With any system in a state of flux, there is a tendency to focus on the points of tension. Certainly, there are some competing approaches to investment rulemaking and investment dispute settlement, but that captures only a small part of the picture. There is also a remarkably strong consensus on the values that should underpin investment law and policy.
That consensus was reflected in the G20's
principles for global investment policymaking in 2016, which stated that "investment policies should establish open, non-discriminatory, transparent and predictable conditions for investment." The G20 also affirmed that "dispute settlement procedures should be fair, open and transparent, with appropriate safeguards to prevent abuse." These principles are not an end to themselves, but with an eye towards "promoting inclusive economic growth and sustainable development."
The link between the G20 principles and sustainable development was also underlined recently in the World Bank Group's inaugural
Global Investment Competitiveness Report. It unpacks the myriad benefits that derive from foreign direct investment, including the sharing of technical know-how and managerial skills, access to foreign markets, and reinvestment in the host State. The report also highlights what drives decision making by investors. According to its survey, "political stability and a business-friendly regulatory environment" is at the top of the list for potential investors. In this respect, legal protection is fundamental to lowering the political and regulatory risks that dissuade investors.
While most countries agree on the guiding principles—and the end goal— of foreign investment, the challenge is in translating these objectives into concrete provisions. It is well-accepted that effective dispute settlement is a key pillar of a business-friendly environment, and investment disputes are commonly addressed through investor-State dispute settlement (ISDS) mechanisms. These mechanisms need to ensure neutrality and fairness in the design of the dispute settlement process. For example, how should parties address legitimate concerns of confidentiality while retaining transparency in the process? How best to ensure efficient and cost-effective procedures without compromising due process, fairness and correctness? Getting the balance right on these types of issues is not easy, and opinions may differ. But it is essential to have these conversations if we are to translate high-level principles into real-world practice.
This is a task that will occupy three of the leading intergovernmental organizations with responsibility for international investment law in the year ahead. One is the United Nations body known as the United Nations Commission on International Trade Law (UNCITRAL). UNCITRAL's
Working Group III is identifying concerns about ISDS, discussing whether reform is desirable, and if so, it may develop recommendations for solutions.
The second is another United Nations body: the United Nations Conference on Trade and Development (UNCTAD). UNCTAD, through its annual
World Investment Reports, has been working towards its recently launched
Reform Package for the International Investment Regime. The package offers numerous policy options for sustainable development-oriented reform of international investment agreements, including their interaction with other public policies, and for improvements in the settlement of investment disputes.
The third is the organization that I lead: the International Centre for the Settlement of Investment Disputes (ICSID). As the premier institution for resolution of investment disputes, ICSID looks at reform from the perspective of its dispute settlement framework and its experience with over 650 cases. ICSID commenced a process to amend its rules in 2016 and will release a working paper this year with proposals for changes. While the ICSID rules have been amended a few times in the past, this is the most comprehensive review since they were established over 50 years ago.
The ICSID, UNCITRAL and UNCTAD reform processes have much in common that is to be commended. First, they reflect multilateral efforts to address global challenges. The ICSID rules amendment process involves all 153 of its Member States, which must ultimately vote on changes. The first meeting of UNCITRAL's Working Group III, held in early December 2017, brought together 80 States. UNCTAD has consulted 194 countries in the development of its reform package.
Second, they are inclusive and bring together multiple stakeholders. For its part, ICSID invited an initial round of ideas for rules amendments from Member States and from the public in 2017, and will organize a second round of State and public consultations in 2018. Some 35 observers attended the November UNCITRAL meeting along with Member States. UNCTAD's meetings on IIA reform are multi-stakeholder, involving States, experts, private sector and civil society.
Third, they embody the principle of transparency. ICSID has established a webpage for its amendment process and posts suggestions received from the public. Moreover, the ICSID Amendment Working Paper will be published on the ICSID website and will consolidate suggestions received and proposals for discussion. UNCITRAL regularly publishes its working materials and releases audio recordings of its meetings for those who cannot attend in person. UNCTAD has live web-casted their plenary sessions.
It is impossible to predict the outcome of these processes. However, investment law has shown a tremendous capacity to evolve based on the policy priorities of States and investors, the evolving economic landscape, and the interests of the public at large. I am optimistic that the discussions underway at ICSID, UNCTAD and UNCITRAL will continue this evolution in ways that—ultimately—will make the investment system even more effective in the service of our shared goals. The key is keeping our common values front of mind as we take on the year ahead.