Exhaustion of Local Remedies in Investor-State Dispute Settlement: An Idea Whose Time Has Come?
Yale Journal of International Law Online, Vol. 41, Fall 2015
12 Pages Posted: 21 Feb 2016
Date Written: 2015
The proposed Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union presents an opportunity to reconsider an old idea: requiring foreign investors to exhaust local remedies before bringing investor-state claims. Globally, investor-state dispute settlement (ISDS) procedures are facing unprecedented scrutiny, with dozens of countries reevaluating their approach to investor protection under international investment agreements (IIAs), including both bilateral investment treaties and the investment chapters of free trade agreements. The proposal to include ISDS in TTIP has become particularly controversial and threatens to derail the broader negotiations. Adopting the local remedies rule in TTIP is arguably the single reform with the greatest potential to reduce political opposition to ISDS while still providing investors with access to ISDS when domestic remedies are inadequate. Moreover, the local remedies rule is sufficiently flexible that it could become part of a template for IIAs that could be used with all countries regardless of their standards for protection of property rights or the capacity of their judicial systems.
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