1-Hour Program

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Overview

Investor-State dispute settlement (ISDS) has become an increasingly common means of resolving cross-border disputes between corporate or individual investors and host governments.   Over the three decades that the United States has had ISDS, it has been the subject of 17 such cases.  This private dispute mechanism has recently come under virulent attack from US politicians on both ends of the political spectrum at a time when the United States is negotiating two important multi-lateral trade agreements containing ISDS, the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP).  These critics assail ISDS as inherently biased:  the coterie of arbitrators who regularly decide these disputes also serve as private lawyers representing multinational corporations are therefore said to be predisposed in favor of corporate interests.  ISDS is also said to invite intrusive scrutiny into sensitive governmental regulations regarding public health, safety, human rights and the environment – issues which are properly the subject of judicial review under constitutional or administrative law, or indeed are not justiciable at all.  Moreover, say critics, these public law issues are decided in secret proceedings that are entirely removed from the democratic process.  A similar debate is taking place in various countries around the world, prompting certain governments to revise their investment treaties by making them more protective of government regulation or to reject ISDS altogether.  Furthermore, the European Commission has proposed to address the perceived problems with ISDS by introducing a permanent court to adjudicate disputes arising under future EU investment agreements. 

This briefing will consider whether these criticisms of the ISDS system have any substantive validity or are mostly political posturing, and why this debate may be important to your clients who invest abroad.  Mark S. McNeill and Christopher M. Ryan of Shearman & Sterling LLP will specifically address: 

  • the ISDS system, including the distinction between investment and commercial arbitration;
  • ethical issues surrounding investment treaty disputes, including potential conflicts arising from arbitrators’ multiple roles;
  • whether ISDS should be included in the TPP and TTIP agreements; and
  • whether we need a permanent court to adjudicate investment disputes.

Credit Details