'UNCITRAL fiddles while countries burn', September 2021

• "The billions of dollars that arbitral tribunals have ordered to be paid out to investors in publicly known ISDS cases have diverted taxpayers’ money away from funding public health, among other public concerns.
• The Working Group III of the United Nations Commission on International Trade Law (UNCITRAL) appears to be a long way from delivering meaningful reforms to the investment arbitration regime.
• As the recent history of ISDS has shown, the negative impacts will affect every country in the world.

Five years into its review of international investment agreements, and specifically investor-state dispute settlement (ISDS), Working Group III (WGIII) of the United Nations Commission on International Trade Law (UNCITRAL) appears to be a long way from delivering meaningful reforms to the investment arbitration regime. In the meantime, ISDS continues to provide foreign investors with an exclusive mechanism through which they can directly sue host states and challenge governmental action, including non-discriminatory regulations.

This paper analyses the work of UNCITRAL Working Group III through a development lens, addressing the issues at a macro-level, the WGIII approach at an institutional level, and specific issues of significance that are of particular concern to developing countries. It calls for a re-opening of the WGIII agenda and processes to address concerns repeatedly raised by participating States from the Global South and deliver genuine systemic reforms to the deeply flawed international investment regime.

Consistent with their origins, the vast majority of ISDS disputes have been brought by developed country investors against developing countries or transition economies. Although the investment regime has impacted on countries of the Global South most severely, the lodging of disputes against public policies in affluent countries has intensified the pressure for substantive reform.

Aligning ISDS reform with developmental objectives requires a recognition that cases, and the measures that these disputes touch on, have different implications from the perspective of sustainable development and public policy than from the perspective of investor promotion and protection.

An effective consideration of the developmental implications of ISDS therefore requires freeing the mandate given to WGIII from the narrow interpretation adopted to date and taking a serious look at alternatives to arbitration as means to settle investment disputes. The substantive concerns that underpin the crisis of legitimacy confronting the international investment regime and ISDS are currently not addressed..."