Correctness of Investment Awards: Why Wrong Decisions Don’t Die

Forthcoming, The Law and Practice of International Courts and Tribunals

18 Pages Posted: 3 Aug 2019 Last revised: 1 Nov 2019

See all articles by Wolfgang Alschner

Wolfgang Alschner

University of Ottawa - Common Law Section

Date Written: July 30, 2019

Abstract

Correctness of arbitral awards is a central concern in current multilateral efforts to reform investor-state dispute settlement (ISDS). Aside from protecting the disputing parties from mistakes by tribunals (retrospective correctness), corrective review also guides future interpreters not to repeat past mistakes (prospective correctness). This article assesses how effective the three existing ISDS correction mechanisms – (1) review by annulment committees or domestic courts, (2) review by the contracting parties, and (3) review by subsequent tribunals – are in promoting such prospective correctness. After assessing existing practice, the article finds that wrong decisions ‘don’t die’. Annulled or set-aside awards continue to be cited, contracting states’ authoritative interpretations are disregarded, and subsequent tribunals do not converge around a jurisprudence constante. This failure of corrective mechanisms to achieve prospective correctness is due to lacking legal constraints, incentives to use favorable awards even if they have been invalidated, and the simple difficulty in telling whether an award still represents ‘correct’ law in ISDS. The article concludes by proposing possible reforms to improve prospective correctness from the shepardization of awards, to rules on precedent, and broader institutional reform.

Keywords: ISDS, correctness, investment law, international investment treaties, UNCITRAL reform, annulment

Suggested Citation

Alschner, Wolfgang, Correctness of Investment Awards: Why Wrong Decisions Don’t Die (July 30, 2019). Forthcoming, The Law and Practice of International Courts and Tribunals, Available at SSRN: https://ssrn.com/abstract=3429397 or http://dx.doi.org/10.2139/ssrn.3429397

Wolfgang Alschner (Contact Author)

University of Ottawa - Common Law Section ( email )

57 Louis Pasteur Street
Ottawa, K1N 6N5
Canada

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