European Commission: investor-State dispute settlement worries

The Council of the European Union authorized the European Commission to represent the EU and its member states in intergovernmental talks at the United Nations Commission on International Trade Law (UNCITRAL), with a view to reforming the existing system of Settlement of Investor-State Disputes (ISDS).

In general, the latter provides a procedural framework for disputes between international investors and host states in relation to international investment agreements and is based on arbitration procedures.

But, according to the European Parliament, the system has raised serious concerns among stakeholders across the European Union, especially in relation to the transparency and consistency of decisions, the independence of arbitrators, and the cost and duration of the judgments. arbitration proceedings.

The intergovernmental talks at UNCITRAL aim to reform the system in a way that addresses these concerns.

In addition, the overall objective of the Council’s mandate is to establish a full-fledged, permanent multilateral investment court with an appeal mechanism and regular judges.

The UNCITRAL talks began in 2017.

Then, in April 2019, the task force identified three areas of concern, namely:

  • Consistency and predictability of arbitration decisions.
  • Integrity of arbitrators and decision makers.
  • Cost and duration of ISDS disputes.


The states then submitted reform proposals that provided the framework for the discussions that began in October 2019.

The UNCITRAL Secretariat has already circulated two documents that summarize the proposals on the selection and appointment of ISDS members, the establishment and scope of an appeal mechanism, and the enforcement mechanism.

Liketime, the proposals range from improving the current Investor-State Dispute Resolution system to the creation of formal investment tribunals made up of courts of first instance and appellate courts.

The documents include questions to government delegations.

In its response to the initial draft, the UNCITRAL delegation to the EU and its member states supports the establishment of a multilateral investment court composed of a court of first instance and a court of appeal composed of full-time judges.