Should the system of investor-state dispute settlement (ISDS) be reformed?

Should the system of investor-state dispute settlement (ISDS) be reformed? That is the question being considered by the United Nations Commission on Trade Law (UNCITRAL).

ISDS provisions are contained in about 3,000 investment treaties and investment chapters of free trade agreements. The provisions permit a foreign investor in the form of a company or individual to bring a claim directly against a State where the investor believes that its investment is being threatened by an action of the State.Foreign-Direct-Investment


FDI can be a valuable tool to exploit resources and build production facilities while creating jobs and infrastructure, particularly in developing countries. Investment agreements aim to create an enabling environment for foreign investors. Among other things, the provisions protect them against expropriation without adequate compensation and guarantee their ability to freely move assets in and out of the country. Sovereign States, on the other hand, need to govern with a multiplicity of interests in mind and their actions can, inadvertently or deliberately, deprive the foreign investor of an intended benefit. ISDS procedures provide the mechanism by which such disputes are resolved.

The most common procedures are drawn from the world of commercial arbitration, used to determine disputes between two commercial parties. They involve the use of an arbitral tribunal which gives equal standing to the investor and the State and whose decisions are binding.

The majority of developing countries rely on foreign direct investment to foster economic growth and development. The overwhelming majority of defendants in arbitral proceedings are the governments of developing and emerging economies. The outcome of ISDS arbitral tribunals can and do impact the ability of governments to develop and implement policy.

Concerns Regarding ISDS

A note by the UNCITRAL Secretariat – “Possible reform of investor-State dispute settlement” and the Report of its Working Group on ISDS summarize expressed concerns regarding ISDS. They include:

  • Inconsistency of arbitral decisions – instances where the host State is sued by different investors on the same issue but with different outcomes from different tribunals;
  • Lengthy duration and extensive cost of ISDS – States that have been sued may not have the resources to adequately defend its policies and actions or to pay arbitral awards;
  • Lack of transparency – States are using public funds and tribunal decisions may be sealed;
  • Lack of an early dismissal mechanism to address unfounded claims;
  • Lack of a mechanism to address counterclaims by respondent States;
  • Heavy reliance on arbitrators from the investor States and who may not understand policy.

Questions at the heart of these concerns address the overall legitimacy of the process. Should a system created to address disputes between two commercial parties be used to resolve policy issues that may impact millions of people? Is it acceptable to exclude domestic investors from the same recourse available to foreign investors?

Proponents of ISDS acknowledge the validity of some of these concerns and say they can be addressed by reforming the current system of ISDS. They also point to the underlying concerns that led to the use of ISDS in the first place – politicization from the use of diplomacy to address dispute and the slow judicial processes in some countries’ domestic legal system.

Concerns are not limited to those expressed by emerging economies. The EU’s submission to the UNCITRAL Working Group highlights systemic issues it believes warrants establishment of a multilateral investment court that would replace the use of arbitral tribunals. A March 2018 ruling of the European Court of Justice concluded that the ISDS clauses in an intra-EU investment treaty were incompatible with EU law.

The Trump Administration has also inserted its perspective on ISDS in the context of the NAFTA re-negotiations. The U.S. Government has consistently expressed its displeasure at being required to abide by the decisions of international panel decisions it finds not to its liking. In August 2017, the Trump Administration floated the idea of opting out of NAFTA ISDS provisions (Chapter 11). Should the US remove itself from the NAFTA ISDS provisions this would be a major departure in US policy and a disappointment for US corporations but a shot in the arm for opponents of ISDS.

Investment Facilitation

UNCITRAL will continue its deliberations. A growing consensus appears to be that while ISDS serves a role the system needs to be reformed. Meanwhile, in December 2017, 70 WTO members agreed to begin discussions to develop the framework for a Multilateral Investment Facilitation Agreement. Discussions will not address ISDS reform, but the purpose will be to minimize the likelihood of disputes by creating a more transparent, efficient, and predictable environment for facilitating cross-border investment.

To the extent that disputes arise because of tension between development-oriented policies of host States and investor goals, conflicts can best be minimized by incorporating a true development dimension into whatever frameworks are used to manage the FDI inflows into developing countries.

(Cross-posted from DevelopTradeLaw blog.)


Write On! The New York International Law Review (NYILR)- Call for Submissions

For over 30 years, the New York International Law Review has provided in-depth legal analysis on cutting-edge international law topics. In continuing this tradition, NYILR invites submissions for scholarly papers on international law via Scholastica. NYILR is co-published by St. John’s University School of Law and the New York State Bar Association.

For more information, please visit the St. John’s University School of Law website or the NYSBA website.

Follow @nyilr for updates.

From memory to justice: addressing sexual violence in Chile 40 years on

In February 2018, authorities in Chile granted historical monument status to a  clandestine detention center formerly located in the basement of Plaza Constitución, in the heart of Santiago’s civic district. Known as Cuartel N°1 (headquarters N°1) of the police intelligence services (SICAR), or as El Hoyo (the Hole), this site functioned as an interrogation and torture center during the dictatorship era, between 1973-1974. This recognition is symbolic given the site’s location at the time, under a square in front of La Moneda presidential palace. It is also significant because this site was one of many where prisoners, in particular women, were subjected to systematic sexual torture during the 1973-1990 military regime. Over this last decade, other detention centers notorious for sexual violence have attained national heritage status. These memorialization initiatives are a form of reparations to the victims. They are also the result of sustained advocacy efforts by victim groups, who have demanded that public steps be taken to memorialize the atrocities of the Pinochet regime.

However, dealing with the past is complex, and a gap remains between memory processes and justice efforts. To date, there have been no convictions for sexual violence in human rights trials in Chile. The 2004 Valech truth commission report marked the first public acknowledgement that the military regime routinely used sexual violence against political opponents in state-run detention facilities. Focusing on cases of political prisoners and torture, the report identified various sites where this tactic was used. The Valech commission’s archives could not be made available to the courts as a 50-year secrecy law prohibited public and judicial access to this information, although partial judicial access has since been granted. Importantly, the law did not prevent survivors from separately pursuing criminal or civil actions.

When survivors and witnesses of sexual violence have come forward in human rights trials, judges have largely disregarded their evidence. Courts have tended to prioritize the prosecution of deaths and disappearances, focusing primarily on murder and kidnapping charges. Torture has been considered of lesser gravity, in part due to its inadequate inclusion in the law in force at the time of the offences. While several recent decisions have included torture convictions and have reflected its gravity in the penalties imposed, courts have yet to expressly recognize sexual violence as a form of torture. Judges have also been reluctant to convict individuals for sexual violence due to the absence of physical evidence, failing to apply international precedents in reaching their findings.

In recent years, sexual violence survivors have demanded justice, insisting on categorizing these abuses as torture. In 2016, two women publicly denounced the sexual torture committed against them at the SICAR’s Cuartel N°1. Through their legal representatives, both had also previously filed criminal complaints for these crimes (in 2010 and 2015 respectively). The decision in this case (case N° 629-2010) is currently pending, but it is unlikely to result in convictions for sexual torture. The indictment against the twelve accused in the case only included charges for kidnapping, with sexual violence as an aggravating circumstance. A handful of sexual violence survivors have brought similar complaints −including several former detainees of an infamous torture center in Santiago known as Venda Sexy (Sexy Blindfold) or as the Discotheque, where guards played loud music while they sexually abused blindfolded prisoners. As state-funded legal aid is only available for the relatives of absent victims (the dead and disappeared), and not for torture survivors, these survivors have had to seek their own legal representation.

While criminal accountability for sexual violence has been lacking, the Supreme Court has recognized the right of survivors to bring civil claims for dictatorship-era sexual violence. In January 2018, in the case of Lara Reyes vs the State of Chile (case N° 31.711-17), the Supreme Court overturned a 2017 ruling of the Santiago Appeals Court for failing to uphold a plaintiff’s right to seek reparations for the sexual violence she suffered. The crimes occurred on 8 March 1984 during a political protest. Policemen arrested the victim, then a minor, and took her to a local police station, where she was held in a basement and gang-raped by several policemen. While the Appeals Court acknowledged that the policemen had sexually assaulted the victim, it found that the statute of limitations applied to the civil action for damages−filed 31 years after the crimes occurred. It held that the sexual violence did not amount to a crime against humanity, but rather was an isolated and private act, committed for personal motives by the perpetrators and not in furtherance of a State policy. It further noted that two of the perpetrators had already been convicted for the crimes under ordinary criminal provisions.

In overturning this decision, the Supreme Court made several key findings, reaffirming its prior jurisprudence on reparations for torture survivors. It found that the sexual violence in the case amounted to a crime against humanity given the political context in which it occurred, the participation of state agents and the fact that the victim’s illegal arrest had facilitated the crimes. It reasoned that, in these circumstances, the statute of limitations did not apply to either the criminal or civil actions. Finally, it held that the Chilean state and the courts have the duty to uphold the right to reparations of victims of dictatorship-era abuses. Although this case was not included in the Valech report, the Supreme Court accepted the state’s duty to provide reparations on the basis of international law.

Chile has come a long way in reckoning with its violent past. But this process remains unfinished. According to official estimates from September 2017, 1328 human rights criminal cases are currently pending at different procedural stages. Between mid-2016 and mid-2017, the Supreme Court’s criminal chamber handed down 55 judgments in human rights trials (for more details, see pages 68-71 of this report). However, accountability efforts have not included sexual violence survivors, and they have had to bear the burden of triggering compliance with the state’s obligations under international law to prosecute those responsible. Decades after the crimes took place, the window to provide redress to these victims is quickly closing.


Write On! 1st Elimination of Violence Against Women Conference in Mauritius

backlit_keyboardThis installment of Write On!, our periodic compilation of calls for papers, includes calls to submit abstracts to the Elimination of Violence against Women Conference, as follows:

►The 1st Elimination of Violence against Women Conference organised by Middlesex University Mauritius will be held on November 23, 2018 at Middlesex University Mauritius in Mauritius.  This is in support of the UN’s International Day for the Elimination of Violence against Women.

►Abstracts of a maximum of 250 words should be submitted by August 1, 2018 to Dr Hannah Baumeister. Authors of selected abstracts will be informed by September 1, 2018.

For more information please click here.


Write On! ASIL-Midwest Works-in-Progress Conference

backlit_keyboardThis installment of Write On!, our periodic compilation of calls for papers, includes calls for submissions to the ASIL-Midwest Works-in-Progress Conference, as follows:

ASIL-Midwest, an interest group of the American Society of International Law (ASIL), is co-sponsoring its 5th annual scholarly Works-in-Progress Conference at the Southern Illinois University (SIU) College of Law in Carbondale, IL on September 7-8, 2018.

►Interested participants should send a 500-word abstract to ASIL-Midwest Co-Chairs Neha Jain ( or Yvonne Dutton ( by July 15, 2018.

For more information, click here.

The Arms Trade and the US-Iran Standoff – a Lucrative Deal for the US, Saudi Arabia, and other Regional Allies?

  1. Introduction

On May 9, President Donald Trump backed out of the Joint Comprehensive Plan of Action, more commonly known as the “Iran deal”, much to the dismay of America’s allies, Iranians, and members of the Iranian diaspora around the world. Those who supported the destruction of the Iran deal, such as Saudi Arabia, are those who have the most to gain by the demise of what was an historic victory of diplomacy and, indirectly, peacekeeping. However, it is undeniable that this move will have dire consequences for the region and will cause suffering among the most vulnerable people in the region. The main questions are: who is profiting from this heinous move, financially and/or politically? And what is being done to stop such behavior?

  1. Arms Sales and Military Profiteering Fueling Conflict in the Middle East

It is no secret that the United States earns a great deal of revenue from the global arms trade. According to a recent report from the Stockholm International Peace Research Institute (Sipri), the US exported more arms than any other nation between 2008 and 2013. (p. 3) The report also finds that Saudi Arabia and the United Arab Emirates are among the world’s largest importers of weapons (p. 1), with Saudi Arabia being the world’s second largest importer of arms between 2013 and 2017. (p. 11)

Since 2013, the US has supplied 52% of weapons to the Middle East, which has been fraught with conflict. (p. 10) Further, in 2017, the State Department approved a lucrative arms deal between the US and Saudi Arabia that would allow the latter to buy $1.4 billion in military training and equipment. It is possible that this deal, along with other such deals, allows the US and its allies to curb the spread of Iranian influence in the region, while ignoring the resultant and related human rights crises and profiting from the suffering of millions.

Indeed, arms sales from the United States and other countries, such as Russia, France, and Germany, have fueled conflict in the region. Arms sales to Saudi Arabia, for instance, may have contributed to the country’s military intervention in Yemen. While the fact that Iran is under an arms embargo may impact its ability to act as a regional power, supplying arms to Saudi Arabia and other countries embroiled in military activities continues to add fire to conflicts in which they are actors.

  1. Attempts to Check the Arms Trade

In Canada, law professor Daniel Turp attempted to bring an action for judicial review in federal court against the Minister of Foreign Affairs for approving permits to provide light armored vehicles produced by General Dynamics Land Systems Canada to Saudi Arabia. (paras. 1, 2-7) In January 2017, Judge Danièle Tremblay-Lamer dismissed the application, stating that “[t]he role of the Court is not to pass moral judgment on the Minister’s decision to issue the export permits but only to make sure of the legality of such a decision”. (paras. 76, 77) The decision is under appeal. However, in January 2018, a federal court ruled that a new challenge could proceed, as new evidence linked Canadian vehicles to violent conduct directed by the Saudi government against the Shiite minority in Awamiyah, Saudi Arabia.

Also in 2017, the NGO Campaign Against Arms Trade attempted to bring a claim for judicial review against the United Kingdom Secretary of State for International Trade in the Royal Courts of Justice. The main question focused on whether possible violations of international humanitarian law in Yemen mandated the Secretary “to suspend extant export licences to the Kingdom of Saudi Arabia and to cease granting new licenses, to conform with Government policy to deny such licences where there is a ‘clear risk that the arms might be used in the commission of a serious violation of international humanitarian law’”. (para. 1) The High Court dismissed the claim, (paras. 3, 214) although on appeal, the Court of Appeal granted permission to appeal grounds 1, 2, and 4. It is unlikely that there would be the political will necessary to bring a court claim in a Western country against a company for profiteering on the suffering of Iranian citizens.

Despite these setbacks in national courts, the historical record shows that business activities can raise issues of international liability. In the context of armed conflict, Philipp Ambach argues that “investor protection […] highlights only one set of interests that are worth protecting. At least equally important is the protection of the interests of the civil communities affected by armed conflict […] The vast majority of armed conflicts of our times are, if not based on, at least closely tied in with the economic interests of the belligerent parties or stakeholders behind the scenes.” (See Ambach, p. 51, in Investment Law Within International Law: Integrationist Perspectives, CUP, 2013) Actors – individuals and legal persons – should be held accountable in national and international courts and tribunals. (Ambach, pp. 64-81)

  1. The Human Consequences of the Arms Trade and Sanctions

Going forward, the people who will be hurt by the United States’ destruction of the Iran deal and its enthusiasm for the arms trade are the most vulnerable people inside Iran and in affected countries: ordinary citizens. The arms trade does not serve the purpose of peace, nor does it positively impact sustainable economic, social, and political development of any party involved therein. Additionally, past experience shows that sanctions are not designed to target the government apparatus. They are designed to punish and humiliate ordinary people by robbing them of their dignity, their livelihoods, their health, and their self-esteem.

I hope that in the coming months and years, the United States will not forget that Iranians also deserve all the good things in the world that many Americans take for granted, and that Americans will choose to see their Iranian counterparts as friends rather than enemies. Iranian (and all) lives matter.



Law as a Method of Destruction: Dismantling Indigenous Land Rights and Protective Institutions in Brazil

Reporting on her 2016 official visit to Brazil, Special Rapporteur on the Rights of Indigenous Peoples Victoria Tauli-Corpuz declared that “[t]oday, indigenous peoples face more profound risks than at any time since the adoption of the Constitution in 1988.”[1] Brazil’s largest indigenous group, the Guaraní-Kaiowá, have and continue to suffer large-scale displacement and dispossession from their ancestral lands in the state of Mato Grosso do Sul. Encroaching large-scale agribusinesses and private landowners grab lands, transform forests into farms, and reap huge profits from agriculture exports produced on Guaraní lands. At the same time, farmers entangle indigenous representatives in decades-long legal battles over the land’s title to stave off official demarcation of lands as indigenous. Some demarcation disputes have resulted in violent clashes between private farmers, public officials and indigenous peoples.

The Guaraní-Kaiowá communities experience devastating consequences as a result of the land grabs and the ongoing violence of state-sponsored settler colonialism. To the Guaraní-Kaiowá, “land is life;” without the land, communities lack access to adequate food, water, shelter, healthcare, education and other necessities. In addition to skyrocketing suicide and childhood starvation rates, Guaraní communities are targets of violent attacks, forced removals, and dozens of assassinations of leadership. Alarmingly, the Guaraní-Kaiowá’s population has dropped from 400,000 to only 50,000 people, motivating community leaders to call this protracted conflict a “silent genocide.”[2]

As in many unfolding processes of mass atrocity, the law has played an integral role in facilitating the systematic destruction of the Guaraní-Kaiowá. Although article 231 of Brazil’s Constitution guarantees indigenous groups the collective rights of return to—and occupation and use of—their traditional lands in line with international obligations, public and private sector interests have prevented the Guaraní-Kaiowá from realizing these rights. According to Tauli-Corpuz, the law has been used to obstruct, rather than to guarantee, indigenous peoples rights in Brazil.[3] The agribusiness sector wields enormous political power in Brazil, and the ruralista caucus (“Agricultural Parliamentary Group,” or “FPA”) has used its influence to roll back not only environmental and food production regulations, but also constitutional guarantees of indigenous peoples to original lands. Indeed, the FPA supports President Michel Temer’s government while funding a massive campaign to all but eliminate indigenous land rights. In direct contravention of its international human rights treaty obligations, the state has enacted laws, passed executive decrees and issued judgments to dismantle protections of ancestral lands and indigenous peoples.

For instance, on July 20, 2017, the President approved Union Attorney General’s Opinion 001/2017, which binds all federal public administrative agencies to limit indigenous rights to demarcation in ways that do not adhere to international treaty obligations or regional human rights jurisprudence. One limitation is the application of the “temporal framework” doctrine (“tese do marco temporal”), a judicial thesis that denies indigenous peoples the right to ancestral lands if the community did not occupy and control those lands at the time the 1988 Brazilian Constitution was promulgated. Given that prior to 1988 most indigenous communities were forcibly removed from their lands in a period of military dictatorship in which the state denied legal capacity to indigenous peoples, such a doctrine severely curtails the constitutional guarantees of indigenous peoples to their original lands. Application of the temporal framework doctrine would affect 748 administrative demarcation processes presently in progress across the country.

Additionally, several proposed bills in Congress further threaten to undo protections of indigenous rights in Brazil. One of the most precarious legislative proposals is Constitutional Amendment Bill 215 (“PEC 215/2000”). If passed, PEC 215/2000 effectively would stop indigenous land demarcations, and would permit new economic and “development” activities, as well as rural settlements, on indigenous lands without free, prior and informed consent of indigenous communities as required under international law.

The United Nations Declaration on the Rights of Indigenous Peoples (“UNDRIP”) includes the clearest and most advanced articulations of the FPIC requirement under international law.[4] Although UNDRIP is non-binding, the Declaration serves as a strong, interpretive guide to determine the content and scope of indigenous rights in international law.[5] Located under several articles of the UNDRIP, FPIC again is derived from and grounded in the rights to self-determination, culture and the use of traditional lands, territories and resources.[6] Brazil also is obligated inter alia as state party to the International Labour Organization’s Convention No. 169 (“ILO No. 169”) to uphold these rights.

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