Investment Policy Brief 12, December 2018

Investor-State Dispute Settlement: An Anachronism Whose Time Has Gone

Investor-State Dispute Settlement (ISDS) – a mechanism that allows foreign investors to bring claims against host governments to an international arbitral tribunal – is a relic that should be abolished. Its alleged benefits have not materialized and its costs – monetary and other – can represent a formidable obstacle to good economic governance. We recommend policymakers to terminate ISDS provisions in existing agreements and eschew them in future trade and investment treaties.

Le mécanisme de règlement des différends entre investisseurs et États (RDIE), au titre duquel les investisseurs étrangers peuvent déposer un recours à l’encontre des États devant un tribunal international d’arbitrage, est un vestige qui devrait être aboli. Les avantages qu’il est censé apporter ne se sont pas concrétisés et les coûts, financiers et d’autres types, qu’il engendre sont un obstacle majeur à la bonne gouvernance économique. Nous recommandons aux décideurs politiques d’abroger les dispositions relatives au RDIE figurant dans les accords en vigueur et, à l’avenir, d’éviter de conclure des accords d’investissement et de commerce qui en contiennent.

El mecanismo de solución de controversias entre inversores y Estados (SCIE), del que pueden valerse los inversores para presentar reclamaciones contra los Estados receptores ante un tribunal internacional de arbitraje, es un vestigio que debería ser abolido. Sus supuestos beneficios no se han materializado y sus costos, financieros y de otro tipo, pueden ser un obstáculo tremendo para la buena gobernanza económica. Recomendamos a los responsables de la formulación de políticas eliminar las disposiciones relativas a la SCIE en los acuerdos vigentes y evitar incluirlas en los futuros acuerdos de comercio e inversión.

This brief is part of the South Centre’s policy brief series focusing on international investment agreements and experiences of developing countries.

While the reform process of international investment protection treaties is evolving, it is still at a nascent stage. Systemic reforms that would safeguard the sovereign right to regulate and balance the rights and responsibilities of investors would require more concerted efforts on behalf of home and host states of investment in terms of reforming treaties and rethinking the system of dispute settlement.

Experiences of developing countries reveal that without such systemic reforms, developing countries’ ability to use foreign direct investment for industrialization and development will be impaired.

The policy brief series is intended as a tool to assist in further dialogue on needed reforms.

*** The views contained in this brief are attributable to the author/s and do not represent the institutional views of the South Centre or its Member States.

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Investor-State Dispute Settlement: An Anachronism Whose Time Has Gone

 

 

 


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