include consideration of control mechanism options to address such risks.

Keywords: appellate mechanism, investor-State arbitration, investment arbitration, WTO, Appellate Body

JEL Classification: K33

Suggested Citation

Feldman, Mark, Investment Arbitration Appellate Mechanism Options: Consistency, Accuracy, and Balance of Power (June 2, 2016). ICSID Review, 2017, Forthcoming; Peking University School of Transnational Law Research Paper No. 16-2. Available at SSRN: or

Mark Feldman (Contact Author)

Peking University School of Transnational Law ( email )


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