The transparency of international investor-State agreements has improved thanks to more precise definitions and other measures intended to avoid disputes, according to a new report issued today by a United Nations trade agency.
The report, Investor-State Dispute Settlement and Impact on Investment Rulemaking, says the experience of a number of countries with investor-State dispute settlement has influenced their approach to formulating international investment agreements (IIAs) - bilateral and regional treaties aimed at promoting foreign investment by establishing stable legal rules.
"Growing numbers of disputes in recent years have landed before arbitration panels, and observing how previous IIAs were interpreted and applied by arbitration tribunals, governments have come up with new language addressing the problems that arose in the context of the disputes," the UN Conference on Trade and Development (UNCTAD) said.
It noted that the definition of investment had been made more precise in several recent IIAs, and provisions dealing with the concept of standards of protection, such as the fair and equitable treatment standard and the concept of indirect expropriation had been redrafted and clarified.
Dispute-settlement procedures have been reviewed and modernized as well. The report says these adjustments aim at better transparency in dispute settlement, increased public participation in the process, and the possibility of consolidating claims so that settlement is faster and more efficient.
The increased number of IIA arbitration cases in recent years may also motivate developing host countries to improve administrative practices and laws so as to avoid future disputes, the report says. This would further strengthen the predictability and stability of the legal frameworks that IIAs are supposed to produce in the first place.
Established in 1964, UNCTAD promotes the development-friendly integration of developing countries into the world economy. It has progressively evolved into an authoritative knowledge-based institution whose work aims to help shape current policy debates and thinking on development, with a particular focus on ensuring that domestic policies and international action are mutually supportive in bringing about sustainable development.