Multilateral Reform of Investor–State Dispute Resolution Mechanism: A Balance between Public Legitimacy Management and Private Efficiency Refinement

Abstract

The Investor-State Dispute Settlement (ISDS) system comes at crossroad. In context of ISDS reform, the Public-Private Debate surrounding international investment agreements (IIAs) could be specified as a balance between public legitimacy and private efficiency, tempering tensions between fast and fair resolution of investment disputes. From the perspective of fast resolution, party autonomy and cost management of the ISDS system should be retained and refined. From the perspective of fair resolution, ex ante (in-put) legitimacy and ex post (out-put) legitimacy should be enhanced to manage the procedural and substantive deficits, by establishment of state’s appointed arbitrator-roster and restricted review of awards by a permanent annulment committee. Therefore, this article proposes a Chinese perspective on Multilateral Investment Dispute Resolution (MIDR) system of balance between public legitimacy management and private efficiency refinement. The institutional structure of MIDR should be of internal balance, moderating three tensions between state and arbitrator, between investor and host state, and between state and arbitral tribunal during ex ante and ex post process of dispute resolution. The process of establishment of MIDR should be of external balance, moderating tensions between procedure and substance of MIDR, between MIDR and existing institutions, and between legal rights of MIDR stakeholders and political will of leading states.

Keywords: Multilateral Investment Dispute Resolution, Investor-State Dispute Settlement, Public Legitimacy, Private Efficiency, Public-Private Debate