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Investor-State Dispute Settlement: A Scoping Paper for the Investment Policy Community

Author

Listed:
  • David Gaukrodger

    (OECD)

  • Kathryn Gordon

    (OECD)

Abstract

Governments are facing an increasing number of arbitration claims by foreign investors relating to important public policies or seeking substantial damages, and many governments are taking a greater joint interest in how such cases are resolved in investor-state dispute settlement (ISDS). This scoping paper has supported inter-governmental dialogue about ISDS at several OECD-hosted investment Roundtable meetings. Part I compares ISDS with other international and domestic processes for resolving disputes including the WTO and European Court of Human Rights, and considers how ISDS may affect domestic policy making processes. Part II examines eight current and emerging issues in ISDS: (i) investors’ access to justice; (ii) the costs of ISDS cases; (iii) remedies for foreign investors under investment treaties and their possible impact on a level playing field for domestic and foreign investors; (iv) the enforcement and execution of ISDS awards; (v) third party financing of ISDS; (vi) the characteristics, selection and regulation of arbitrators in ISDS; (vii) forum shopping and treaty shopping by investors; and (viii) the question of the consistency of decision-making in ISDS. Part III outlines key findings from a statistical survey of ISDS provisions in 1,660 bilateral investment treaties. Public comment on this paper, including 46 investment policy questions (as outlined in the paper), was obtained in May-July 2012 and is available on the OECD website.

Suggested Citation

  • David Gaukrodger & Kathryn Gordon, 2012. "Investor-State Dispute Settlement: A Scoping Paper for the Investment Policy Community," OECD Working Papers on International Investment 2012/3, OECD Publishing.
    • Handle: RePEc:oec:dafaaa:2012/3-en
    DOI: 10.1787/5k46b1r85j6f-en
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    Cited by:

    1. Anna Clare Bull & Jagjit Plahe & Lachlan Gregory, 2021. "International Investment Agreements and the Escalation of Private Power in the Global Agri-Food System," Journal of Business Ethics, Springer, vol. 170(3), pages 519-533, May.
    2. Jan Stráský, 2016. "Priorities for completing the European Union's Single Market," OECD Economics Department Working Papers 1315, OECD Publishing.
    3. Eckhard Janeba, 2019. "Regulatory chill and the effect of investor state dispute settlements," Review of International Economics, Wiley Blackwell, vol. 27(4), pages 1172-1198, September.
    4. Stephen R. Buzdugan, . "The global governance of FDI and the non-market strategies of TNCs: explaining the “backlash” against bilateral investment treaties," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    5. Fritz Breuss, 2014. "TTIP und ihre Auswirkungen auf Österreich. Ein kritischer Literaturüberblick," WIFO Working Papers 468, WIFO.
    6. Brada, Josef C. & Chen, Chunda & Jia, Jingyi & Kutan, Ali M. & Perez, M. Fabricio, 2022. "Value creation and value destruction in investor-state dispute arbitration," Journal of Multinational Financial Management, Elsevier, vol. 63(C).
    7. Emma Aisbett & Matthias Busse & Peter Nunnenkamp, 2018. "Bilateral investment treaties as deterrents of host-country discretion: the impact of investor-state disputes on foreign direct investment in developing countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(1), pages 119-155, February.
    8. Chu Thanh, Giang & Dinh Hoang, Anh & Nguyen Phuong, Linh, 2017. "Vietnam’s recognition and enforcement of foreign arbitral awards and preparation for EVFTA," Papers 1135, World Trade Institute.
    9. Florence Dafe & Zoe Williams, 2021. "Banking on courts: financialization and the rise of third-party funding in investment arbitration," Review of International Political Economy, Taylor & Francis Journals, vol. 28(5), pages 1362-1384, October.
    10. Kent Jones, 2018. "Patterns of Investor-State Dispute Settlement Decisions," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(1), pages 79-96, February.
    11. Patricia Ranald, 2015. "The Trans-Pacific Partnership Agreement: Reaching behind the border, challenging democracy," The Economic and Labour Relations Review, , vol. 26(2), pages 241-260, June.
    12. Cote, Christine, 2018. "A chilling effect? Are international investment agreements hindering government’s regulatory autonomy?," LSE Research Online Documents on Economics 108406, London School of Economics and Political Science, LSE Library.
    13. Kinda Mohamadieh, 2021. "Investment Governance to Reverse Unjustified Privileging of Investors," Development, Palgrave Macmillan;Society for International Deveopment, vol. 64(1), pages 82-92, June.

    More about this item

    Keywords

    access to justice; arbitration costs; arbitrators; bilateral investment treaties; comparative law; comparative remedies; competitive neutrality; consistency of arbitral decisions; dispute resolution; dispute settlement; domestic impact of investment law; ECHR dispute settlement; enforcement of arbitration awards; foreign investment; forum shopping; treaty shopping; international arbitration; international economic law; international investment; international investment agreements; international investment law; investment arbitrators; investment law and development; investment treaties; investor-state dispute settlement; judicial review; level playing field; litigation finance; non-pecuniary remedies; remedies; selection and regulation of arbitrators; third party financing; third party funding; WTO dispute settlement;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages

    Statistics

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