Significant progress on Advisory Centre for International Investment Law at UNCITRAL

In 2017, UNCITRAL Working Group III (WGIII) was launched and was tasked with working on procedural reform of the investor state dispute settlement (ISDS) system. From 1-5 April 2024, Ciarb participated in the 48th session of WGIII in its capacity as an observer delegate. The latest session of WGIII saw new levels of state engagement across an ambitious agenda, as states sought to maintain momentum on delivery on reform instruments for use in the ISDS system.

Most notably, after a multi-year development process, the states were able to reach consensus on a statute creating an Advisory Centre for International Investment Law. The Centre will be available for use by least developed and developing states who chose to become members. The organisational structure and additional logistics for the centre will be addressed at a special meeting in December 2024.

Although important details remain to be decided, the completion of the foundational document for the Centre is a milestone which has taken several years of meticulous negotiation among states and input from observer delegations like Ciarb to achieve. Now that the Code of Conduct for Adjudicators has been created, States and observer delegations are energized to complete additional work products.

WGIII is also considering draft guidelines on prevention and mitigation of international investment disputes [1] and the establishment of a standing mechanism and an appellate mechanism [2]. Discussions on an instrument for dispute avoidance failed to find consensus after vigorous debate.

The group then moved to begin a long-awaited substantive review of the proposed language to create a standing dispute and appellate mechanism. Regional coalitions have begun to form and the interventions from neighbouring states were noticeably less fragmented than in past sessions. It was clear from the discussions that there is not yet widespread buy-in for such a standing dispute mechanism. Fundamental disagreements have emerged. There was noticeably greater interest among states to explore a stand-alone appellate body, which can be incorporated into the existing arbitration-based system, as opposed to a two-tiered stand-alone court and appellate system, which would preclude the use of any other dispute mechanism. [3]

Moreover, a proposal to create tribunals that simply expand the facilities of existing institutions, such as the International Center for Settlement of Investor Disputes (ICSID) and the Permanent Court of Arbitration (PCA), received broad interest and support and will, no doubt, be explored in future sessions. While the work on this particular reform element is far from complete, the 48th session left the distinct impression that the states have entered a new phase of activity and engagement on the issue of ISDS reform.

[1] https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/wp.235_rev_clean.pdf

[2] https://undocs.org/en/A/CN.9/WG.III/WP.239

[3] See Draft statute of a standing mechanism for the resolution of international investment disputes, https://undocs.org/en/A/CN.9/WG.III/WP.239