The UK Should Include Investor State Dispute Settlement (ISDS) in Its Post-Brexit International Investment Agreements

Abstract

This article argues from a commercial standpoint that the United Kingdom should include Investor-State Dispute Settlement (ISDS) in the new International Investment Agreements (IIAs) which it concludes following its departure from the European Union. Focusing on the procedure of ISDS rather than the substantive protections afforded by IIAs, the article supports this assertion by reference to advantages engendered by ISDS from the perspective of the UK as both a capital importer and capital exporter. ISDS does not exhibit systemic bias in favour of investors or states and offers an efficient alternative to domestic courts, particularly in jurisdictions where there is weak rule of law. The UK’s own commitment to rule of law suggests that the risk of adverse claims by foreign firms through this system is minimal. The article briefly considers the two chief alternatives to ISDS in modern IIAs: the EU’s new Investment Court System and state-to-state dispute settlement, neither of which should be viewed as a suitable alternative to ISDS for the UK.

Keywords: investment arbitration, investor-state dispute settlement, international arbitration, Brexit