- Composition of the study group
- Administrators / Assistant in charge: Marco Ristori / Karen Aghadjian
In the light of the critics of the traditional system of investor-state dispute settlement (ISDS) and to pressures from civil society on the need for reform, the United Nations Commission on International Trade Law (UNCITRAL) Working Group III received a mandate to reform ISDS, taking a three-stage approach: (1) identifying all concerns around ISDS, (2) testing the appetite for reform, and (3) drawing up proposals to replace the ISDS provisions of the 1 400 existing bilateral agreements between Member States and third countries. As a permanent observer, the EU tabled a proposal to set up a Multilateral Investment Court (MIC). Many other proposals are on the table.
With this own-initiative opinion, the EESC will take stock of how the EU might have incorporated earlier EESC recommendations in its reflections. It will also contribute to the EU's reflections on the establishment of a multilateral framework capable of ensuring a balance between the legitimate right of states to legislate in accordance with democratic rules, and the protection of investments.
Looking at the work of the UNCITRAL working group III, this opinion will provide an assessment of the process, as well as the achievements and shortcomings from a civil society point of view.
- Regrets that the ongoing negotiations on the possible establishment of a multilateral investment court (MIC), under the auspices of the United Nations Commission on International Trade Law (UNCITRAL) WG-III, are focusing more on procedural issues rather than substantive ones.
- Urges the European Commission, in its mandate to negotiate, to continue pursuing the reform of substantive law issues along with the procedural rules. Among the substantive issues, vague or too far-reaching provisions of fair and equitable treatment (FET) should be limited to non-discrimination and direct expropriation as essential elements of investment protection.
- Reminds the Commission of its request to be more involved in UNCITRAL's work.
- Would like for the amicus curiae model to include third party interventions by all stakeholders (such as local residents, workers, unions, environmental groups or consumers) and to ensure their due consideration by judges.
- Calls to ensure that some of the more crosscutting issues are kept on the negotiating table, including the chilling effect of ISDS, the exhaustion of local remedies, and access of third parties, such as local communities impacted by investments.
- Welcomes the OECD's work aimed at considering the challenges of sustainable development in investment agreements, but urges that it will complete its work by taking social issues into consideration, particularly making due diligence an eligibility criteria for foreign investors.
- Notes that while WG-III's work is centred on procedural elements, this may lead to benefits in the future, such as clearer and more stable case law, which would also facilitate reforming applicable substantive law in investment treaties.
- Considers it essential for an effective ISDS institutional reform to move away from ad-hoc arbitration, to take a more holistic approach to international investment governance, and not to just replace ISDS arbitration with an investor-state court.
- Reiterates the need to achieve consistency between the EU's ambitious sustainable development goals, and the framework for reforming the ISDS model.