Investment Treaty Arbitration: Opportunities to reform arbitral rules and processes

This report by the International Institute for Sustainable Development (IISD) analyzes the rules and governing structures of various investor-state dispute settlement (ISDS) institutions. It identifies critical areas for reform—specifically transparency, arbitrator independence, and the consistency of awards—and evaluates how different institutional frameworks (intergovernmental versus non-governmental) impact the ability of states to implement these changes.

• By the end of 2012, the International Centre for Settlement of Investment Disputes (ICSID) and the United Nations Commission on International Trade Law (UNCITRAL) were the most used frameworks for ISDS cases, accounting for 61.9 per cent and 27.6 per cent of known disputes respectively.
• Outcomes of concluded cases under ICSID and UNCITRAL rules are similar, with slightly over 40 per cent of decisions rendered in favor of the state, while slightly under 60 per cent resulted in investor victories or settlements.
• The Stockholm Chamber of Commerce (SCC) is particularly relevant for energy-related disputes because it is one of the alternatives available under the Energy Charter Treaty (ECT), which had 47 member states as of November 1, 2013.
• Intergovernmental institutions like ICSID, the Permanent Court of Arbitration (PCA), and UNCITRAL offer states more influence over reform than non-governmental bodies like the ICC or SCC, which are governed by private sector boards.
• Transparency in investment arbitration has historically been low, but UNCITRAL adopted new 'Transparency Rules' in July 2013, set to take effect on April 1, 2014, to increase openness in treaty-based proceedings.
• Concerns exist regarding the impartiality of arbitrators because parties typically appoint their own arbitrators, and the 'dual-role' issue allows individuals to serve as both arbitrators and counsel in different investment disputes.
• The process for challenging arbitrators is criticized for potential bias; for example, under ICSID, the President of the World Bank (traditionally a U.S. citizen) often decides challenges if co-arbitrators cannot agree.
• States have very limited avenues to challenge awards based on errors of law or fact. Under the ICSID Convention, awards can only be annulled on five specific grounds, and manifest errors of law or fact are not among them.
• The New York Convention of 1958 requires roughly 150 state parties to recognize and enforce foreign arbitral awards, allowing refusal only on seven limited grounds, none of which include errors of law or fact.

APA

Bernasconi-Osterwalder, N., & Rosert, D. (2014). Investment Treaty Arbitration: Opportunities to reform arbitral rules and processes. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/investment_treaty_arbitration.pdf

Chicago

Bernasconi-Osterwalder, Nathalie, and Diana Rosert. Investment Treaty Arbitration: Opportunities to reform arbitral rules and processes. International Institute for Sustainable Development, 2014. https://www.iisd.org/system/files/publications/investment_treaty_arbitration.pdf.

Wikipedia

{{cite report |last1=Bernasconi-Osterwalder |first1=Nathalie |last2=Rosert |first2=Diana |title=Investment Treaty Arbitration: Opportunities to reform arbitral rules and processes |publisher=International Institute for Sustainable Development |date=January 2014 |url=https://www.iisd.org/system/files/publications/investment_treaty_arbitration.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bernasconiosterwalder2014investment, author = {Bernasconi-Osterwalder, Nathalie and Rosert, Diana}, title = {{Investment Treaty Arbitration: Opportunities to reform arbitral rules and processes}}, institution = {International Institute for Sustainable Development}, year = {2014}, month = jan, url = {https://www.iisd.org/system/files/publications/investment_treaty_arbitration.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }