Continuing on the issue of appeals in ISDS proceedings, Kluwer Arbitration Blog carried this recent piece on the trend of EU agreements incorporating clauses that include an appellate mechanism, akin to the Appellate Body of the WTO.
In this post, Daniel Avila II and Nicolas Borda outline the proposed EU-Mexico Free Trade Agreement proposal for an appellate mechanism for investment arbitration.
According to the Agreement in Principle, the “EU-Mexico agreement fully implements the new EU approach to investment protection and investment dispute resolution by fundamentally reforming the old-style ISDS system. It establishes a standing international investment court system composed of a Tribunal of First Instance and on an Appeal Tribunal.”
The proposal of an appellate mechanism is not novel. The UNCITRAL Working Group III was established in the fall of 2017 to “provide a useful model for possible reforms in the field of investor-State arbitration, in conjunction with interested organizations.” In its Thirty-eighth session, the UNCITRAL Working Group IIII provided a possible reform adding appellate and multilateral court mechanisms.
Commentators analyzing the strengths and weaknesses of the proposed appeal reform by UNCITRAL in international arbitration have argued that an appellate mechanism replaces “crucial parts of the system such as annulment mechanisms, enforcement and finality of awards.” On the other hand, commentators note, “Consistency in the application of substantive norms in BITs would contribute to the confidence in ISDS” and will serve as a check against legal error. Further, commentators have raised concerns of costs and time increasing by allowing appeals to go forward in international arbitration.
Interesting developments in the international investmentment norm setting space - while Cabada rejects ISDS for Canadian investors and Canada as a respondent in USMCA, the EU model proposes permanent arbitrators at the panel stage and an appellate mechanism. Where all this will converge is yet to be seen. However, the churning in the investment norm setting arena is evident with modifications to treaty obligations, new model BITs, co-operation and mediation instead of dispute resoluton, State to State arbitration instead of ISDS and then finally an appellate mechanism.
States have a lot to choose from unlike in the heydays of BITs which were more templates to be signed on. How States choose their obligations and practises would reflect what they consider important and relevant for their interests in the context of a negotiation. Whether these efforts would lead to a multilateralization and standardisation of practises is not known - the UNCITRAL Working group is working on certain aspects of ISDS reform.
This decade would definitely have a lot in store for international investment law enthusiasts.
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