For information only - not an official document
9 April 2019
VIENNA, 9 April 2019 (UN Information Service) - A working group entrusted by the United Nations Commission on International Trade Law (UNCITRAL) with a broad, three-phase mandate on the possible reform of investor-State dispute settlement (ISDS) met last week in New York.
Some 400 delegates, including 106 States and around 70 observer organizations, representing various stakeholders, participated in this government-led process to continue identifying concerns regarding ISDS and to commence work on the development of relevant solutions for ISDS reform, in line with the third phase of its mandate.
At past sessions, the decision was made on the desirability of undertaking ISDS reform to address concerns relating to its cost and duration, the appointment mechanism and related issues regarding arbitrators and decision makers, as well as the lack of consistency, coherence, predictability and correctness of decisions by ISDS tribunals. At its current session, the Working Group agreed to add third-party funding to this list of concerns.
Further, based on contributions by States and other stakeholders, the Working Group considered matters such as participation in ISDS by the general public and local communities affected by the investment or the dispute at hand, counterclaims, the regulatory chill effect of ISDS, means other than arbitration to resolve investment disputes as well as dispute prevention methods, exhaustion of local remedies and the calculation of damages. The Working Group agreed that it would be important to take into account all those aspects as part of the development of reforms in particular to strengthen their legitimacy.
The Working Group commenced work on phase three of its mandate - the development of relevant reforms - by agreeing to develop multiple potential reform solutions simultaneously. For that purpose, a project schedule will be prepared to move the proposed solutions forward in parallel.
The development of a project schedule, as well as the information on a code of conduct, third party funding, indirect claims by shareholders and reflective loss, selection and appointment of adjudicators and the establishment of an advisory centre on international investment law will be on the agenda of the Working Group at its forthcoming session as it looks at possible solutions. States and other stakeholders are invited to make submissions to the Secretariat by 15 July.
A report summarizing the deliberations of the week as well as digital recordings of the proceedings will be available on the UNCITRAL website in the coming days at https://uncitral.un.org/en/working_groups/3/investor-state
The Working Group looks forward to ongoing and constructive participation as it moves forward with further consideration of ISDS reforms at its next session, in Vienna, in October 2019.
Support for travel of representatives from developing States to sessions of the Working Group
In recognition of the importance of the topic under consideration, and of the significance of inclusive and diverse representation in UNCITRAL sessions, the European Union, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and the Swiss Agency for Development and Cooperation (SDC) have provided financial assistance to support the participation of developing States in sessions of the Working Group. The Working Group expressed its appreciation for these contributions, which will enhance the level of participation in, as well as the results of, its deliberations. Other donors wishing to contribute should contact the UNCITRAL Secretariat for further information.
Responding to concerns of a lack of transparency in ISDS, UNCITRAL adopted Rules on Transparency in Treaty-based Investor-State Arbitration (Transparency Rules) in 2013, to provide a procedural framework for making information available to the public on investment arbitration cases arising under relevant investment treaties concluded after 1 April 2014. The United Nations Convention on Transparency in Treaty-based Investor-State Arbitration, which came into force in October 2017, provides a mechanism for the application of the Transparency Rules to arbitration cases arising under the nearly 3,000 investment treaties concluded before 1 April 2014.
During the 50th annual session of UNCITRAL, in July 2017, the Commission requested its Working Group III to first identify concerns regarding ISDS, second to consider whether reform was desirable in light of identified concerns and, if so, to thirdly develop relevant solutions to be recommended to the Commission.
The United Nations Commission on International Trade Law (UNCITRAL) is the core legal body of the United Nations system in the field of international trade law. Its mandate is to remove legal obstacles to international trade by progressively modernizing and harmonizing trade law. It prepares legal texts in a number of key areas such as international dispute settlement, electronic commerce, insolvency, international payments, sale of goods, transport law, procurement and infrastructure development. UNCITRAL also provides technical assistance to law reform activities, including assisting Member States in reviewing and assessing their law reform needs, and drafting the legislation required to implement UNCITRAL texts. The UNCITRAL Secretariat is located in Vienna, Austria. For more information, visit: http://www.uncitral.un.org/ .
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