1. Should Investment Disputes Be Submitted to International Arbitration or to a Permanent Investment Court?
Presentation by
Nassib G. Ziadé
BCDR-AAA/SCC Joint Conference on Salient Issues in Investment Arbitration
Sunday 18 November 2018
Manama, Bahrain 1

2. Introductory remarks Investment arbitration system is severely flawed
Reform, and not replacement, is the solution 2

3. Introductory remarks Flaws in investment arbitration system
Reservations over permanent investment court
Alternative solutions 3

4. I. Flaws in investment arbitration system
Main concern: conflicts of interest
Greater diversity still a pressing need
Cost and duration of proceedings
Awards and decisions lacking in consistency 4

5. II. Reservations over permanent investment court
The European Commission is the main proponent of a permanent investment court
The proposal fails to address the principal flaws and creates new problems
Fear of pro-State bias in the appointment of judges 5

6. II. Reservations over permanent investment court
Unintended effects of court on investment
Contracting States appoint judges unilaterally
Problematic if judges’ mandates are renewable 6

7. II. Reservations over permanent investment court
Recourse to experts or consultations with stakeholders cannot allay concerns
Reason to doubt that appointees will have required level of expertise
Appointment process may not be insulated from politics 7

8. II. Reservations over permanent investment court
Permanent investment court will not solve the issue of cost
Problem of transposing the WTO dispute settlement mechanism into international investment law 8

9. II. Reservations over permanent investment court
“I would also point out that, notwithstanding that the European Commission papers and proposals are quite detailed, it is far from clear how they would work in practice. They seem to be inspired to some degree by the WTO system. But inter-State trade disputes concerning the interpretation and application of multilateral WTO treaties are hardly comparable to investor-State investment disputes under more than 3,000 bilateral investment treaties, each with its different wording and negotiating history.”
Sir Michael Wood 9

10. III. Alternative solutions
If not a permanent investment court, then what? 10

11. III. Alternative solutions
First proposal: creation of an appellate mechanism within existing institutions
Shortcomings of appeal mechanism:
an additional layer that adds time and cost
appellate mechanism unlikely to aid consistent decision making 11

12. III. Alternative solutions
Second proposal:
establishment of joint interpretative bodies
dedicated pool to handle ICSID annulment proceedings
possibility for States to insert additional grounds for annulment in their BITs 12

13. III. Alternative solutions
Proposed solution for conflicts of interest:
Promulgation of internal and external codes of conduct by specialized arbitration institutions 13

14. III. Alternative solutions
The establishment of a permanent investment court, which would be a true leap in the dark, is not the way to remedy the imperfections of investment arbitration. The choice is not between (1) unconstrained, self-regulating investment arbitration, exposed to the vagaries of arbitration practitioners, and (2) a permanent investment court with ill-defined boundaries and a hastily adopted statute. The way ahead is to carefully circumscribe investment arbitration and prevent specialized arbitration institutions from delegating their regulatory role to arbitration practitioners. 14

15. Final thoughts
A permanent investment court will not allay legitimacy concerns
Reform has not been given a proper chance
The creation of a permanent investment court is unlikely to be in the best interests of developing countries 15