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TWN
Info Service on WTO and Trade Issues (Sept21/17) Third World Network, together with Friedrich Ebert Stiftung, are pleased to share a new analytical report titled “UNCITRAL Fiddles While Countries Burn”. 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. In many cases, this has resulted in massive awards of compensation ordered by investment arbitration and a ‘chilling effect’ on the regulatory process. The report reviews the work of UNCITRAL’s WGIII, authored by Jane Kelsey from the faculty of law in the University of Auckland and Kinda Mohamadieh from TWN’s trade and investment team in Geneva. According to the authors, the failure of WGIII to make effective advances towards urgently needed reforms can be traced back to several factors, notably its narrow interpretation of the UNCITRAL mandate to cover a limited set of procedural issues, the prescriptive agendas that have limited the range of issues being discussed and sidelined a range of concerns raised by developing countries, and the procedures adopted before and during the COVID-19 pandemic. This report analyses the work of WGIII 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 reveals a disturbing reality behind the consensus-based, government-driven approach: capital-importing developing countries, which are the main targets of ISDS cases and should have had at least as much influence over the process as the developed capital-exporting countries that primarily support ISDS, have struggled to make their concerns heard. The authors stress that the failure to move beyond narrow procedural reforms to ISDS, and to address the fundamental challenges that confront the regime, will mean that the crisis of the investment regime will not be resolved. At the same time, it will create an additional wedge in the process towards delivering on the Sustainable Development Goals, instead of ensuring that the system that underpins international investment governance supports and enables sustainable development. By purporting to offer a “solution” to the deficiencies in the current ISDS regime, the UNCITRAL process would legitimise the deeply problematic rules and forms of the international investment regime. The fundamental systemic problems will remain unaddressed at a time when major crises of climate change, pandemics, geopolitical conflicts, debt defaults, and social upheaval create new opportunities for foreign investors to capitalise on the partisan and deeply flawed investment regime. There is a risk that a purported “solution” may be used to silence ongoing calls from most developing countries and civil society observers at the UNCITRAL to address the power imbalance and development asymmetries that are endemic to both the substance and procedure in the current international investment agreements regime. The authors propose that an effective consideration of the developmental implications of ISDS 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 full report with its recommendations can be downloaded here. (https://twn.my/announcement/Uncitral%20Fiddles%20While%20Countries%20Burn-%20Kelsey%20and%20Mohamadieh-Final.pdf) The report was launched on 16 September with a panel discussion. A recording of the proceedings will be available at a later date. With best
wishes,
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