ArbitralWomen members Dr Yulia Levashova (Associate Professor, Nyenrode Business University) and Dr Pascale Accaoui Lorfing (Researcher CREDIMI, Professor affiliated to Law ESCP Business School, Paris) were honoured to organise a conference on ISDS Reform: Comparative, Regional and Institutional Approaches during the 46th session of UNCITRAL WG III (9-13 October 2023) in Vienna. On 10 October, together with the esteemed speakers, Jae Sung Lee (UNCITRAL), Prof. Makane Moïse Mbengue (University of Geneva, President of the African Society of International Law -AFSIL-), Prof. Alvaro Galindo (Dean of Universidad de Las Américas), Prof. Hi-Taek Shin (Twenty Essex Chambers), Frauke Nitschke (Team Leader/Legal Counsel, ICSID) (replacing Martina Polasek, Deputy Secretary-General, ICSID), Girgis Abd El-Shahid (CRCICA) (Alejandro Carballo Leyda, General Counsel, ECT, could not take part of the event) and moderators Dorieke Overduin (Sovereign Arbitration Advisors) and Evgeniya Goriatcheva (Senior Legal Counsel, PCA), we discussed the use of mediation in international investment disputes and the right to regulate, two subjects included in the UNCITRAL document “Draft provisions on procedural and cross-cutting Issues” (A/CN.9/WG.III/WP.231) (draft provisions 2 and 12, respectively).
The key takeaways of the discussions are the following:
- Mediation can be a meaningful tool for States and investors to resolve disputes. All speakers agreed that, in practice, however, parties are still reluctant to pursue mediation, based on, in the case of States, fear of public suspicion that the State’s authorities may agree to settle with investors for personal gain or under pressure from civil society, for example.
- The core of the discussion was the potential effectiveness of mandatory mediation. While the UNCITRAL Mediation Rules and the ICSID Mediation Rules are based on the principle of ongoing consent, some States or groups of States, such as the African Union, are currently discussing adopting mandatory mediation for investor-States disputes (see Article 46.1 of the draft AfCFTA Investment Protocol). However, the scope of mandatory mediation and its implications for the parties still need to be determined.
- On States’ right to regulate, the scope of the standard of review of States’ conduct consisting of giving “a high level of deference” to States’ right to (i) develop and implement domestic policies, (ii) regulate in the public interest and (iii) “adopt, maintain and enforce measures sensitive to the protection of public health, public safety or the environment, the promotion and protection of cultural diversity” (paragraph 2 of draft provision 12) raised questions. It was suggested that a set of guidelines to clarify the meaning of such an abstract formulation should be included in treaties.
- As to the potential carve out of climate-change-related measures from the scope of ISDS, several speakers pointed out that a more suitable approach would be to reaffirm the State’s right to regulate by emphasising that where a State exercises such power in a non-discriminatory manner and in the interest of a legitimate public policy objective -such as climate change-, a State does not have to compensate foreign investors.
The recording of the session is available upon request by writing to plorfing@gmail.com or Y.Levashova@uu.nl.
We are grateful to the UNCITRAL Secretariat, especially Nikola Kovacikova, for facilitating the organisation of this event.
Submitted by ArbitralWomen members Pascale Accaoui Lorfing, Researcher at CREDIMI, University of Burgundy – France, & Professor affiliated to ESCP Business School, Paris, France, and Yulia Levashova, Associate Professor, Nyenrode Business University, The Netherlands