State-State Dispute Settlement Clause in Investment Treaties

This guide from the International Institute for Sustainable Development (IISD) examines state-state dispute settlement (SSDS) provisions in international investment agreements, contrasting them with the more common investor-state arbitration. It analyzes various settlement mechanisms, types of claims, and the interaction between SSDS and investor-state systems, providing recommendations for states to strengthen their control over treaty interpretation.

• Investor-state arbitration has experienced significant growth, with recorded cases increasing from 51 in 2000 to 568 by the end of 2013, while state-state arbitration has remained rare, with only four cases occurring under investment treaties.
• Renewed interest in state-state dispute settlement is driven by concerns regarding investor-state arbitration, specifically its high costs, perceived lack of predictability, independence, and openness, and the fact that claims often challenge financial policy, public welfare, and legitimate environmental measures.
• The document analyzes various mechanisms for settling investment disputes, including arbitration, quasi-judicial, and judicial procedures, as well as specific types of claims such as declaratory relief requests, interpretive claims, and diplomatic protection claims.
• The paper provides recommendations for states to consider when designing dispute settlement, including whether to use SSDS as the sole mechanism, whether to require the exhaustion of local remedies, and how to coordinate parallel state-state and investor-state cases, such as through suspension.

APA

Bernasconi-Osterwalder,, N. (2014). State-State Dispute Settlement Clause in Investment Treaties. International Institute for Sustainable Development. https://www.iisd.org/publications/guide/iisd-best-practices-series-state-state-dispute-settlement-clause-investment

Chicago

Bernasconi-Osterwalder,, Nathalie. State-State Dispute Settlement Clause in Investment Treaties. International Institute for Sustainable Development, 2014. https://www.iisd.org/publications/guide/iisd-best-practices-series-state-state-dispute-settlement-clause-investment.

Wikipedia

{{cite report |last1=Bernasconi-Osterwalder, |first1=Nathalie |title=State-State Dispute Settlement Clause in Investment Treaties |publisher=International Institute for Sustainable Development |date=31 October 2014 |url=https://www.iisd.org/publications/guide/iisd-best-practices-series-state-state-dispute-settlement-clause-investment |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bernasconiosterwalder2014statestate, author = {Bernasconi-Osterwalder,, Nathalie}, title = {{State-State Dispute Settlement Clause in Investment Treaties}}, institution = {International Institute for Sustainable Development}, year = {2014}, month = oct, url = {https://www.iisd.org/publications/guide/iisd-best-practices-series-state-state-dispute-settlement-clause-investment}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }