Permanent Investment Courts

Table of Contents

1. Frontmatter

2. A Paradigm Shift? Arbitration and Court-Like Mechanisms in Investors’ Disputes

   Shai Dothan, Joanna Lam

   Abstract

   Recently, several court-like mechanisms have been considered as a substitute for investor-state arbitration. Suggestions for creating such mechanisms have been around for a long time, but new trade agreements may make court-like mechanisms for investors’ disputes a reality. This paper starts by asking whether the shift from arbitration to court-like mechanism is likely to happen and how deep is the change to dispute resolution going to be. The advantages and disadvantages of replacing ad-hoc arbitrators with court-like mechanisms are examined. Courts are more centralized than arbitrators, which gives them the ability to act in a coherent way and consider long-term consequences. However, centralization may imply a greater risk of capture by special interests and could lead to more radical legal developments than the stable system of diverse arbitration. Furthermore, compromise solutions that create numerous competing court-like mechanisms instead of a universal court may escalate the fragmentation of international law.

3. Permanent Investment Courts and the EU Legal Order

   Eleftheria Neframi

   Abstract

   In the external action of the Union, the establishment of permanent investment courts is not only part of the common commercial policy, but also an expression of the objective to promote the rule of law and to act as an influential actor in international procedural law. Through its participation in agreements that establish a bilateral investment court system (ICS) and in the negotiation of the convention establishing a Multilateral Investment Court (MIC), the Union aims to promote its own standards of judicial protection while preserving the constitutional framework at the basis of the principle of autonomy. The present paper deals with the question of division of competences, especially in the context of the establishment of a MIC and the allocation of international responsibility in Investor-State Dispute Settlement (ISDS) mechanisms. Moreover, it discusses the scope of fundamental principles of the EU legal order through the position of the Court of Justice in Opinion 1/17 and the analysis of the compatibility of the ICS with primary EU law. While the principles of conferral and of the autonomy of the EU legal order impose constraints to the external action of the Union, their scope is at the same time interpreted in a way to accommodate their guarantee with the EU’s objective to contribute to the major reform of the ISDS. In that way, the guarantee of the EU legal order’s constitutional requirements is not necessarily a limit to the efficiency of the Union’s external action.

4. The North American Experience with Investor-State Arbitration: Does It Lead to a Permanent Investment Court?

   Armand de Mestral, Lukas Vanhonnaeker

   Abstract

   This paper addresses two related questions: (1) does the experience of the three NAFTA Parties suggest that they would be more comfortable with a court structure replacing arbitration and (2) does this reflect the discomfort of developed democracies with investor-state arbitration (ISA)? To answer these questions the paper examines the experience of the three states Parties to NAFTA Chapter 11, the steps that they have taken over the years to change the procedure or interpretation of Chapter 11, the evolution of their Model BITs, other investment treaty practice and the extent to which they appear to have embraced the European Union’s call for some form of standing foreign investment tribunal to replace investor-state arbitration.

5. Potential Enforcement Mechanisms for Decisions of a Multilateral Investment Court

   Marc Bungenberg, Anna M. Holzer

   Abstract

   In recent years, demands for reforming investor-state arbitration have become louder. One of the rather incisive proposals in this regard is to set up a Multilateral Investment Court (MIC). Because of the still early stage of development there is much room for the unprejudiced expression of ideas and suggestions regarding its organisational structure. This article aims to contribute to this process and intends to identify possible arrangements for effective enforcement mechanisms for the decisions of the MIC. The present paper will therefore look at the different ways in which decisions of an MIC could be enforced. Part B will deal with the question whether existing conventions concerning the enforcement of arbitral awards or the international enforcement of judgments should and could be used for the enforcement of MIC decisions. Part C will then address the possibilities of creating new international instruments or agreements for the enforcement of MIC decisions aiming at obliging not only MIC members but also third states to enforce MIC decisions. The options to be addressed include establishing an MIC Statute containing provisions on the enforcement of MIC decisions, the creation of a new international convention along the lines of the New York Convention, the ICSID Convention, or existing conventions on the international enforcement of judgments. Additionally, the advantages and disadvantages of agreeing on additional protocols to existing conventions are discussed. A further, however entirely different approach will then be addressed in the last part: MIC decisions could be enforced by using a (yet-to-be-created) fund system following the example of the Iran-US Claims Tribunal. MIC members would have to pay a certain sum into that fund and if a decision against an MIC member is issued, the investor can—under certain conditions—obtain money out of/from the fund. However, this is followed again by questions of enforcement.

6. Impossible Ethics? A Critical Analysis of the Rules on Qualifications and Conduct of Adjudicators in the New EU Investment Treaties

   Güneş Ünüvar, Tim Kreft

   Abstract

   This contribution will outline and analyze a selection of rules on qualifications of judges, and the framework of rules on ethics, vis-à-vis perceived problems related to arbitrators in investor-State dispute settlement (ISDS). It specifically focuses on the conduct, ethics and qualifications of “Members of Tribunal” for a series of new generation EU Agreements (CETA, EUVIPA, EUSIPA, EUMEX, TTIP) pursuant to publicly available documents at the time of the writing. It will identify the core characteristics of rules on ethics and qualifications in arbitration and the prescribed ICS practice, as well as the relevant rules governing international courts such as the International Court of Justice (ICJ) and the International Criminal Court (ICC). The contribution will detail provisions in each EU Agreement; as well as the new USMCA or “NAFTA 2.0”, as a strikingly different take on what ‘reform’ could look like. In comparing these two different contextual applications of ethical rules (to arbitrators and judges respectively), the contribution will finally argue that, given their fundamentally different sources of authority and perceived (reputational and actual) duties and responsibilities, any confusion in applying ethical rules tailored for arbitrators to international court judges will prove to be problematic and work against intended reform objectives such as (re)establishing legitimacy.