2022 was strongly marked by the change and reform of institutions, treaties, and procedural rules relevant to investor-State dispute settlement (ISDS). This post summarizes the most important institutional and structural reforms that were progressed during 2022 in relation to investment treaty law and ISDS. The focus is on the various reforms pursued under in the ICSID, UNCITRAL, and ECT context. It highlights the progress of such reforms and looks ahead to what 2023 and beyond might bring.


ICSID 2022 Rules

On January 2022, ICSID submitted its amended rules to the Administrative Council for vote. These rules were well received by the international arbitration community and approved by the Administrative Council on March 21, 2021. Kluwer Arbitration Blog followed the amendment process since its inception, providing continuous updates and coverage of the ongoing revision and amendment process.

As argued here, the ICSID amended rules reflect contemporary approaches to arbitration procedures with an overarching goal of increasing transparency in the conduct and outcome of proceedings. In an interview on the Blog, the Secretary General of ICSID, Meg Kinnear, highlighted how the new rules better-define the process for publishing awards and decisions, including through party-agreed redactions and transparency measures. Notably, AR 62 and AR 63 stipulate that absent a clear objection in 60 days, a party will be deemed to have consented to the publication of awards, orders, and decisions.

Another key reform was highlighted by Alberto Favro and Antonio R. Parra, the 2022 rules regulate third-party funding (TPF) for the first time, requiring parties to disclose the names and addresses of entities and persons from which they are receiving funding directly or indirectly. The revised rules also envisage situations in which a tribunal might even order the disclosure of the TPF agreement. Critics of the regulation of TPF in the ICSID rules note that Rule 14 forces parties to disclose more about the funder than the funded party itself, and argue that disclosure of TPF may give an unfair advantage to the nonfunded party. Yarik Kryvoi and Alexandros Bakos further pointed out that the broad language of the definition of TPF used may make it hard to know precisely when a particular type of funding qualifies as TPF or not. Ultimately, the authors highlight a very incisive issue – left for investment tribunals to solve: do law firms acting on contingency fees qualify as a TPF under the amended definition?

From a practical perspective, several authors (here and here)  have highlighted that the new rules open the ICSID framework to more actors, such as regional economic integration organizations (REIOs), potentially creating scope for the European Union (EU) and other REIOs to become a part of the ICSID Convention. Other relevant amendments include confirmation that investment tribunals have power to issue provisional measures to preserve the rights of parties and the elimination of ambiguity concerning the procedure for early dismissal of claims that manifestly lack legal merit.


ECT Reform

On June 24, 2022, the ECT Secretariat completed a several years-long modernization process, which will be put to States Parties for decision in 2023. The Blog covered the ECT Modernization process since its inception, and in 2022 we covered various different perspectives on ECT modernization, with some commentators supporting the modernized treaty (see, e.g., here, here, and here) and some others criticizing the modernized version particularly by reference to its connection to the clean energy transition.

Maynard and Kalinin argued in their post that the modernized ECT addresses the contracting parties’ desires to promote sustainable development and combats climate change by narrowing down and clarifying the meaning of investment protection standards and by reaffirming the parties’ right to regulate in a non-discriminatory way towards the advancement of legitimate policy objectives. Further, the modernized version narrows down the scope of the definition of “investor” and “investment”, requiring that a company conducts substantial business activities to benefit from ECT Protection.

Other authors have been more critical of the reform and of the modernized ECT. Several authors have argued that the reforms would not address the need for increased international flows of long-term capital, as well as technical and financial support and technology transfers, to support the net-zero transition in developing countries—despite the ECT’s campaign to expand into Africa, Asia, and Latin America and the Caribbean. In this regard, Martin Dietrich Brauch noted that Modernized ECT Article 8 (Transfer of Technology) would remain unchanged, committing members to remove existing barriers to technology transfer and not to create new ones, but failing to create cooperation mechanisms to actively foster and increase transfers of energy technologies. In view of this and other features of the proposed reforms, such commentators argue that the renegotiated ECT does not acknowledge the need for a just transition nor creates an international cooperation mechanism addressing the needs of the most affected.

The modernization process has been punctuated by intense academic and civil society debate on both sides. It has also generated diverse reactions on the part of States and other stakeholders. In particular, the European Parliament on November 23, 2022, called for a coordinated withdrawal of the ECT, and in anticipation of this decision, the ECT Secretariat decided to postpone the voting process on the “agreement in principle” of the Modernized ECT to April 2023.


UNCITRAL WGIII Institutional Reform

In 2020, the Blog ran a series on UNCITRAL’s Working Group III (“WGIII”), and since then, there have been several blog posts on the ongoing reform process (see here, here and here). Following WGIII’s 43rd session during 2022, the Blog highlighted its work in particular on a multilateral instrument on investment reform (“MIIR”) and joint draft code of conduct.

As discussed by  Kittelmann and Lemoine, the MIIR constitutes a partial vehicle for delivering agreed ISDS reforms. (see, WGIII report, ¶ 70). Discussions during the 43rd session of the WGIII focused on the structure and scope of the MIIR, with delegates noting that it could operate as a single legal instrument with option protocols and annexes and that these could operate as treaties of their own. (See, WGIII report, ¶¶ 73-77). Parties suggested that generic rules apply to all dispute resolution mechanisms for consistency and harmonization and highlighted the need for flexibility for the MIIR to adapt to future industry developments. There was also a note on the need to use reservations carefully to avoid legal uncertainties in the application of the instrument. (See, WGIII report, ¶¶ 78-79). Finally, there appears to be a consensus among WGIII that any reform of the MIIR should apply to existing investment agreements. However, the retroactive application of the MIIR would not happen automatically, but rather it would have to be spelled out in the treaty. This is because not all members are part of the Vienna Convention of the Law of Treaties (VCLT) and a compatibility/conflicts clause would have to be inserted to understand which provisions would prevail and under what conditions. (See WGIII report, ¶ 86)

On the other hand, there has yet to be a consensus regarding the application of the MIIR to future investment treaties. The Report on the 43rd session only notes that there are still doubts as to whether states should be prohibited from derogating the MIIR, while, on the other hand, other members expressed that a set of rules for dispute settlement could ensure coherence in the practice of ISDS, however, preserving the States’ freedom to negotiate and agree on their investment obligations. (See, WGIII report, ¶ 80)

Regarding the joint ICSID-UNCITRAL Joint Code of Conduct for Adjudicators in International Investment Disputes (Code of Conduct), in an interview with the Blog, Shane Spelliscy, the Chair of WGIII, noted that this initiative has an enormous amount of support from the parties and most think it is an important and necessary component of the reform. (see, interview here). However, he noted that views differ on how much change it will bring about, with some delegations arguing that real change and improvement will come with more structural changes of the ISDS system itself. One area of particular divergence between delegations has been “double hatting” or “multiple hatting” where individuals act as arbitrators, counsel or expert witnesses in multiple disputes. In the fifth version of the Code, the WG considered introducing a cooling-off period within which an arbitrator would be limited from undertaking a legal representative or expert witness role. Also, the duties of confidentiality of an arbitrator would be extended to this period as well (see Draft Code, ¶¶46-48)

Another interesting matter regarding the Draft Code is the enforcement of the provisions therein; while most delegations highlight the value of an enforceable Code, they differ as to what would be the best option to enforce this instrument, especially in the context of arbitration.


Concluding Remarks

The structural reforms discussed in this post showcase the efforts of the arbitration community to address stakeholders’ concerns about the need for transparency and accountability in investment arbitration. If we understand where we come from and adapt the system to the ongoing global challenges, the system will last for a long time.





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