I. Introduction

Investor-state dispute settlement (ISDS)[1] is a unique mechanism that enables dispute resolution between foreign investors and host states.[2] ISDS provides these parties with the ability to resolve their disputes through a private, binding arbitration in an ostensibly neutral forum.[3] Prior to the establishment of the ISDS regime, no such mechanism existed, leaving investors with little recourse in the event of nationalization or other state action that materially affected their investment.[4]

In recent years, talk of whether ISDS is in “crisis” has been a consistent topic of debate at arbitration conferences and discussions among practitioners worldwide. At an August 2024 conference, a panel of delegates discussed “a world without ISDS” and debated “inherently problematic” aspects of the regime.[5] And at a September 2024 conference, panelists discussed the relevance of investment arbitration and debated the motion “This House Believes that a World Without Investment Arbitration Would Be a Better Place.”[6] Countless articles have been written on the issue, and criticism of the regime abounds.[7]

Some of the criticism of ISDS has validity, and the system has been flawed since its inception.[8] However, ISDS remains the primary mechanism for dispute resolution between foreign investors and host states and does not appear to be disappearing anytime soon.[9] The ISDS regime must reform to address long-standing critiques of the system and remain relevant.

This Comment provides an introduction to ISDS and answers the question of whether it is truly in “crisis.” Part II discusses the regime’s establishment—why it was created and how. Part III discusses why some consider the regime to be in crisis. Part IV discusses the most prevalent critiques of the regime. Finally, Part V discusses ongoing reform efforts. Ultimately, this Comment concludes that ISDS is not a system in crisis—but a system in transition.

II. Establishing the ISDS Regime

ISDS, in today’s world, is the primary means by which foreign investors have recourse against states in which they invest. Prior to the establishment of the ISDS regime, foreign investors had limited options when host states breached their obligations to investors—there was no mechanism to ensure fair and equitable treatment or fair compensation in cases of unlawful expropriation.[10] This Part briefly explains why and how the ISDS regime emerged to address these concerns.

A. Why Was the ISDS Regime Established?

Before the global proliferation of ISDS provisions in international investment agreements (IIAs), foreign investors lacked adequate legal protection when investing abroad.[11] While investors could bring claims against host states in states’ national courts, this method was problematic.[12] Investors perceived domestic courts as lacking judicial independence and impartiality, and domestic courts often ran into sovereign immunity issues—whereby a domestic court could not assume jurisdiction “over a matter where a country was acting in the exercise of its sovereign powers.”[13] Alternatively, investors could seek “diplomatic protection.”[14] By this method, foreign investors relied on their home state government to bring their claims against the host state in a state-to-state dispute.[15] In the nineteenth and twentieth centuries, this led to the politicization and escalation of what were, in effect, private disputes.[16] Neither of these options provided investors with an efficient or impartial forum for dispute resolution—international investment arbitration developed in response.[17]

B. How Was the ISDS Regime Established?

As international legal scholar Wolfgang Alschner stated:

[P]erhaps the greatest achievement of investment law . . . was the transition “from a world in which a foreign-investment dispute might be a casus belli,[18] to one in which most such disputes are not even the subjects of diplomatic correspondence between the relevant governments.”[19]

This transition from politicized to peaceful and private dispute resolution began in 1965 when the World Bank established the International Centre for Settlement of Investment Disputes (ICSID) with the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention).[20] The World Bank envisaged that ICSID would serve as a “tool of international economic development” and promote international investment.[21]

One type of international investment is particularly relevant here—foreign direct investment. Foreign direct investments are investments in which an investor from one country “establishes a lasting interest in and a significant degree of influence over an enterprise” within a different country.[22] For decades now, a global network of IIAs has encouraged and facilitated foreign direct investment.[23] IIAs are treaties between countries that address issues relevant to cross-border investments and commit states to affording investors “specific standards of treatment.”[24] IIAs typically include guarantees such as fair and equitable treatment, full protection and security, and compensation for expropriation.[25] IIAs may be negotiated on a bilateral, multilateral, or regional basis.[26] And until recently, almost every IIA had an ISDS provision.[27]

The ISDS provisions within IIAs provide investors with a mechanism for “neutral international dispute settlement.”[28] Such provisions enable investors to bring claims directly against the government of the country in which their investment was made and to resolve their dispute through binding arbitration.[29] In many IIAs, ISDS permits an investor to bring these claims without first pursuing domestic remedies, often circumventing national courts entirely.[30] In sum, the benefits of ISDS lie in its provision to investors of “the right to have disputes resolved in a neutral forum, before impartial adjudicators and in accordance with transparent rules.”[31] This protection, in turn, motivates investment in states.

ICSID is the most common administrator of international investment arbitration.[32] According to the text of the ICSID Convention, ICSID “provide[s] facilities for conciliation and arbitration of investment disputes between Contracting States and nationals of other Contracting States in accordance with the provisions of [the] Convention.”[33] ICSID offers an “independent” and “depoliticized” forum for ISDS that did not exist before the 1960s.[34] Until the late 1990s, however, ICSID oversaw only a few disputes per year, if any at all.[35] In fact, the first IIA case was not filed with ICSID until 1987.[36]

This changed rapidly in the 2000s when approximately 1,500 IIAs entered into force, prompted by a shift in the view of foreign direct investment as a key mechanism for economic development in the late 1980s and 1990s.[37] And this growth has continued—as of September 2025, the United Nations Conference on Trade and Development (UNCTAD) reported that 2,227 bilateral investment treaties (BITs) were in force, along with 408 treaties with investment provisions.[38] As of June 30, 2024, ICSID had overseen 897 arbitration cases under the ICSID Convention.[39] In 2023 alone, fifty-seven arbitration cases were registered at ICSID.[40]

Since its inception and despite its growth, investment arbitration has had its critics. In recent years, these voices have only grown louder. This has led some to question—is ISDS in crisis?[41]

III. Is ISDS in Crisis?

The vocal backlash against ISDS began with the withdrawal of several Latin American countries from ICSID after they faced a large number of claims.[42] However, several other developments in the field have also signaled that ISDS may be in a state of crisis; for example, the European Union’s (EU) termination of intra-EU BITs and the decision of several countries to no longer include ISDS in their IIAs also indicate dissatisfaction with the current system.[43]

A. Latin American States’ Denunciation of ICSID

Latin America has a fraught history with investment arbitration, as demonstrated by the rejection of the initial draft of the ICSID Convention by nineteen Latin American states.[44] Latin American states historically have limited protections for foreign investors and prioritized domestic production.[45] However, many Latin American states signed BITs and ratified the ICSID Convention in the 1990s in an effort to attract foreign direct investments, believing that the development benefits of IIAs outweighed the risks.[46] Not every state remained satisfied with its decision to join ICSID.[47]

Article 71 of the ICSID Convention provides that Contracting States may denounce the Convention by written notice.[48] Since the Convention came into force, four states have denounced ICSID: Bolivia in 2007, Ecuador in 2009, Venezuela in 2012, and Honduras in 2024.[49] Each denouncing state withdrew after facing many ISDS claims, in the context of broader state policies against private investment, and accompanying the state’s termination of many BITs.[50] Honduras, the state to most recently denounce the Convention, withdrew following a $11 billion USD claim brought under ICSID, and the country has since embraced anti-investment policies.[51] Many see these denunciations as a warning bell for ISDS’s longevity.[52]

B. EU’s Termination of Intra-EU BITs

Outside of Latin America, the EU has also changed its perspective on ISDS in recent years.[53] In 2018, the EU’s Court of Justice issued a landmark ruling that set the stage for the termination of all intra-EU BITs.[54] In Slovak Republic v. Achmea, the court determined that investment arbitration clauses in intra-EU BITs conflict with EU law.[55] The court reasoned that “an [IIA] cannot affect the allocation of powers fixed by the Treaties or, consequently, the autonomy of the EU legal system,”[56] and that ISDS provisions permitted an arbitral tribunal “to interpret or indeed to apply EU law.”[57] The court found that this was impermissible because these arbitral tribunals “cannot in any event be classified as a court or tribunal ‘of a Member State.’”[58] Therefore, the court determined that arbitration clauses in BITs between Member States of the EU have “an adverse effect on the autonomy of EU law” because they enable private actors to make determinations regarding EU law.[59] Following this ruling, twenty-three EU Member States signed a joint statement agreeing to terminate all intra-EU BITs for the protection of investments.[60] That statement, titled the “Agreement for the termination of Bilateral Investment Treaties between the Member States of the European Union,” states succinctly: “Arbitration Clauses are contrary to the EU Treaties and thus inapplicable.”[61]

The EU Parliament voted to replace ISDS with an investment court system, and the European Commission has been working on the development of a multilateral investment court since 2015.[62] Section V.C discusses the concept of an investment court as an alternative to ISDS.[63]

C. Exclusion of ISDS from IIAs

Countries in Latin America and the EU are not the only ones to exclude ISDS provisions from new treaties and terminate existing IIAs that include them.[64]

In Australia, the Labor government announced in November 2022 that Australia would not include ISDS clauses in any new trade agreements and “would attempt to reduce their impact in existing agreements.”[65] The Trade Minister also stated that the government would “actively engage in processes to reform existing ISDS mechanisms” to align with the government’s goals of increased transparency and preservation of state sovereignty.[66] Reflecting a common theme among countries that have pulled away from ISDS, Australia’s new strategy coincides with a claim for $300 billion AUD filed against Australia under the Australia-New Zealand Agreement for a Free Trade Area.[67]

India also signed a number of BITs from 1991 to the 2010s, but it has since taken a conservative stance towards ISDS and terminated all but six of its early BITs.[68] India’s first loss in an investment dispute for $11 million AUD and “the subsequent flood of investment claims” that followed may have triggered the switch in India’s stance towards ISDS.[69] Following this loss, India developed the Indian Model BIT in 2015, which now requires that investors exhaust local remedies for five years before pursuing an ISDS claim.[70]

South Africa has not entered new BITs with ISDS provisions after two investors brought claims against it under IIAs and has vocally opposed ISDS in recent years.[71] In demonstration of this distaste, South Africa passed the Protection of Investment Act of 2015, which enables the South African government to take several measures in the State’s interests and requires foreign investors to first exhaust domestic remedies before resorting to international arbitration.[72]

These examples partly explain why some have concluded that ISDS is in crisis. States denouncing ICSID, the EU terminating intra-EU BITs, and the decision by several countries to no longer include ISDS provisions in their investment treaties all indicate dissatisfaction with the ISDS regime. Part IV discusses why the system is critiqued more generally.[73]

IV. Critiques of ISDS

The major critiques of ISDS can be divided into two broad categories—those critiques related to the cost and efficiency of the regime and those critiques related to the perceived illegitimacy of the regime.

A. Cost and Efficiency

High costs and perceived inefficiency are two of the most oft-cited critiques of the ISDS regime.[74] In a 2015 survey on international arbitration, “respondents indicated that the cost (68%), lack of insight into arbitrators’ efficiency (39%), and lack of speed (36%) were among the worst characteristics of international arbitration.”[75] While arbitration has historically been lauded in the domestic setting for its greater efficiency and lower costs compared to litigation, ISDS claims on average take 3.46 years, entail high legal costs, and may result in significant damage awards.[76]

In fact, over the past decade, the average ISDS award has nearly quadrupled, with one in twenty awards now amounting to over $1 billion USD and more than a quarter of awards amounting to more than $100 million USD.[77] There are several reasons why ISDS awards are increasing, including inflation, the growing size of investment projects, tribunals increasingly relying on discounted cash flow valuations,[78] and increasingly large claims.[79] “Old-generation” IIAs, which account for nearly 98% of all ISDS cases,[80] often do not include specific guidance on the calculation of awards, so tribunals instead most often adopt the general rules of customary international law, which apply the standard of “full reparation.”[81] The standard of “full reparation” leads ISDS tribunals to adopt a broader interpretation of compensable damages than other international courts and tribunals because the reparation “must, as far as possible, wipe out all the consequences of the illegal act and re-establish the situation which would . . . have existed if that act had not been committed.”[82] The extraordinary costs of complying with arbitral awards thus calculated may be difficult for states to bear and consequently are criticized for diverting state monies away from domestic matters in favor of private foreign actors.[83]

B. Perceived Illegitimacy

1. Bias

A standard critique of ISDS is that it is inherently unfair to states.[84] Critics primarily argue that the system is biased in two ways—first, in the terms of IIAs, and second, in the makeup and conduct of arbitrators.

The vast majority of IIAs in place today are considered “old-generation,” meaning they were signed in the 1990s and early 2000s.[85] These old-generation IIAs include more favorable measures to investors and expose host states to a greater risk of being subject to claims under ISDS provisions.[86] Old-generation IIAs typically “do not contain explicit provisions to preserve States’ regulatory space . . . .[Instead,] [t]hey feature broad and vague formulations for substantive treatment standards.”[87] The imbalance between investors’ rights and obligations and host states’ rights and obligations is often the result of unequal bargaining power between developing states (typically host states and recipients of foreign direct investments) and developed states (typically home to investors and suppliers of foreign direct investments).[88]

Similarly, there is a general perception of imbalance in the appointment of arbitrators and a belief that arbitrators are biased towards foreign investors, resulting in investors winning on a disproportionate number of claims against host states.[89] The claims of arbitrator bias stem partly from a lack of diversity among arbitrators and the “revolving door” phenomenon,[90] which refers to the fact that many practitioners in the field move frequently between roles as judges and advocates.[91] Additionally, for many years, there were no clear standards to regulate arbitrator and counsel conduct.[92]

However, the data does not support the claim that ISDS tribunals are more likely to find in favor of foreign investors.[93] In the UNCTAD’s most recent World Investment Report, the organization reported that 28% of all ISDS cases have been decided in favor of investors, 38% decided in favor of states, 18% settled, 13% discontinued, and 3% found fault but awarded no damages.[94] That being said, the accusation of bias in the ISDS regime undermines its legitimacy as a tool for dispute resolution because it implies that decisions made by arbitral tribunals are neither impartial nor independent.

2. Encroachment on State Sovereignty

The claim that ISDS infringes on state sovereignty is another common critique of ISDS.[95] Critics argue first that IIAs effectively tie states’ hands and leave them unable to freely govern by effecting a “regulatory chill,” and second, that ISDS awards may direct state funds away from the public and towards corporations.[96]

The idea of a “regulatory chill” is that states are dissuaded from enacting certain regulations because they may negatively impact foreign investments in the country and subsequently trigger investor-state disputes under the governing IIA.[97] Proponents of this idea have argued that host state governments are disincentivized from implementing certain regulatory policies “for fear of defending a lengthy and expensive case, paying millions to a foreign investor, and, ultimately, weakening or rolling back policies.”[98] Furthermore, they claim that the fear of ISDS claims “may unduly influence host states’ willingness to adopt measures that are in the public interest.”[99]

The regulatory chill argument often goes hand-in-hand with climate policy, and some recent high-profile cases have lent credence to this argument.[100] However, a 2021 study of 146 ISDS cases between 1990 and 2015 found that while an increase in pending ISDS cases “is associated with a downturn in domestic regulation in high-bureaucratic capacity states,” this relationship is only “of a temporary nature” and an increase in pending ISDS cases in medium-to-low bureaucratic countries “is associated with an increase in regulatory acts.”[101] Many case studies have considered the effect of ISDS provisions on states’ implementation of regulatory policies with varied conclusions, so it is hard to conclusively determine the extent of regulatory “chill”.[102] There is certainly a perception among many, however, that ISDS inhibits states from governing independently.[103]

In addition to considering the impact of regulatory chill on state sovereignty, some argue that ISDS threatens state sovereignty and is an illegitimate form of dispute resolution because “the process undermines the capacity of a nation to govern itself at the behest of profit-driven multinational enterprises.”[104] Following this line of argument, the threat of ISDS encroaches on state sovereignty because state governments are compelled to prioritize their obligations to foreign investors under IIAs over those of the state.

3. Inconsistency

ISDS awards are considered by some to be illegitimate on account of their inconsistency.[105] There is no stare decisis or binding precedent for arbitral decisions. Article 53 of the ICSID Convention exemplifies “the notion that there is no rule of precedent in general international law nor within the specific ICSID system.”[106] Tribunals are not bound by previous decisions, which understandably leads to some inconsistency in awards. However, in recent years, some have argued that there is “a growing body of at least ‘softly’ binding case law” in ISDS.[107] This is in part due to developments in the transparency of ISDS cases.[108]

4. Transparency

The final critique related to the perceived legitimacy of ISDS is the historical lack of transparency in investor-state disputes.[109] Confidentiality of proceedings is typically referenced as one of the primary reasons parties prefer arbitration to litigation proceedings;[110] however, in the ISDS context, some consider the lack of transparency improper given its “public dimension.”[111] The decisions made by ISDS tribunals have the potential to “alter national legal frameworks and affect citizens’ lives” as they often consider issues related to environmental regulations, public health, and social policies and determine “‘potentially explosive’ allocations of public budget.”[112] Some argue that because decisions in ISDS cases impact citizens, the public has a right to know what goes on in these proceedings.[113]

The critiques explored in this Part are all concerned, to some extent, with the fact that investor-state arbitration places sovereign nations at the mercy of arbitral tribunals that are made up of private individuals, ultimately questioning whether the ISDS regime is legitimate as a tool for dispute resolution. ISDS has been accused of inherent bias, encroaching on state sovereignty, lacking consistency, and needing greater transparency. While the extent of the reality of these critiques is debatable, there is some truth to each of them—be that in the structure of old-generation IIAs or the effect of regulatory chill. The next Part of this Comment addresses the reforms being undertaken and discussed to address these and other critiques of the ISDS regime.

V. Reforming ISDS

ISDS has its critics and is certainly flawed, yet it does not appear to be going anywhere soon. The cumulative number of ISDS cases has doubled in the past ten years.[114] In 2023, sixty new investment arbitration cases were initiated—forty-eight at ICSID and twelve before other forums.[115] In 2024, ICSID administered 341 cases and registered fifty-eight new cases, the second highest in ICSID’s history.[116] And as of June 2024, the ICSID Convention had 158 Contracting States and eight Signatory States.[117] Whatever its flaws, “the common reliance on arbitration for ISDS is undeniable.”[118]

ISDS remains essential because investors would have no legitimate means of recourse against host states without the regime in place. Without it, there would be a return to the issues described in Part II. Moreover, in the absence of a mechanism like ISDS, states could theoretically “pass legislation to create a favorable playing field for themselves, promulgate administrative regulations and executive orders to aid their position, or pressure domestic judges.”[119]

Despite the continued presence of the fundamental issues that motivated ISDS’s creation in the first instance, as described in Part IV, criticism of ISDS abounds. There is consensus that some reform to the regime is necessary, but there is less agreement as to what shape reform should take.[120] Reforms would ideally address serious critiques of ISDS—decreasing costs, improving efficiency, balancing investors’ and states’ interests more equally, enabling states to implement environmental and public policy regulations, and bringing IIAs in line with modern goals. The three major areas of reform this Comment will address are (1) modernizing old-generation IIAs, (2) amending the ICSID Convention, and (3) the work of the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WGIII).[121]

A. Modernizing Old-Generation IIAs

The vast majority of IIAs in place today are old-generation treaties that provide minimal consideration for host states’ regulatory capacities and contain “broad and unrefined provisions that often expose host countries to greater risk of ISDS.”[122] As of 2024, old-generation IIAs cover about half of foreign direct investments globally.[123] For developing and least-developed countries, the percentage of foreign direct investments covered by old-generation IIAs is even higher—about two-thirds for developing countries and three-quarters for least-developed countries.[124] Old-generation IIAs cover more than 80% of foreign direct investment stock for fifty-three countries.[125]

There are two primary routes for deconstructing the regime of old-generation IIAs—(i) reforming old treaties or (ii) signing new IIAs.

1. New IIAs

New IIAs attempt to rebalance commitments for states and investors and provide more flexibility for state action than old-generation IIAs.[126] International legal scholar Wolfgang Aslchner describes states’ motivation in signing new IIAs as follows:

States want to reap the benefits of foreign investment by offering credible commitments of protection, but they also do not want to trade off too much sovereignty and make domestic regulatory action too costly. States thus strive for an optimal level of protection that curbs opportunism . . . and seizes regret . . . .[127]

In order to attain the “optimal level of protection,” new IIAs often include explicit safeguards for states’ right to regulate and “innovative provisions on investment facilitation and cooperation.”[128] Three out of four new IIAs include provisions for public policy and security regulation exceptions, and many also include economic coordination exceptions, further enshrining states’ right to regulate.[129] Many new IIAs include explicit, substantive provisions directly related to environmental protection, including provisions on the promotion and facilitation of sustainable investments, environmental impact assessments, and environmental management systems.[130] Some other developments in new IIAs include provisions regarding investor obligations, such as requiring responsible business conduct and avoiding corruption,[131] the limitation or complete exclusion of survival clauses,[132] and the addition of transparency provisions.[133]

New IIAs have also begun to include more detailed provisions regarding compensation rules, a reasonable development given the increasing size of arbitral awards over the past decade.[134] These provisions, for example, limit the types of remedies available to investors and address valuation practices, with some now requiring that tribunals awarding “full reparation” damages account for “mitigating and contextual factors . . . when addressing compensation.”[135] These factors may include the investor’s behavior over time, the state’s enrichment, and public policy goals.[136] The UNCTAD[137] has proposed that new IIAs should propose caps on compensation, “calculated by reference to the amount invested by the investor or the host State’s GDP.”[138] At this point, it does not appear that any new IIAs have incorporated this type of provision, but new IIAs are trending towards outlining compensation rules in more detail and limiting the scope of recoverable loss.[139]

In general, new IIAs provide greater protections for states’ rights and address some of the most significant critiques of ISDS—namely, limiting the extent to which ISDS provisions can encroach on state sovereignty by granting states more authority to act within the bounds of IIAs, curbing the effect of the “regulatory chill,” and addressing the issue of calculating arbitral awards. Some, however, are doubtful that these new IIAs will make any difference in the outcomes of investment arbitration cases. In Alschner’s 2022 book, Investment Arbitration and State-Driven Reform: New Treaties, Old Outcomes, he argues that although “new-generation IIAs are just beginning to be litigated. . . . [T]he cases that have been decided under . . . [new IIAs] seem to defy conventional wisdom and suggest a different trajectory: new treaties reproduce old outcomes.”[140] Alschner is not alone in his doubt—the 2024 World Investment Report published by UNCTAD states that “reform [efforts have so far] . . . had a limited effect on mitigating the risks of ISDS.”[141] One reason may be that developing countries continue to prioritize attracting foreign direct investments by adopting policies more favorable to investors 86% of the time.[142] Of these policies that are more favorable to investors, approximately one-third are investment incentives, such as tax and financial incentives and those related to special economic zones.[143] It is hard to say at this point, however, whether new IIAs will consistently produce similar outcomes to old-generation IIAs or what the cause of that may be.

2. Reforming Old-Generation IIAs

Rather than wholesale replacement of the global network of old-generation IIAs, some advocate for reinterpreting or reforming old-generation IIAs.[144] In a 2021 article, legal scholars Lauge N. Skovgaard Poulsen and Geoffrey Gertz argue that states should promulgate interpretative statements of their own IIAs, a right they have under international law and the Vienna Convention on the Law of Treaties.[145] The authors reasoned that these statements would “provide a viable way for governments to bring their concerns, already clearly expressed when discussing new investment treaties, to the far more important world of existing treaties without going through the pains of terminations or negotiations.”[146] This method, as of yet, has been rarely used with much success, but it may be used in the future if an organization like UNCITRAL, for example, serves as a facilitator for discussions around reinterpretation and states present themselves as “reformers and rule-makers in the investment regime.”[147]

A more popular proposition for improving ISDS than Poulsen and Gertz’s proposal of reinterpretation is the reform of old-generation IIAs.[148] UNCTAD has been a leader in this area of reform and has advocated for the modernization of IIAs since 2012, when it launched UNCTAD’s Investment Policy Framework for Sustainable Development.[149] In 2020, UNCTAD launched the IIA Reform Accelerator “to expedite the modernization of the existing stock of old-generation IIAs.”[150] The Reform Accelerator identified eight provisions most in need of reform in old-generation IIAs, including those provisions that are “most frequently invoked in ISDS claims” and are related to “genuine public interest measures” and “the host State’s ability to regulate in the interest of sustainable development.”[151] The Reform Accelerator provides reform options for each of the eight identified provisions and provides examples of treaties including similar reforms.[152] UNCTAD’s stated goal with the Reform Accelerator is “to present a viable, less resource-intensive alternative to the traditional way of IIA negotiations by focusing on a selection of reform-oriented formulations for eight IIA clauses.”[153] To supplement this tool, UNCTAD launched the Multi-Stakeholder Platform on IIA Reform in October 2023 to share knowledge of “best practices on IIA reform” amongst participants from governments, international organizations, think tanks, academia, civil society, and the private sector.[154] The Platform is intended to encourage cooperation on the bilateral, regional, and multilateral levels for IIA reform.[155] UNCTAD’s reform efforts are ongoing and can be monitored on the organization’s “Investment Policy Hub” webpage.[156]

B. Reforming ICSID

Another avenue for reforming ISDS is through the institutions that conduct arbitral proceedings.[157] Most investor-state disputes are brought before ICSID, so that institution will be the focus of this Comment.[158]

In 2022, ICSID implemented the most extensive set of amendments to its rules since the Convention’s inception in 1966.[159] According to ICSID, “[t]he overarching goals of the rule amendments are to modernize, simplify, and streamline the rules.”[160] The updated rules prioritize improving efficiency, reducing costs, and enhancing transparency.[161] The 2022 rules now mandate case management conferences and set deadlines for key steps in ICSID proceedings, including requiring tribunals to render awards within 240 days.[162] The new rules also introduce a chapter on “Expedited Arbitration” procedures.[163] In theory, these efforts to improve the efficiency of ICSID proceedings should lower costs for all parties involved. Additionally, the new rules require that tribunals ensure “all decisions on costs are reasoned and form part of the Award.”[164]

Regarding transparency, the 2022 rules attempt to balance enhancing transparency while maintaining the confidentiality of sensitive information and protecting personal information from public disclosure.[165] The new rules “increase the likelihood that case materials, awards, and decisions will be published . . . [but] parties can still block publication by refusing to provide consent.”[166] However, even for those parties that refuse to provide consent, ICSID publishes redacted legal excerpts of the award,[167] and today the ICSID rules require a public register of cases, which can be found on the Convention’s website.[168]

These amendments to the ICSID Rules and Regulations attempt to address some of the most significant critiques[169] of the ISDS regime by increasing efficiency, decreasing costs, and improving transparency. Some argue that the improvements in transparency are particularly significant because they are now enabling the growth of a body of “softly” binding case law in ISDS that may provide for more predictability and consistency in investment arbitration.[170]

C. UNCITRAL Working Group III

UNCITRAL established Working Group III in 2017 to begin discussing ISDS procedural reforms following its receipt of a report submitted by the Center for International Dispute Settlement (the Center).[171] The Center’s report included comments from states and international organizations and explained the weaknesses of the current ISDS system.[172] The report explored the possibility of establishing a multilateral investment court and of creating an appeal mechanism for investment arbitration awards—including “charting the main options to determine the methods and criteria by which individuals could be selected to become members of these bodies, and the modalities by which disputes would be assigned to them.”[173] The Center’s report laid the groundwork for WGIII discussions and aimed to “contribute analysis and ideas for concrete reform proposals going forward.”[174] Reform elements in discussion at WGIII are codes of conduct, investment mediation and dispute prevention, procedural rules reform, cross-cutting issues, the establishment of a multilateral advisory center, the establishment of a multilateral permanent investment court, the establishment of an appellate mechanism, and the establishment of a multilateral instrument to implement reforms.[175]

Since WGIII’s first meeting in 2017, the group drafted, and UNCITRAL has now adopted, Codes of Conduct for adjudicators in ISDS—the Code of Conduct for Arbitrators in Investment Dispute Resolution and the Code of Conduct for Judges in International Dispute Resolution.[176] These Codes are intended to “enhance adjudicators’ independence and impartiality, regulate double-hatting, impose comprehensive disclosure requirements, and address obligations concerning confidentiality of proceedings, fees and expenses, and tribunal assistants.”[177] Beyond the Codes, however, WGIII’s progress has been slower.

In 2024, the group achieved some success in finalizing and adopting in principle the Statute of the Advisory Centre, which “has the mandate of ‘capacity building’ and provision of ‘legal support and advice with regard to an international investment dispute proceeding.’”[178] The advisory center has long been discussed, and the finalization of its framework is a notable achievement for WGIII.[179]

Since 2019, WGIII has discussed establishing a multilateral instrument on ISDS reform (MIIR) as a tool “to achieve coherence in the application of the reform elements being developed by [WGIII], while also being sufficiently flexible to accommodate future developments and to endure the passage of time.”[180] The MIIR would ideally streamline the reform process and enable the implementation of WGIII’s other reform elements.[181] The first draft of the MIIR was published in 2024 and indicates that the MIIR would be structured as a framework convention with optional protocols that states could choose whether to be bound by.[182] As of the first draft, the protocols include the Codes of Conduct previously adopted by UNCITRAL, the Statute of the Advisory Center discussed previously, and draft provisions.[183] The draft provisions address the other reform elements in discussion at WGIII—procedural issues, cross-cutting issues, a standing mechanism for the resolution of international investment disputes, and an appeal mechanism for the resolution of international investment disputes.[184] Thus, significant work remains to be done on this reform element, but it has been recognized as “the first concrete step toward implementing the broader and more substantive reforms of [WGIII].”[185]

The final ISDS reform addressed by WGIII that garners discussion here is the establishment of a standing mechanism for the resolution of international investment disputes—said differently, the establishment of a multilateral investment court.[186] The multilateral investment court would replace the existing ISDS regime, be staffed full-time by state-appointed judges, and have both a “Dispute Tribunal” and an “Appeals Tribunal.”[187]

The EU has largely spearheaded the effort to establish an investment court.[188] The European Commission has been working to establish an investment court since 2015 with the goal of replacing existing bilateral court systems in EU trade and investment agreements.[189] This has been especially significant following the Achmea decision discussed in Section III.B.[190] Some IIAs have already begun to include provisions referring disputes to investment courts, including the EU-Vietnam Free Trade Agreement, the EU-Singapore Investment Protection Agreement, and the EU-Canada Comprehensive Economic and Trade Agreement, despite the courts’ current nonexistence.[191] The most recent draft by WGIII on the statute of a standing mechanism states, however, that WGIII “has yet to determine whether and how a standing mechanism would operate and how to proceed with the deliberations on these reform elements,”[192] and it was noted in the Report of Working Group III on the work of its forty-ninth session that states’ views “diverged” on several issues related to the standing mechanism.[193]

Proponents of the multilateral investment court contend that a standing court will create more consistency in ISDS decisions, increase efficiency, and decrease costs.[194] Proponents also contend that the appointment process for investment court judges, strict ethical standards, and nonrenewable terms would ensure the body’s neutrality.[195] Critics of the investment court, however, argue that judges appointed by states to the investment court could be subject to political bias, “which would discourage investors and impact the development of investments globally.”[196] Other issues related to establishing an investment court include financing of the permanent body, enforcement of its decisions, and general resistance to such “radical” reform of ISDS.[197]

In summary, the progress of WGIII has thus far been incremental. WGIII has achieved some success in implementing the Codes of Conduct and making concrete moves toward establishing an advisory center; however, the future of other reform elements, such as the MIIR and the multilateral investment court, remains uncertain. WGIII continues to meet consistently, and the group’s progress can be tracked with reasonable speed and accuracy on the UNCITRAL website.[198]

Ultimately, some combination of these efforts will be the most effective at reforming the ISDS regime. ICSID’s procedural reforms directly address critiques of high costs and poor efficiency, while other actors endeavor to modernize IIAs, and WGIII works to tackle broader issues related to the regime’s legitimacy. These efforts should be pursued in tandem to address critiques of the regime most efficiently.

VI. Conclusion

In recent years, many have asked whether ISDS is in crisis. Despite developments such as states withdrawing from ICSID and refusing to include ISDS provisions in new IIAs, ISDS remains prevalent, and ICSID’s caseload continues to grow. However, criticisms of the regime are not unfounded. Costs are high, and proceedings take years. Some question the regime’s legitimacy on account of its implicit bias, infringement on state sovereignty, inconsistency, and lack of transparency. Fortunately, reforms are ongoing. Old-generation IIAs are being reformed or replaced, ICSID has amended its rules in response to criticism, and WGIII continues to work towards bettering the regime. While it is too soon to pass judgment on these ongoing reforms, they indicate that ISDS is not disappearing, but it is adapting. ISDS is best understood not as a system in crisis—but as a system in transition.

VII. Appendix

BIT bilateral investment treaty

DCF discounted cash flow

EU European Union

ICSID International Centre for Settlement of Investment Disputes

IIA international investment agreement

ISDS investor-state dispute settlement

MIIR multilateral instrument on ISDS reform

UNCITRAL United Nations Commission on International Trade Law

UNCTAD United Nations Conference on Trade and Development

WGIII Working Group III

Grace Josephine Burgert

  1. For a complete list of abbreviations used in this Comment, see infra Appendix.

  2. Martin Valasek & Alison FitzGerald, Frequently Asked Questions About Investor-State Dispute Settlement, Int’l Arb. Rep., June 2017, at 5,5.

  3. Id.

  4. Wolfgang Alschner, Investment Arbitration and State-Driven Reform: New Treaties, Old Outcomes 85, 86, 88 (2022).

  5. Susannah Moody, A World Without ISDS?, Glob. Arb. Rev. (Sep. 5, 2024), https://globalarbitrationreview.com/article/world-without-isds? [https://perma.cc/YXS2-QCN7].

  6. Shwetha Bidhuri & Steffi Mary Punnose, The Best Path Forward in International Arbitration: A Summary of the SIAC Annual India Conferences 2024, Kluwer Arb. Blog (Oct. 26, 2024), https://arbitrationblog.kluwerarbitration.com/2024/10/26/the-best-path-forward-in-international-arbitration-a-summary-of-the-siac-annual-india-conferences-2024/ [https://perma.cc/CQH9-5Y2J].

  7. See generally Ksenia Polonskaya, Metanarratives as a Trap: Critique of Investor-State Arbitration Reform, 23 J. Int’l Econ. L. 949 (2020) (summarizing popular critiques of ISDS and ongoing reform efforts).

  8. See Bidhuri & Punnose, supra note 6.

  9. See U.N. Conf. on Trade & Dev., World Investment Report 2024: Investment Facilitation and Digital Government, at 8, Sales No. E.24.II.D.11 (2024) [hereinafter World Investment Report 2024] (showing that investors continue to initiate ISDS cases and that states continue to include ISDS provisions in IIAs).

  10. Valasek & FitzGerald, supra note 2, at 5.

  11. Id.

  12. See David Collins, An Introduction to International Investment Law 226 (2d ed. 2023).

  13. Id. at 230; see also Valasek & FitzGerald, supra note 2, at 5 (noting obstacles to recovery in domestic courts included sovereign immunity defenses and compromised judicial independence).

  14. Polonskaya, supra note 7, at 957.

  15. Emmerich Vattel first defined the concept of diplomatic protection in the eighteenth century, stating “whoever ill-treats a citizen indirectly injures the state, which must protect that citizen and the sovereign of the latter should avenge his wrongs, punish the aggressor, and, if possible, oblige him to make full reparation.” Harrison Ogalagu & Nnamdi Ezekwem, The Waning Popularity of Diplomatic Protection in Resolving International Investment Disputes 2 & n.6 (2023), https://topeadebayolp.com/wp-content/uploads/2024/01/119_the-waning-popularity-of-diplomatic-protection-in-resolving-international-investment-disputes-2.pdf [https://perma.cc/9U89-9GDN]; see also Alschner, supra note 4, at 86–87 (noting that prior to the proliferation of BITs, home states could “exercise . . . diplomatic protection claims”); Polonskaya, supra note 7, at 957 (stating that investors had to rely on their governments to espouse diplomatic protection claims).

  16. Alschner, supra note 4, at 87 (elaborating on this era of “gunboat diplomacy”); see also Collins, supra note 12, at 233 (“[H]istorically, disputes between two countries were often resolved through military conflict or the threat of it.”). See generally O. Thomas Johnson Jr. & Jonathan Gimblett, From Gunboats to BITs: The Evolution of Modern International Investment Law, in Y.B. on Int’l Inv. L. & Pol’y 2010–2011 (Karl P. Sauvant ed., 2012) (explaining the evolution of investor disputes from diplomatic and military resolutions to resolutions via arbitrations under IIAs).

  17. See Alschner, supra note 4, at 85, 87–88.

  18. Casus belli is defined as: “[A]n event or action that justifies or allegedly justifies a war or conflict.” Casus Belli, Merriam-Webster, https://www.merriam-webster.com/dictionary/casus belli [https://perma.cc/7QTZ-F5FY] (last visited Nov. 21, 2024).

  19. Alschner, supra note 4, at 88.

  20. See generally Antonio R. Parra, The Development of the Regulations and Rules of the International Centre for Settlement of Investment Disputes, 41 Int’l Law. 47 (2007) for a history of the ICSID Convention.

  21. . Collins, supra note 12, at 248; About ICSID, Int’l Ctr. for Settlement of Inv. Disps.: World Bank Grp., https://icsid.worldbank.org/About/ICSID [https://perma.cc/VX3F-NE2D] (last visited Sep. 11, 2025).

  22. FDI Flows, OECD, https://www.oecd.org/en/data/indicators/fdi-flows.html [https://perma.cc/G22T-KXL5] (last visited Sep. 14, 2025); Stephen E. Blythe, The Advantages of Investor-State Arbitration as a Dispute Resolution Mechanism in Bilateral Investment Treaties, 47 Int’l Law. 273, 274 (2013).

  23. See Primer on International Investment Treaties and Investor-State Dispute Settlement, Colum. Climate Sch.: Colum. Ctr. on Sustainable Inv. (Jan. 2022), https://ccsi.columbia.edu/content/primer-international-investment-treaties-and-investor-state-dispute-settlement [https://perma.cc/8RW6-Y2ZX] [hereinafter Primer].

  24. Id.

  25. Collins, supra note 12, at 132, 196–97.

  26. Id. at 34; Investment Treaties, Int’l Ctr. for Settlement of Inv. Disps.: World Bank Grp., https://icsid.worldbank.org/node/20271# [https://perma.cc/AJ76-9B9N] (last visited Sep. 11, 2025).

  27. Collins, supra note 12, at 227.

  28. Id. at 226.

  29. Valasek & FitzGerald, supra note 2, at 5.

  30. Primer, supra note 23.

  31. Valasek & FitzGerald, supra note 2, at 5.

  32. About ICSID, supra note 21.

  33. Convention on the Settlement on Investment Disputed Between States and Nationals of Other States § 1, art. 1, ¶ 2, Mar. 18, 1965, 575 U.N.T.S. 162.

  34. About ICSID, supra note 21. ICSID amended its rules in 2022 to expand its jurisdiction under the Additional Facilities to disputes involving non-Contracting States. ICSID Releases 2022 Versions of Its Rules and Regulations, Int’l Ctr. for Settlement of Inv. Disps.: World Bank Grp. (June 22, 2022), https://icsid.worldbank.org/news-and-events/news-releases/icsid-releases-2022-versions-its-rules-and-regulations [https://perma.cc/V6KG-HH3S].

  35. The ICSID Caseload—Statistics, Int’l Ctr. for Settlement of Inv. Disps.: World Bank Grp., no. 2, 2024, at 1, 3.

  36. Susan Franck, Reforming World Bank Dispute Resolution: ICSID in Context, 44 Mich. J. Int’l L. 349, 386 (2023); Parra, supra note 20, at 53.

  37. Parra, supra note 20, at 53; The ICSID Caseload—Statistics, supra note 35, at 6; Alschner, supra note 4, at 93.

  38. International Investment Agreements Navigator, U.N. trade & dev.: Inv. Pol’y Hub, https://investmentpolicy.unctad.org/international-investment-agreements [https://perma.cc/WGE3-J9YE] (last visited Sep. 8, 2025).

  39. The ICSID Caseload—Statistics, supra note 35, at 1–2.

  40. Id. at 3.

  41. Moody, supra note 5; see also Mathias Baudena, Investor-State Dispute Settlement: Understanding the System’s Legitimacy Crisis in Constitutional Terms, Lond. Sch. of Econ. L. Rev. (Feb. 18, 2021), https://blog.lselawreview.com/2021/02/18/investor-state-dispute-settlement-understanding-the-systems-legitimacy-crisis-in-constitutional-terms/ [https://perma.cc/YM6U-RZ6C] (discussing the generally understood notion that the ISDS system is undergoing a legitimacy crisis); Alison Ross, We’re Losing the ISDS Fight, Warns Mourre, Glob. Arb. Rev. (Jan. 19, 2024), https://globalarbitrationreview.com/article/were-losing-the-isds-fight-warns-mourre [https://perma.cc/AU2C-ZTR9] (same); Vanessa Giraud, Is Investment Arbitration in Latin America in Crisis?, Kluwer Arb. Blog (May 19, 2024), https://arbitrationblog.kluwerarbitration.com/2014/05/19/is-investment-arbitration-in-latin-america-in-crisis/ [https://perma.cc/EN5B-UVSC] (noting that multiple Latin American states have denounced the ICSID Convention).

  42. Vanina Sucharitkul, Backlash in Investment Arbitration, Jus Mundi (Sep. 17, 2025), https://jusmundi.com/en/document/publication/en-backlash-in-investment-arbitration [https://perma.cc/39ZL-WNJP].

  43. Id.

  44. Claudio Salas, Maria Camila Hoyos & Soledad Peña, The Sound and Fury of Venezuela’s ICSID Denunciation, 5 Principia 139, 141–42 (2021).

  45. Id. at 142. Many Latin American states embraced the “Calvo Doctrine,” which sought to establish “a relative standard not to treat foreign investors any worse than their domestic counterparts.” Alschner, supra note 4, at 87; see also Salas, Hoyos & Peña, supra note 44, at 142 (explaining how Latin American states required investors to resolve their disputes in domestic courts).

  46. Salas, Hoyos & Peña, supra note 44, at 143; Primer, supra note 23.

  47. Giraud, supra note 41.

  48. Convention on the Settlement on Investment Disputed Between States and Nationals of Other States, supra note 33, at 26.

  49. Silvia Marchili et al., Honduras ICSID Denunciation and Implications for Foreign Investors, White & Case (Mar. 15, 2024), https://www.whitecase.com/insight-alert/honduras-icsid-denunciation-and-implications-foreign-investors [https://perma.cc/7E2U-JSWW]; Honduras Denounces the ICSID Convention, Int’l Ctr. for Settlement of Inv. Disps.: World Bank Grp. (Feb. 29, 2024), https://icsid.worldbank.org/news-and-events/communiques/honduras-denounces-icsid-convention [https://perma.cc/FNU7-C6HN].

  50. Marchili et al., supra note 49.

  51. Toby Fisher, Honduras to Withdraw from ICSID, Glob. Arb. Rev. (Mar. 1, 2024), https://globalarbitrationreview.com/article/honduras-withdraw-icsid [https://perma.cc/XB37-UYZH]; Marchili et al., supra note 49.

  52. Giraud, supra note 41; Ylli Dautaj, Between Backlash and the Re-Emerging “Calvo Doctrine”: Investor-State Dispute Settlement in an Era of Socialism, Protectionism, and Nationalism, 41 Nw. J. Int’l L. & Bus. 273, 300 (2021).

  53. See Sucharitkul, supra note 42 (explaining how EU states have agreed to terminate all intra-EU BITs and voted in favor of replacing ISDS with an investment court system).

  54. Clement Fouchard & Marc Krestin, The Judgment of the CJEU in Slovak Republic v. Achmea – A Loud Clap of Thunder on the Intra-EU BIT Sky!, Kluwer Arb. Blog (Mar. 7, 2018), https://legalblogs.wolterskluwer.com/arbitration-blog/the-judgment-of-the-cjeu-in-slovak-republic-v-achmea-a-loud-clap-of-thunder-on-the-intra-eu-bit-sky/ [https://perma.cc/6WFN-PNAV].

  55. Case C-284/16, Slovak Rep. v. Achmea BV, ECLI:EU:C:2018:158, paras. 59–60 (Mar. 6, 2018) (“Articles 267 and 344 TFEU must be interpreted as precluding a provision in an international agreement concluded between Member States . . . under which an investor from one of those Member States may, in the event of a dispute concerning investments in the other Member State, bring proceedings against the latter Member State before an arbitral tribunal whose jurisdiction that Member State has undertaken to accept.” (emphasis added)).

  56. Id. at para. 32.

  57. Id. at para. 42.

  58. Id. at para. 46.

  59. Id. at paras. 55–60.

  60. 2020 O.J. (L 169) 1.

  61. Id. art. 4.

  62. Sucharitkul, supra note 42; Multilateral Investment Court Project, Eur. Comm’n, https://policy.trade.ec.europa.eu/enforcement-and-protection/multilateral-investment-court-project_en [https://perma.cc/E2AP-YKCP] (last visited Nov. 23, 2024).

  63. See infra Section V.C.

  64. See Luke Nottage, Australia’s Ambivalence Again Around Investor-State Arbitration: Comparisons with Europe and Implications for Asia, 39 ICSID Rev.-Foreign Inv. L.J. 320, 321 (2024) (on Australia); Jaivir Singh, Vatsala Shreeti & Parnil Urdhwareshe, The Impact of Bilateral Investment Treaties on FDI Inflows into India: Some Empirical Results 9 (Indian Council for Rsch. on Int’l Econ. Rel., Working Paper No. 391, 2020), https://icrier.org/pdf/Working_Paper_391.pdf [https://perma.cc/PXY3-4VU4] (on India); Ashutosh Kumar & Anjali Anchavil, Keeping a Distance: India’s Approach Towards Investment Treaties, Kluwer Arb. Blog (Oct. 20, 2022), https://arbitrationblog.kluwerarbitration.com/2022/10/20/keeping-a-distance-indias-approach-towards-investment-treaties/ [https://perma.cc/MSZ9-PNTV] (on India); Mmiselo Freedom Qumba, South Africa’s Move Away from an International Investor-State Dispute: A Breakthrough or Bad Omen for Investment in the Developing World?, 52 De Jure L.J. 358, 372 (2019) (on South Africa).

  65. Nottage, supra note 64, at 321.

  66. Id. However, Australia previously declared that it would not include ISDS in any new agreements and later walked back that claim when a new government came to power. Id. at 322–24.

  67. Id. at 327.

  68. Singh, Shreeti & Urdhwareshe, supra note 64, at 2–3; Kumar & Anchavil, supra note 64.

  69. Singh, Shreeti & Urdhwareshe, supra note 64, at 2; Kumar & Anchavil, supra note 64.

  70. Ladan Mehranvar et al., Breaking Free: Strategies for Governments on Terminating Investment Treaties and Removing ISDS Provisions, Colum. Ctr. on Sustainable Inv., Oct. 2024, at 1, 34–35.

  71. Qumba, supra note 64, at 359–60; Jackwell Feris, Dispute Resolution in African Regional Investment Agreements: Innovation or Stagnation?, Cliffe Dekker Hofmeyr (May 4, 2021), https://www.cliffedekkerhofmeyr.com/news/press-releases/2021/dispute/Dispute-Resolution-in-African-Regional-Investment-Agreements-Innovation-or-Stagnation.html [https://perma.cc/9638-NS3R].

  72. Protection of Investment Act 22 of 2015 §§ 12–13 (S. Afr.).

  73. See infra Part IV.

  74. Valasek & FitzGerald, supra note 2, at 7.

  75. Michelle Grando, Challenges to the Legitimacy of International Arbitration: A Report from the 29th ITA Workshop, Kluwer Arb. Blog (Sep. 19, 2017), https://legalblogs.wolterskluwer.com/arbitration-blog/challenges-to-the-legitimacy-of-international-arbitration-a-report-from-the-29th-annual-ita-workshop/ [https://perma.cc/5W2U-29EL].

  76. See Arbitration and Litigation – Legal Glossary, Thomson Reuters (Oct. 4, 2022), https://legal.thomsonreuters.com/blog/arbitration-vs-litigation-the-differences/ [https://perma.cc/5RSY-YPPB]; Ruihan Liu, Procedural Efficiency in Investor-State Dispute Settlement in Light of the New ICSID Rules, Daily Jus (July 26, 2022), https://dailyjus.com/world/2022/07/procedural-efficiency-in-isds-in-light-of-the-new-icsid-rules [https://perma.cc/GS6A-LP8E].

  77. Compensation and Damages in Investor-State Dispute Settlement Proceedings, IIA Issues Note, Sep. 2024, at 1, 2–3 [hereinafter Compensation and Damages].

  78. Discounted cash flow (DCF) valuations consider estimated future income. Id. at 4. DCF itself is controversial and has often been a topic of conversation in the arbitration sphere, but a more comprehensive discussion of it is beyond the scope of this Comment. See generally iisdvideo, Webinar on Valuation in Investment Arbitration: Spotlight on Discounted Cash Flow Analysis, (YouTube, Mar. 29, 2021), https://www.youtube.com/watch?v=pQ7MOpLW2aQ [https://perma.cc/7MF5-SVTB] (on file with the Houston Law Review) (discussing the increased use of DCF analysis in international investment arbitration).

  79. Compensation and Damages, supra note 77, at 4.

  80. Caroline Simson, Investor-State Awards Have Grown Tenfold, New Report Says, LAW360 (Sep. 9, 2024, at 18:35 ET), https://www.law360.com/internationalarbitration/articles/1877911?nl_pk=47ab3dfa-3751-48ab-8b53-5c4836939f9e&utm_source=newsletter&utm_medium=email&u… [https://perma.cc/NQK5-N6E2].

  81. Compensation and Damages, supra note 77, at 6.

  82. Id. at 6–7.

  83. See Arthur Nelson, Secretive Court System Has Awarded Over $100bn Public Money to Corporations, Finds New Analysis, Guardian (June 6, 2024, at 00:00 ET), https://www.theguardian.com/environment/article/2024/jun/06/investors-awarded-billions-of-dollars-for-losses-related-to-climate-laws-analysis-finds [https://perma.cc/WZF9-SJZ8].

  84. Sucharitkul, supra note 42.

  85. World Investment Report 2024, supra note 9, at 46, 66; Investment Facilitation in International Agreements: Trends and Policy Options, IIA Issues Note, Sep. 2023, at 1, 12.

  86. World Investment Report 2024, supra note 9, at 68.

  87. The International Investment Treaty Regime and Climate Action, IIA Issues Note, Sep. 2022, at 1, 3.

  88. Moataz M. Hussein, Successful Regional Investment Negotiations as a Tool for IIA Reform: A Multi-Identity Perspective, Inv. Treaty News (Apr. 2, 2024), https://www.iisd.org/itn/2024/04/02/successful-regional-investment-negotiations-as-a-tool-for-iia-reform-a-multi-identity-perspective/ [https://perma.cc/GMM5-PTMB] (arguing that many of Egypt’s old-generation BITs suffer “from an inherent syndrome of inconsistency on the substantive, procedural, and drafting levels for many historical reasons”).

  89. Davy Karkason, Challenges and Criticisms of Investor State Dispute Mechanisms, TRANSNAT’L MATTERS (Dec. 18, 2023), https://www.transnationalmatters.com/understanding-problems-with-investor-state-dispute-mechanisms/ [https://perma.cc/68X3-M3ED]; Ilana Solomon & Iliana Paul, Trading Away Our Climate: How Corporations Use Trade and Investment Agreements to Undermine Action on Climate Change, Sierra Club, May 2024, at 6, 9 (claiming that fossil fuel corporations succeed in 72% of all cases that reach the merits stage).

  90. The “revolving door” phenomenon, also called “double hatting,” has long been a topic of debate both within the international arbitration community and beyond. In brief, the phenomenon raises ethical questions because it is unclear whether and how much the practice affects individuals’ behavior over time as both counsel and arbitrator. Is it possible for these individuals to serve as impartial and independent arbitrators if they turn around to act as counsel in a different, but factually similar case? See Malcom Langford, Daniel Behn & Runar Hilleren Lie, The Revolving Door in International Investment Arbitration, 20 J. Int’l Econ. L. 301, 321, 323 (2017) for a fascinating discussion on this topic.

  91. Karkason, supra note 89; Collins, supra note 12, at 251.

  92. See Grando, supra note 75. Codes of Conduct, as of 2025, have now been adopted. See infra Section IV.B.

  93. World Investment Report 2024, supra note 9, at 75; Blythe, supra note 22, at 278.

  94. World Investment Report 2024, supra note 9, at 75.

  95. Sucharitkul, supra note 42.

  96. . Collins, supra note 12, at 227; Karkason, supra note 89; David Korn, Thibault Denamiel & William Alan Reinsch, Investor-State Dispute Settlement: A Key Feature of the Trade Policy Response to Climate Challenges, CSIS (June 21, 2024), https://www.csis.org/analysis/investor-state-dispute-settlement-key-feature-trade-policy-response-climate-challenges [https://perma.cc/XA7W-LRKD]; Melissa Morrow, Retaining and Improving Investor-State Arbitration Amidst Calls for Reform, Canadian Bar Assoc. (Sep. 2, 2022), https://www.cba.org/Sections/Alternative-Dispute-Resolution/Resources/Resources/2022/Retaining-and-Improving-Investor-State-Arbitration [https://perma.cc/WT7U-NHAD].

  97. Karkason, supra note 89; Morrow, supra note 96.

  98. Korn, Denamiel & Reinsch, supra note 96.

  99. Tarald Laudal Berge & Axel Berger, Do Investor-State Dispute Settlement Cases Influence Domestic Environmental Regulation? The Role of Respondent State Bureaucratic Capacity, 12 J. Int’l Disp. Settlement 1, 6 (2021).

  100. Aloke Prabhu, Spain’s Renewable Energy Disputes: Renewable Energy Needs Reliable Arbitration, Arb. Brief (Feb. 15, 2023), https://thearbitrationbrief.com/2023/02/15/spains-renewable-energy-disputes-renewable-energy-needs-reliable-arbitration/ [https://perma.cc/L4FD-495U] (explaining how Spain faced fifty claims totaling eight billion euros following changes it made to its renewable energy regulatory regime); see also Sophia Sepúlveda Harms, Comment, Towards a Green New Treaty Deal: Reforms to ISDS amid Environmental Crisis, 58 Hou. L. Rev. 479, 485–87 (2020) (noting that increasing investor-state disputes and costly arbitral awards deter states from enacting strong environmental regulations).

  101. Berge & Berger, supra note 99, at 25.

  102. Id.; Julia G. Brown, International Investment Agreements: Regulatory Chill in the Face of Litigious Heat?, W.J. Legal Studs., June 27, 2013, at 1, 18.

  103. Karkason, supra note 89; see also Brown, supra note 102, at 8 (arguing that investment treaties and arbitration mechanisms constrain states’ legislative independence by discouraging policies that might conflict with investor protections).

  104. Collins, supra note 12, at 227.

  105. Sucharitkul, supra note 42.

  106. Neil Q. Miller, Holly Stebbing & Ayaz Ibrahimov, Precedent in Investment Treaty Arbitrations, Int’l Arb. Rep., June 2017, at 10, 10.

  107. Id. at 11.

  108. Id.

  109. Collins, supra note 12, at 241.

  110. See, e.g., Arbitration vs. Litigation: Choosing the Right Path, Pepp. L. Blog (Apr. 4, 2024), https://law.pepperdine.edu/blog/posts/arbitration-vs-litigation-choosing-the-right-path.htm [https://perma.cc/4MQG-2M7F] (weighing the pros and cons of arbitration).

  111. Collins, supra note 12, at 241.

  112. Karkason, supra note 89; Moody, supra note 5 (internal quotation marks omitted).

  113. Collins, supra note 12, at 241.

  114. World Investment Report 2024, supra note 9, at 73–74.

  115. Id. at 73.

  116. The ICSID Caseload—Statistics, supra note 35, at 2, 6.

  117. Id. at 1. This number includes Ecuador, which had previously denounced the ICSID Convention in 2009. Ecuador Rejoins the ICSID Convention, Inv. Treaty News (Oct. 7, 2021), https://www.iisd.org/itn/en/2021/10/07/ecuador-rejoins-the-icsid-convention/ [https://perma.cc/2JDY-D7BQ]. Ecuador chose to rejoin ICSID as one of several measures put in place to attract foreign direct investment in the state. Id.

  118. Morrow, supra note 96.

  119. Franck, supra note 36, at 351.

  120. Lauge N. Skovgaard Poulsen & Geoffrey Gertz, Reforming the Investment Treaty Regime: A ‘Backward-Looking’ Approach 4 (Chatham House, London 2021).

  121. Homepage, U.N. Comm’n on Int’l Trade L., https://uncitral.un.org/ [https://perma.cc/SUD8-LWGQ] (last visited Sep. 11, 2025).

  122. The International Investment Treaty Regime and Climate Action, supra note 87, at 3; World Investment Report 2024, supra note 9, at 68.

  123. World Investment Report 2024, supra note 9, at 46.

  124. Id. at 68–69.

  125. Id. at 68.

  126. Alschner, supra note 15, at 55; World Investment Report 2024, supra note 9, at 66.

  127. Alschner, supra note 15, at 54 (footnote omitted).

  128. Id.; World Investment Report 2024, supra note 9, at 65.

  129. Alschner, supra note 4, at 70. Alschner emphasizes that the primitive purpose of economic coordination exceptions is to “manage normative conflicts with overlapping international economic law regimes” and to ensure that IIAs do not interfere with “welfare maximizing conduct that was specifically allowed or mandated by international tax, trade, intellectual property, or financial law.” Id. at 71. Overlapping obligations for states has become a more significant issue in recent years, as states are bound both by IIAs and by multilateral agreements such as the Paris Climate Accords. As such, this topic is rightfully considered in the discussion of reforming IIAs. See generally Ctr. for Int’l Env’t L., International Investment Law and ISDS: Overcoming Legal Barriers to Effective Climate Action Under the UNFCCC and the Paris Agreement (2024) (arguing that overlapping IIA and climate treaty obligations constrain states’ regulatory freedom).

  130. The International Investment Treaty Regime and Climate Action, supra note 87, at 5.

  131. Alschner, supra note 4, at 74; World Investment Report 2024, supra note 9, at 68.

  132. Many old-generation IIAs include “survival provisions,” which may also be referred to as “sunset clauses.” These provisions empower a treaty to remain in effect long past a state’s denunciation of it. Valasek & FitzGerald, supra note 2, at 7. These clauses provide that “investments made, acquired, or approved prior to the date of the termination of the treaty will be protected by the treaty’s provisions for a further term of ten to twenty years” or, for some, “even for the whole time span of the investment.” Blythe, supra note 22, at 275; Andrew Gattini, Jurisdiction ratione temporis in International Investment Arbitration, 16 L. & Prac. Int’l Cts. & Tribunals 139, 154 (2017).

  133. World Investment Report 2024, supra note 9, at 67.

  134. Compensation and Damages, supra note 77, at 11. Sixty percent of IIAs concluded in the past five years include these sorts of provisions. Id. at 10.

  135. Id. at 11.

  136. Id.

  137. U.N. Trade & Dev., https://unctad.org/ [https://perma.cc/YW7Z-GLCN] (last visited Sep. 8, 2025).

  138. Compensation and Damages, supra note 77, at 11.

  139. Id. at 14.

  140. Alschner, supra note 4, at 41 (footnote omitted).

  141. World Investment Report 2024, supra note 9, at 69.

  142. Id. at 46. In comparison, developed countries adopt such policies only forty-three percent of the time. Id.

  143. Id. at 53.

  144. Poulsen & Gertz, supra note 120, at 5 (proposing that states reinterpret their own IIAs); Morrow, supra note 96 (recommending amending treaties that provide jurisdiction for ISDS); The International Investment Treaty Regime and Climate Action, supra note 87, at 15 (advocating for accelerating the reform of old-generation IIAs).

  145. Poulsen & Gertz, supra note 120, at 5.

  146. Id.

  147. Id. at 6–8.

  148. See Ajoo Kim, 2024 in Review: ISDS Reforms - Busy Business and Progress, Kluwer Arb. Blog (Jan. 21, 2025), https://arbitrationblog.kluwerarbitration.com/2025/01/21/2024-in-review-isds-reforms-busy-business-and-progress/ [https://perma.cc/XX84-QNS6].

  149. The International Investment Treaty Regime and Climate Action, supra note 87, at 14.

  150. U.N. Conference on Trade and Development, International Investment Agreements Reform Accelerator, at 2 (Nov. 12, 2020).

  151. The eight provisions identified by the IIA Reform Accelerator are: “(1) Definition of investment (2) Definition of investor (3) National treatment (NT) (4) Most-favoured-nation (MFN) treatment (5) Fair and equitable treatment (FET) (6) Full protection and security (FPS) (7) Indirect expropriation (8) Public policy exceptions.” Id. at 4.

  152. See id. at 10–28.

  153. Id. at 29.

  154. Multi-Stakeholder Platform on IIA Reform, U.N. Trade & Dev.: Inv. Pol’y Hub, https://investmentpolicy.unctad.org/pages/1074/multi-stakeholder-platform-on-iia-reform [https://perma.cc/GNG8-7D3R] (last visited Sep. 11, 2025).

  155. Id.

  156. See International Investment Agreements Navigator, supra note 38.

  157. See generally Franck, supra note 36 (explaining the need for reform at ICSID over time); Maria José Alarcon, 2022 in Review: Institutional and Structural ISDS Reforms, Kluwer Arb. Blog (Jan. 29, 2023), https://arbitrationblog.kluwerarbitration.com/2023/01/29/2022-in-review-institutional-and-structural-isds-reforms/ [https://perma.cc/89KZ-T88C] (noting that the ICSID rules were amended in 2022 with the intent of increasing transparency in arbitration proceedings).

  158. About ICSID, supra note 21.

  159. Id.; Martin Gusy, Eight Key Amendments of the 2022 ICSID Arbitration Rules, Bracewell (May 2, 2023), https://www.bracewell.com/resources/eight-key-amendments-2022-icsid-arbitration-rules/ [https://perma.cc/YNB3-DCVY].

  160. ICSID Rules and Regulations Amendment, Int’l Ctr. for Settlement of Inv. Disps.: World Bank Grp. (July 1, 2022), https://icsid.worldbank.org/resources/rules-amendments [https://perma.cc/9X42-VQ3B].

  161. Collins, supra note 12, at 256–57; Franck, supra note 36, at 391.

  162. Gusy, supra note 159; ICSID Releases 2022 Versions of Its Rules and Regulations, supra note 34.

  163. Int’l Ctr. for Settelement of Inv. Disps., ICSID: Convention, Regulations & Rules 132 (2022), https://icsid.worldbank.org/sites/default/files/documents/ICSID_Convention.pdf [https://perma.cc/L3LH-RWQM] [hereinafter ICSID: Convention, Regulations & Rules].

  164. Id. at 117.

  165. ICSID Releases 2022 Versions of Its Rules and Regulations, supra note 34.

  166. David R. Boyd (Special Rapporteur on Human Rights and the Environment), Annex 3: Brief Summary of ISDS Reform Efforts, U.N. Doc. A/78/168, annex 3 (July 10, 2023); ICSID: Convention, Regulations & Rules, supra note 163, at 18 (“The Centre shall not publish the award without the consent of the parties.”).

  167. Spotlight on Transparency at ICSID, Int’l Ctr. for Settlement of Inv. Disps.: World Bank Grp. (May 15, 2023), https://icsid.worldbank.org/news-and-events/speeches-articles/spotlight-transparency-icsid [https://perma.cc/8NUN-S9R6].

  168. See ICSID: Conventions, Regulations, & Rules, supra note 163, at 57 (requiring the Secretary General to publish a Register for each case); see also Cases, Int’l Ctr. for Settlement of Inv. Disps.: World Bank Grp., https://icsid.worldbank.org/cases/case-database [https://perma.cc/J6HM-EV9M] (last visited Sep. 22, 2025) (collecting cases).

  169. Despite some discussion, ICSID has not added an appellate mechanism with its latest amendments, and it seems unlikely that an appellate mechanism will be established anytime soon given its controversy and the potential legal difficulties in establishing such a mechanism. ICSID: Convention, Regulations & Rules, supra note 163, at 21 (“The award shall be binding on the parties and shall not be subject to any appeal . . . .” (emphasis added)); see also Yenkong Ngangjoh-Hodu & Collins C. Ajibo, ICSID Annulment Procedure and the WTO Appellate System: The Case for an Appellate System for Investment Arbitration, 6 J. Int’l Disp. Settlement 308, 326–27 (2015) (explaining the debate over whether ICSID can and/or should establish an appellate mechanism); Johanna Kalb, Creating an ICSID Appellate Body, 10 UCLA J. Int’l L. & Foreign Affs. 179, 218 (2005) (explaining the benefits of creating an ICSID appellate body).

  170. Miller, Stebbing & Ibrahimov, supra note 106, at 11 (“It is precisely through the publication of such excerpts and awards that tribunals are able to follow in the footsteps of their predecessors . . . .”).

  171. Croisant Guillaume, Multilateral Investment Court, Jus Mundi (Sep. 16, 2025), https://jusmundi.com/en/document/publication/en-multilateral-investment-court [https://perma.cc/FPK5-WAGG].

  172. Id.

  173. Gabrielle Kaufmann-Kohler & Michele Potestà, CIDS: Geneva Ctr. For Int’l Disp. Settlement, The Composition of a Multilateral Investment Court and of an Appeal Mechanism for Investment Awards 8 (2017), https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/cids_supplemental_report.pdf [https://perma.cc/PW2G-3UXJ].

  174. Investor-State Dispute Settlement (ISDS) Reform, CIDS: Geneva Ctr. for Int’l Disp. Settlement (2024), https://cids.ch/research/research-projects/2024-investor-state-dispute-settlement-isds-reform/ [https://perma.cc/WZ6J-LVMF]. Since 2017, the Center has published two more papers on the topic of ISDS reform, as well as hosting a series of seminars and workshops. Id. While the Center’s project on ISDS reform was officially completed in 2020, the authors of the original report continue to act as experts for Switzerland in WGIII. Id. Furthermore, the Center has prepared seven “concept papers” on topics of interest for WGIII. Id.

  175. Working Group III: Investor-State Dispute Settlement Reform, U.N. Comm’n on Int’l Trade L., https://uncitral.un.org/en/working_groups/3/investor-state [https://perma.cc/L5B2-PW9F] (last visited Sep. 22, 2025).

  176. UNCITRAL Working Group III Holds First Meeting on Possible Reform of ISDS, Int’l Inst. for Sustainable Dev.: Inv. Treaty News (Dec. 21, 2017), https://www.iisd.org/itn/2017/12/21/uncitral-working-group-iii-holds-first-meeting-on-possible-reform-of-isds/ [https://perma.cc/ZQF6-Q2ZX]; Ajoo Kim, 2023 Year in Review: ISDS Reforms – Milestone Achieved, Uncertainties Persist, Kluwer Arb. Blog (Feb. 20, 2024), https://legalblogs.wolterskluwer.com/arbitration-blog/2023-year-in-review-isds-reforms-milestone-achieved-uncertainties-persist/ [https://perma.cc/NCH4-7QUH]; Collins, supra note 12, at 257.

  177. Kim, supra note 176.

  178. Kim, supra note 148.

  179. Güneş Ünüvar, Meaningful Consensus or Delaying Disagreements? UNCITRAL Working Group III and the Advisory Centre on International Investment Dispute Resolution, Kluwer Arb. Blog (May 19, 2024), https://arbitrationblog.kluwerarbitration.com/2024/05/19/meaningful-consensus-or-delaying-disagreements-uncitral-working-group-iii-and-the-advisory-centre-on-international-investment-dispute-resolution/ [https://perma.cc/B8RV-Z92R] (“[A] prevalent sentiment among many delegations of WGIII is that the [advisory center] should, first and foremost, be able to fulfill its intended purpose in assisting least developed and developing countries in their efforts to access justice and adequately defend themselves against foreign investor claims . . . .”).

  180. Caroline Kittelmann & Sarah Lemoine, An Overview of the First Draft of the Multilateral Instrument on ISDS Reform, Kluwer Arb. Blog (Sep. 6, 2024), https://legalblogs.wolterskluwer.com/arbitration-blog/an-overview-of-the-first-draft-of-the-multilateral-instrument-on-isds-reform/ [https://perma.cc/JYN6-KQMQ]; U.N. Comm’n on Int’l Trade L., Possible Reform of Investor-State Dispute Settlement (ISDS): Draft Multilateral Instrument on ISDS Reform, ¶ 2, U.N. Doc. A/CN.9/WG.III/WP.246 (July 8, 2024) (citation omitted).

  181. Kittlemann & Lemoine, supra note 180.

  182. See id.

  183. Possible Reform of Investor-State Disp. Settlement (ISDS): Draft Multilateral Instrument on ISDS Reform, supra note 180, ¶¶ 3, 10–17 (discussing Article 2).

  184. Id.

  185. Kim, supra note 148.

  186. U.N. Comm’n on Int’l Trade L., Possible Reform of Investor-State Dispute Settlement: Submission from the European Union and its Member States on Certain Aspects Concerning the Jurisdiction of the Standing Mechanism, ¶¶ 2–3, U.N. Doc. A/CN.9/WG.III/WP.257 (June 11, 2025).

  187. U.N. Comm’n on Int’l Trade L., Possible Reform of Investor-State Dispute Settlement (ISDS): Draft Statute of a Standing Mechanism for the Resolution of International Investor Dispsutes, at art. 3, ¶ 1, art. 12, ¶¶ 2–4, U.N. Doc. A/CN.9/WG.III/WP.239 (Feb. 8, 2024); Fahira Brodlija, The Multilateral Investment Court: Necessary ISDS Reform or Self-Fulfilling Prophecy?, 15 Arb. L. Rev. 1, 4 (2024).

  188. Guillaume, supra note 171; U.N. Comm’n on Int’l Trade L., Possible Reform of Investor-State Dispute Settlement (ISDS): Submission from the European Union and its Member States, at annex, U.N. Doc. A/CN.9/WG.III/WP.159/Add.1 (Jan. 24, 2019).

  189. Multilateral Investment Court Project, supra note 62.

  190. See supra Section III.B; Brodlija, supra note 187, at 5–6.

  191. Collins, supra note 12, at 261; Annex 3: Brief Summary of ISDS Reform Efforts, supra note 166, at 4.

  192. Possible Reform of Investor-State Dispute Settlement (ISDS): Draft Statute of a Standing Mechanism for the Resolution of International Investor Dispute, supra note 187, § 1, ¶ 3.

  193. See U.N. Comm’n on Int’l Trade L., Report of Working Group III (Investor-State Dispute Settlement Reform) on the Work of Its Forty-Ninth Session (Vienna, 23–27 September 2024), ¶¶ 3, 17, 24, 40, U.N. Doc. A/CN.9/1194, (Oct. 26, 2024).

  194. Collins, supra note 12, at 262; Brodlija, supra note 187, at 4–5.

  195. Brodlija, supra note 187, at 11.

  196. Guillaume, supra note 171.

  197. Id.; Brodlija, supra note 187, at 14 (“Most of the WGIII’s delegations . . . propose a flexible, gradual, and targeted reform. This was clear from the very beginning of the WGIII mandate when several states . . . emphasized that the reform process at the WGIII should not be prejudiced in favor of the [multilateral investment court].”).

  198. See Working Group III: Investor-State Dispute Settlement Reform, supra note 175.