Reform of the international investment agreement (IIA) regime was discussed at a recent Expert Meeting hosted by the United Nations Conference on Trade and Development (UNCTAD) in Geneva. On 25-27 February 2015, more than 250 participants including governmental representatives, academics, business organizations and other civil organizations engaged in constructive discussions on how to enhance investments and sustainable development. The Stockholm Chamber of Commerce delegations were also present, which were the Trade Policy Advisor and the Legal Counsel of the Arbitration Institute.
The point of departure of the discussion is that a large number of IIAs will expire soon – and in parallel to that, there are negotiations of mega-regional investment pacts such as the TTIP and TPP. This recent development opens up the opportunity to further develop the IIA and ISDS regime, essentially to promote sustainable development. The meeting sought insights and expertise from participants to achieve this goal.
For the substantive part, provisions of early IIAs have been viewed as broad and vague. The discussions revolved around whether to specify these provisions (such as indirect expropriation and fair and equitable treatment) or to leave the issues to be developed through case laws.
For the procedural part, participants still voiced strong supports for ISDS.
The question is how to design ISDS to be more cost-efficient and to safeguard consistency in the outcome of the cases. Options such as establishment of appellate mechanism and international investment court were discussed, even though participants still differed to a great extent on whether these reform options will address the problems or will add the problems.
There was however a broader consensus that it is rather more difficult to reform the IIA regime as it is not codified in one single system, for instance such as the WTO.
A good note to take home was a reminder from participants that the design of the new IIA and ISDS regime should focus on the main purpose of the regime, which is to promote investment, most importantly investment in sustainable development. To this end, government representatives agreed to learn from one another’s best practices and to continuously seek expertise from the UNCTAD.