International Investment Law
CAUSATION, STANDARDS OF PROOF AND VALUATION UNDER UNCITRAL WORKING GROUP III: Reducing Uncertainty and Decisional Subjectivity
By José Manuel Alvarez Zárate
The assessment of damages has been one of the areas in which States participating in UNCITRAL Working Group III have expressed concerns about inconsistency, unpredictability and the correctness of ISDS awards. The successive versions of the draft provision on damages were intended to address those concerns. The revised Draft Provision 20 in WP.268 have incorporated a but-for test, requires loss or damage to be directly caused by the breach, replaces the former requirement of satisfactory evidence with a reasonable degree of certainty, and, for certain future damages, proposes a clear and convincing evidence standard. These developments, however, do not fully resolve the evidentiary and causal problem. Identifying who bears the burden of proof does not determine how much uncertainty that party must overcome before a factual proposition may be treated as established. Nor does reasonable degree of certainty, without further criteria, explain how the evidence should be assessed or what a tribunal must identify before concluding that the standard has been satisfied. This still leaves substantial room for subjective and divergent approaches to causation and quantum to Tribunals.
This paper argues that Draft Provision 20 should distinguish more clearly between the existence of the alleged loss, factual causation, legal compensability and quantification. Causation should determine which alleged economic losses are attributable to the breach before questions of legal compensability and valuation arise. For each material head of loss, the tribunal should identify the alleged causal mechanism, the relevant counterfactual, the material factual propositions on which it depends and the material alternative explanations for the same economic outcome before the loss proceeds to valuation. The paper proposes that a material factual proposition necessary to establish the existence of loss and factual causation should be treated as proven only where the evidentiary record provides an objective and verifiable basis for that finding. The tribunal should identify the evidence supporting and contradicting the proposition, assess its reliability, contemporaneity, source independence, corroboration, consistency and completeness, address material competing explanations supported by the record, and explain why the evidence establishes the proposition despite the residual possibility of error. Quantification should likewise rest on identified factual inputs and assumptions supported by the record, and the amount awarded should remain within the limits that the evidence can support.
The purpose is to make the exercise of adjudicative judgment transparent, disciplined and objectively reviewable. Findings on loss and causation should be capable of being reconstructed from the evidence, and the loss ultimately valued should correspond to the loss established as caused by the breach and determined to be compensable under the applicable law.
(more…)
Reclaiming Authority in Investment Arbitration: Joint Interpretations in International Investment Agreements and Investor-State Dispute Settlement
By Adamant Aldo Ruddyard, Diego Flávio Fontoura José, Sidney Tambasi Netya
Supervisor: Prof. Fuad Zarbiyev
Prepared for the South Centre as part of the Geneva Graduate Institute’s LL.M. Legal Clinic Programme, International Economic Law Stream
In order to analyze to what extent joint interpretations of international investment agreements (IIAs) influence the decision-making of arbitration tribunals in investor-State dispute settlement (ISDS), this report will explore the evolving role of joint interpretations in international investment law and their impact on the balance of power between States and arbitral tribunals. The first section examines the shift towards joint interpretations and State control, highlighting key developments in treaty design and the increasing use of joint interpretation clauses (JICs) and how they potentially reshape investment tribunals’ decision-making. The second section delves into the characteristics and benefits of joint interpretations, discussing their effectiveness in addressing ambiguities in investment treaties and their potential outcomes to investment arbitrations. Finally, the report will conclude by offering recommendations for enhancing the role of joint interpretations in the investment arbitration framework. The recommendations will address the challenges States face in ensuring the effective use of these mechanisms, proposing ways to integrate JICs into the broader reform efforts of international investment law.
(more…)
Beyond Amicus Curiae: Rethinking the Role of Third-Party Participation in Investment Arbitration and Environmental Governance
By Paulina Kuehme, Lakshmi Swathi Ganti, Brian Kelly Nyaga, Mattia Semenza
Supervisor: Prof. Elena Cima
Prepared for the South Centre as part of the Geneva Graduate Institute’s LL.M. Legal Clinic Programme, International Environmental Law and Governance Stream
This document examines third-party participation in Investor-State Dispute Settlement (ISDS), with a particular emphasis on environmental considerations. It investigates how to ensure procedural fairness and enable meaningful involvement of affected communities in cases concerning environmental protection. The study assesses the scope and challenges of such participation, including the ability to present evidence and legal arguments related to environmental impacts. It also explores the potential role of third-party involvement in shaping counterclaims against investors for environmental damage, and its possible influence in mitigating compensation by introducing arguments and evidence related to environmental costs. Through this analysis, the project aims to support a more balanced and sustainable ISDS framework – one that protects both investors and the environment – while fostering community empowerment and strengthening accountability for environmental harm.
(more…)
The South Centre: 30 Years Advancing towards a Fair and Responsible International Investment Regime
By Daniel Uribe
This paper examines the South Centre’s 30-year effort to reform the international investment law (IIL) regime, advocating for a shift from a self-contained system to one integrated with human rights, environmental protection, and sustainable development. It analyses how the Investor-State Dispute Settlement (ISDS) mechanism has led to “regulatory chill” and legal fragmentation, disproportionately impacting developing nations. The South Centre promotes aligning investment with national development strategies through technical assistance, treaty renegotiation, and policy frameworks that emphasise investor obligations and State sovereignty. Ultimately, the paper calls for a paradigm shift in global governance to address emerging challenges such as climate change and the digital divide, thereby ensuring a more equitable and responsible investment landscape.
(more…)
Investor Obligations in International Investment Law
by David Cheng, Jai Abhijit Unde, and James Casey Ryan
Prepared for the South Centre as part of the Geneva Graduate Institute’s LL.M. Legal Clinic Programme
This report first outlines key instruments and different approaches that some States across Africa, Asia, Europe and the Americas have taken to reform the international investment regime in relation to investor obligations. Second, it charts the trends arising from investment tribunals following Urbaser across environmental and human rights cases. Third, it describes and evaluates the reform efforts at the multilateral level. Finally, it summarises and evaluates avenues for policy reform by States.
(more…)
