Author: Sofia Pimenova
Keywords: European Commission; European Court of Justice; international investment agreements; international investment arbitration; reform of investment arbitration
The author suggests that the existing model of dispute resolution between foreign investors and host states finds itself in a deep crisis and needs to be substantially reformed. Over the past years, several options for such reform have been suggested by academics, practitioners, and states. Such options include the establishment of a permanent appellate authority or a specialized international investment court, as well as unilateral actions by states regarding revision of existing investment protection agreements and restrictive approach to concluding new ones. Given that all parties to this discussion pursue their own interests, it may be difficult to come to any universally accepted multilateral solution on the future of investment arbitration. The impetus to the new wave of discussion about the reform of investment arbitration had been given by the release of a European Commission Concept paper, proposing the creation of a permanent investment court instead of ad hoc arbitration and, accordingly, the replacement of arbitrators with judges. This article provides a comprehensive analysis of this proposal, as well as scenarios for further development. The author concludes that while the proposal of the EU Commission has some obvious advantages – such as the creation of an appellate instance as a guarantee of the right to a fair trial and the abolition of the right of disputants to appoint arbitrators – the proposal suffers from significant disadvantages. Among these are the incompatibility of the proposed investment court with the ICSID Convention and a lack of mechanisms for recognition and enforcement of the investment court’s judgments by the national courts of third countries, as well as a potential veto by the European Court of Justice, especially considering its negative attitude toward investment arbitration and its mechanisms which, in the Court’s view, may seriously compromise the unity of the EU legal order. Nevertheless, the author emphasizes that the veto of the European Court of Justice does not mean an overall refusal of the states to use current investment arbitration mechanism, but only in agreements concluded by the European Union and its member states. In the event of a successful reformation, there will be co-existence and even competition between the new and old models of investment dispute resolution. The relevance of this article is that the proposal of the EU Commission to reform investment arbitration has not yet attracted the attention of Russian researchers.
Abouy the author: Sofia Pimenova – Graduate student, International Law Department, Faculty of Law, Lomonosov Moscow State University, Moscow, Russia.
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