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.
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.
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.
The Constitutional Shield: How Colombia’s Judiciary Shapes Investment Treaties Through Joint Interpretation
By Daniel Uribe Teran
This policy brief examines an innovative judicial approach by the Colombian Constitutional Court in response to an increase in investor-state dispute settlement (ISDS) claims. The Court introduced a doctrine called ‘conditional constitutionality’ (exequibilidad condicionada), which mandates the executive to negotiate binding joint interpretative declarations prior to ratifying an International Investment Agreement (IIA). This process aims to clarify ambiguous language and ensure that IIA provisions align with constitutional principles, particularly concerning the sovereign right to regulate and the protection of human and environmental rights.
The analysis examines the “constitutional shield” doctrine established by this domestic mechanism, emphasising its legal basis in Article 31.3(a) of the Vienna Convention on the Law of Treaties. However, it highlights a significant discrepancy: the uncertain acknowledgement of these subsequent agreements within the international investment arbitration framework. The brief notes that arbitral tribunals, which often function as autonomous legal systems, may not consistently respect such domestic constitutional provisions. This creates ongoing tension between national sovereignty and arbitral independence. The policy brief concludes by addressing the limitations of relying solely on domestic solutions and calls for systemic reforms at the international level, such as within the United Nations Commission on International Trade Law (UNCITRAL) Working Group III.
Contract-based Arbitration: Lessons Learned from Bolivia’s Extractives Industries
By Daniel Uribe Teran
Bolivia has undergone a significant shift in its approach to investment dispute resolution, moving away from reliance on Bilateral Investment Treaties (BITs) and international arbitration towards domestic mechanisms and contract-based arbitration. This shift, driven by a desire to assert greater state sovereignty over natural resources, seeks to align dispute resolution with national development priorities while reducing the costs associated with international arbitration. The recent Shell Bolivia Corporation v. YPF Bolivia case highlights the complexities inherent in contract-based arbitration within the extractive sector, emphasizing the need for meticulous contract drafting and a clear definition of arbitrable disputes within the framework of Bolivian law.
This article analyses Bolivia’s transition from reliance on international investment treaties and arbitration to a domestic, contract-centred approach for resolving disputes in its extractive industries. The article examines how the legal framework adopted by Bolivia highlights the role of contract-based arbitration in addressing disputes related to investment, production, technology transfer, environmental and social impacts, labour relations, and contract interpretation. The article draws lessons from other developing countries’ experience, recommending that Bolivia further strengthen its investment framework by adopting clear protection standards, prioritizing fair administrative procedures, and emphasizing domestic remedies. This approach seeks to balance attracting responsible investment with protecting state sovereignty and promoting sustainable development in Bolivia’s extractive industries.
Ensuring a Balanced Approach for the Global South in UNCITRAL Working Group III
By José Manuel Alvarez Zarate
This paper examines the ongoing efforts of the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WG III) to reform the Investor-State Dispute Settlement (ISDS) system. It argues that the current approach prioritises the concerns of developed countries over those of the Global South. The document highlights the disproportionate focus on the Permanent Multilateral Investment Court (MIC) and related issues, while neglecting procedural and cross-cutting concerns crucial for developing nations. The paper proposes concrete actions to rebalance the discussions, including prioritising procedural reforms and ensuring equitable representation in the MIC’s structure and appointment process. It emphasises the need for transparency, depoliticisation, and genuine consideration of the Global South’s concerns to achieve a genuinely legitimate and balanced ISDS reform.
Painting the Grass Green: A Climate Change Carve-Out in Investment Agreements
By Daniel Uribe
During the Twenty-Eighth Session of the Conference of the Parties (COP-28) of the United Nations Framework Convention on Climate Change (UNFCCC), States recognised the critical need to accelerate efforts to mitigate climate change and called on Parties to take action to transition away from fossil fuels in energy systems, to achieve net zero emissions by 2050. However, implementing such a transition finds obstacles in investor-state dispute settlement (ISDS) mechanisms, which can undermine regulatory actions necessary for climate policies, leading to a ‘regulatory chill’. As a response to these challenges, the Organisation for Economic Co-operation and Development’s (OECD) Future of Investment Treaties program has proposed a model carve-out provision to exclude fossil fuel sectors from ISDS protection with procedural safeguards, but its effectiveness may be limited. A holistic reform of investment agreements and additional measures, such as withdrawal from international investment agreements, are necessary to safeguard regulatory space and promote sustainable investment and a just transition.
On the Forty-eighth Session of UNCITRAL Working Group III
By Jose Manuel Alvarez Zarate
The forty-eighth session of UNCITRAL Working Group III (WGIII) on Investor-State Dispute Settlement (ISDS) reform was held in New York from April 1-5, 2024. The WGIII made significant progress in various reform areas. The European Union’s proposal for a permanent Multilateral Investment Court is advancing, albeit with mixed support. A Code of Conduct, developed with ICSID and adopted in 2023, remains contentious. Likewise, discussions focused on the draft statute for an Advisory Centre on International Investment Dispute Settlement, revised guidelines for dispute prevention, and a draft statute for a Permanent Mechanism for ISDS. Despite progress, core criticisms of the ISDS system—transparency, balance of rights, and rule clarity—remain inadequately addressed. This document considers some of the progress made and the need to provide more time for discussions on procedural and cross-cutting issues, which are crucial for developing countries to achieve balanced and inclusive outcomes.
Response to the Call for Inputs by the UN Special Rapporteur on human rights and the environment
“Should the interests of foreign investors trump the human right to a clean,
healthy and sustainable environment?”
South Centre
14 June 2023
To realize the right to clean, healthy & sustainable environment and reduce ISDS risks, States need to align their FDI policies with human rights, climate action and SDGs, including via reform of the international investment regime.
El mecanismo multilateral permanente propuesto y su posible relación con el universo existente de solución de controversias entre inversionistas y estados
por Danish y Daniel Uribe
La opción de reforma del Mecanismo Multilateral Permanente (SMM) que se está debatiendo actualmente en el Grupo de Trabajo III (GTIII) de la Comisión de las Naciones Unidas para el Derecho Mercantil Internacional (CNUDMI) ha planteado una serie de importantes preocupaciones sistémicas para las reformas procesales de la solución de controversias entre inversionistas y Estados. El presente documento trata en primer lugar de situar los debates sobre la SaaaMM en su contexto histórico y contemporáneo. A continuación, examina el Documento de Trabajo 213 de la CNUDMI y las disposiciones legales que contiene, que constituyen la base de los debates actuales sobre esta opción de reforma en el GTIII. Además, explora la posible relación de esta propuesta de SMM con diferentes aspectos del régimen jurídico internacional vigente en materia de inversiones. El documento concluye proporcionando algunos elementos que requieren una mayor consideración en este proceso, especialmente para proteger los intereses de los países en desarrollo.
Le mécanisme multilatéral permanent proposé et sa relation potentielle avec l’univers existant du règlement des différends entre investisseurs et États
par Danish et Daniel Uribe
L’option de réforme du Mécanisme permanent de règlement des différends internationaux en matière d’investissements actuellement en discussion au sein du Groupe de travail III de la CNUDCI a soulevé un certain nombre de préoccupations importantes concernant la réforme du système de règlement des différends entre investisseurs et États. Le présent document s’attache, dans un premier temps, à situer les discussions sur le mécanisme de règlement des différends dans leurs contextes historique et actuel. Il examine ensuite le document de travail 213 de la CNUDCI et les dispositions juridiques qu’il contient, qui constituent la base des discussions en cours sur cette option de réforme au sein du Groupe de travail. Enfin, il explore les liens potentiels entre le projet de mécanisme de règlement des différends et les différentes facettes du régime des accords internationaux d’investissement. Il se conclut sur les différents points qui nécessitent un examen plus approfondi en vue notamment de préserver les intérêts des pays en développement.
Webinar: Exploring Linkages between Climate Change, International Investment and the Legally Binding Instrument on Business and Human Rights
27 September 2022
Virtual event
Time: 15:30 – 17:00 CEST
Facilitated by the South Centre, this webinar is an opportunity for participants representing developing country governments, civil society and academia to exchange views and discuss the linkages between Climate Change, International Investment reforms and the Legally Binding Instrument, and how to harness their common elements to recover better, build resilience against future crises and achieve the UN 2030 Agenda & the SDGs.
