The proposed Investment Court System: does it really solve the problems?

Juan Pablo Charris Benedetti * The proposed Investment Court System: does it really solve the problems?** La propuesta de un Sistema de Corte de Inversiones: ¿realmente resuelve los problemas? Abstract In recent years, the foreign investment regime has been subject to an increasing volume of criticism from the public. The significant sums of money at stake and the potential impact of the awards on State’s regulatory powers have placed the Investor-State Dispute Settlement (isds) under the spotlight. In response to this, the European Union has proposed a far-reaching reform which introduces an Investment Court System (ics). This model constitutes an innovative dispute settlement mechanism intended to address most of the core issues of the isds by combining elements of the traditional isds with judicial features. Overall, this paper aims at analysing whether the EU’s new approach constitutes an effective improvement to the traditional isds and the future of the international investment regime. To achieve this, the study begins with an overview of the current isds; followed by a synopsis of the main criticisms to the traditional isds; proceeded by a review of the core features of the EU’s proposed ics and its inclusion in the new generation of iias in negotiation by the EU; and finally, provides a commentary of the main criticisms and obstacles that the introduction of the ics is likely to encounter. Keywords Investment Court System (ics), Investor-State Disputes Settlement (isds), Foreign Direct Investment (fdi), International Investment Agreement (iia), * LL.M. (Master of Laws) en Resolución de Disputas Internacionales de King’s College London. Magíster en Gobierno y Políticas Públicas de la Universidad Externado de Colombia. Abogado de la Universidad Externado de Colombia. Investigador independiente. Londres, Inglaterra. Contacto: ** Recibido el 11 de septiembre de 2017, aprobado el 4 de abril de 2018. Para citar el artículo: Charris Benedetti, J. P. The proposed Investment Court System: does it really solve the problems? En Revista Derecho del Estado, Universidad Externado de Colombia. N.º 42, enero-abril de 2019, pp. 83-115. doi: https://doi.org/10.18601/01229893.n42.04 Revista Derecho del Estado n.º 42, enero-abril de 2019, pp. 83-115 84 Juan Pablo Charris Benedetti Comprehensive Economic and Trade Agreement (ceta), Transatlantic Trade and Investment Partnership (ttip). Resumen En los últimos años, el régimen de inversión extranjera ha sido objeto de un creciente número de críticas del público. Las sumas significativas de dinero en juego y el posible impacto de los laudos en los poderes regulatorios del Estado han puesto al actual Sistema de Resolución de Controversias entre Inversores y el Estado bajo la lupa. En respuesta a ello, la Unión Europea ha propuesto una reforma de gran alcance mediante la introducción de un Sistema de Corte de Inversiones (sci). El nuevo sistema constituye un mecanismo innovador de resolución de controversias internacionales destinado a remediar los problemas centrales que acarrea el sistema actual, mediante la combinación de elementos tradicionales del arbitraje con rasgos judiciales. En este contexto, el presente escrito pretende analizar si el nuevo enfoque de la Unión Europea constituye una mejora efectiva del actual mecanismo de resolución de controversias de inversiones y del futuro del régimen de inversión internacional. Para dicho propósito, el artículo comienza con una descripción general del actual Sistema de Resolución de Controversias entre Inversores y el Estado; seguido de una sinopsis de sus principales críticas; continúa con un resumen de las principales características del Sistema de Corte de Inversiones, así como de su inclusión en la nueva generación de acuerdos internacionales de inversión en negociación por la Unión Europea; y, finalmente, hace una referencia a las principales críticas y posibles obstáculos que afrontará la introducción del nuevo Sistema de Corte de Inversiones. Palabras clave Sistema de Corte de Inversiones, Sistema de Resolución de Controversias entre Inversores y el Estado, Inversión Extranjera Directa, Acuerdos Internacionales de Inversión, Acuerdo Económico y Comercial Global ( aecg), Asociación Transatlántica de Comercio e Inversión. Content Introduction. 1. An overview of the isds. 1.1. The early years. 1.2. The foreign investment regime. 1.3. Rules and institutions. 1.4. Main features of the isds. 2. Criticism to the isds. 2.1. Lack of consistency. 2.2. Lack of impartiality. 2.3. Lack of transparency. 3. The introduction of the ics. 3.1. The EU’s new investment policy. 3.2. The core institutional features of the ics. 3.3. The venture towards a Multilateral Investment Court System. 4. Criticism to the Revista Derecho del Estado n.º 42, enero-abril de 2019, pp. 83-115 The proposed Investment Court System: does it really solve the problems? 85 ics. 4.1. Re-politicisation. 4.2. Quality of the decision-making. 4.3. Finality, efficiency and costs. 4.4. Enforceability. Conclusions. References. Introduction Contemporary international investment agreements tend to articulate substantive standards of protection that confer foreign investors the right to bring claims against sovereign States before international arbitral tribunals. This mechanism of dispute resolution is known as investor-state-dispute settlement (isds). Nevertheless, in recent years, the legitimacy of the isds has been subject to numerous criticisms. In this context, critics seek for structural reforms to the system, while supporters of the status quo advocate for the need to maintain the core elements of the system with some amendments. Some of the critiques to the isds stem from tribunals rendering contradictory decisions, the potential conflict of interest of individuals acting as counsellors and arbitrators in similar cases, and the apparent detriment of democratic institutions in favour of private interests. However, although previous attempts to reform have been dismissed as premature and politically challenging, recent developments within the European Union (EU) have gained momentum in favour of a major shift in the system, encouraged by the adoption of a permanent court system for the resolution of investmentrelated disputes. Thus, the present study is based upon the EU’s proposal for the introduction of an Investment Court System (ics), analysed both from an institutional and a procedural perspective. In this sense, the goal is to determine whether the implementation of the ics – as proposed by the EU for the Transatlantic Trade and Investment Partnership (ttip), already included in the EU-Vietnam Free Trade Agreement and the EU-Canada Comprehensive Economic and Trade Agreement (ceta), and more recently in the EU-Singapore Investment Protection Agreement and the EU-Mexico Trade Agreement, and currently subject to bilateral negotiation in the EU-Japan Economic Partnership Agreement – constitutes an improvemen (...truncated)