A response to the criticism against the Investor-State Dispute Settlement (ISDS) has been published by the European Federation for Investment Law and Arbitration (EFILA), which is a non-profit think tank based in Brussels.
Professor Loukas Mistelis, Director of the School of International Arbitration at Queen Mary University of London, collaborates with EFILA in his capacity as a member of the Advisory Board. Gloria Alvarez (QMUL PhD Research Fellow) and Mary Mitsi (QMUL PhD Candidate) contributed to the EFILA response.
Critics have raised concerns about the pro-investor interpretation of investment treaty provisions and their perceived unpredictability, the alleged lack of transparency of arbitral proceedings and the alleged lack of independence and impartiality of arbitrators. Others have suggested that ISDS bypasses the operation of domestic law and national courts and stymies the right of states to regulate. Criticisms have also been raised against the investor-state arbitration process itself, claiming that it allows partisan, self-interested arbitrators to secretly overrule governments with no right of appeal.
Consequently, the EFILA, a recently established non-profit think tank bringing together a significant amount of practical experience in investment law and arbitration, decided to write this paper in order to address the most often voiced myths against ISDS. This paper aims at balancing the currently rather one-sided debate by providing an in-depth analysis, based on arbitration practice and literature.