The European Union's Proposed Investment Court System: Addressing Criticisms of Investor-State Arbitration While Raising New Challenges
Legal Issues of Economic Integration 43, no. 4 (2016): 367-384
21 Pages Posted: 21 Aug 2017
Date Written: August 9, 2016
Many would agree that reforms to the existing investor-State arbitration system are necessary, but opinions diverge on precisely what these should be. The European Commission’s proposal is to include an Investment Court System (ICS) in the investment chapters of the European Union (EU) Free Trade Agreements.
This article scrutinizes, first, difficulties in setting up an ICS: the International Centre for the Settlement of Investment Disputes (ICSID) Convention’s applicability, the rules regarding conflicts of interest, ethics and ancillary professional affiliations of adjudicators, and requirements in terms of nationality, expertise and diversity of the bench. Secondly, problems are examined which may emerge in running an ICS: ensuring transparency, allowing for third party participation, and avoiding major increases in length and costs of the proceedings. Thirdly, issues concerning the review and enforcement of ICS decisions are analysed.
Although the Commission has made a meritorious attempt at countering the main criticisms of investor-State arbitration, several new challenges have emerged which need to be addressed in order for an ICS to be fit for purpose. Although the incorporation of investment rules into the World Trade Organization (WTO) would seem unlikely to become politically feasible in the foreseeable future, multiple bilateral ICS mechanisms could serve as stepping stones towards a multilateral adjudicatory system for international investment disputes.
Keywords: independence, impartiality, code of ethics, international arbitration, ICSID, ISDS, Investment Court System (ICS), transparency, third party participation, review, enforcement
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