Published 22 January 2024
UNCITRAL Working Group III (the "Working Group") was formed more than six years ago to address widespread criticism of the investor-State dispute settlement system created by the worldwide network of bilateral and multilateral investment treaties ("ISDS"). The Working Group has made little progress to date for a number of reasons, not least of which is the fact that not everyone in the Working Group agrees that there is a crying need for reform. There remain staunch proponents of ISDS who maintain that its virtues far outweigh its drawbacks, see it as an appropriate vehicle for the peaceful settlement of investment disputes rather than a menace to economies falling victim to outrageous decisions, and therefore invoke the "If it ain't broke don't fix it" principle, which makes it difficult to achieve consensus on even the most basic reforms.
When the Commission gave the Working Group its mandate to work on ISDS reform, it specified that the Group was to be "Government-led," signaling a break from past practice, which had involved private sector arbitration practitioners often sitting as government delegates and speaking on behalf of States. Private interests are still afforded access to the Working Group's sessions as "stakeholders," but they participate wearing their non-governmental hats, intervening, for instance, on behalf of "observer" delegations largely in favor of maintaining the status quo.
Nevertheless, the fact remains that there are also still governments unconvinced of the need for reform and others worried about the potential adverse effect of radical change on the level of foreign investment in their countries. The former, mainly countries with advanced economies, are influenced by private interests seeking protection for their investments abroad; the latter, principally developing countries, remain convinced of the connection between investment treaties and foreign investment, or at least unconvinced of the absence of such connection and therefore willing to put up with investment treaties as a necessary evil.
Footnotes omitted from this introduction.