Draft Statute of a Standing Mechanism
The Working Group discussed the draft statute for a standing mechanism, particularly focusing on the selection and appointment of tribunals for both the firsttier dispute mechanism and the appellate mechanism.
It was suggested that tribunal members should have experience in government, the judiciary, or foreign service to ensure an understanding of public policy. While knowledge of investors’ business operations is desirable, it should not be mandatory for all members. Adjudicatory experience was deemed particularly relevant for the appeals tribunal, as its role centers on reviewing legal correctness.
Opinions varied on whether the qualifications for the appeals tribunal should differ from those of the dispute tribunal. Some felt they should be the same, while others argued that differing tasks warranted different qualifications, particularly emphasizing the need for significant adjudicatory experience for appeals tribunal members.
The Working Group agreed that tribunal members should be independent, impartial, of high moral character, and possess recognized competence in public international or investment law as well as the resolution of international disputes.
Views also diverged on requiring tribunal members to be nationals of a Contracting Party. While some argued for such a requirement to ensure representation, many disagreed, preferring a broader candidate pool to reflect diverse backgrounds. This flexibility would be important in the early stages of the mechanism. It was agreed that “[a] Contracting Party may nominate up to four individuals as candidates for appointment as members of the Tribunal. Candidates need not be nationals of a Contracting Party.” Contracting Parties should also consider gender representation and consult relevant stakeholders in the nomination process. It was suggested that nominations should typically come from Contracting Parties unless the Conference of the Contracting Parties opts for an open call for nominations.
Procedural and Cross-cutting Issues
In discussing procedural and cross-cutting issues, delegates supported a draft provision addressing counterclaims, highlighting their potential to improve procedural efficiency and reduce the asymmetry between respondent States and claimants. However, concerns were raised about possible delays, increased costs, and risks of parallel proceedings. The draft provision allows respondents to make counterclaims related to the original claim, requiring submission no later than the statement of defense unless justified otherwise.
Third-party funding was another topic, eliciting diverse views on regulation. Some argued it promoted access to justice for small and medium enterprises and suggested limited regulation focused on conflicts of interest. Others expressed concerns that it increases costs for respondent States, creates settlement resistance, and poses potential corruption and money-laundering risks. It was agreed to develop a separate disclosure provision for third-party funding.
Amicable settlement was also discussed, with general support for encouraging but not mandating the process. It was proposed to introduce a six-month cooling-off period before raising claims, starting from an invitation for settlement. However, there were concerns about potential delays and conflicts with existing provisions.
Lastly, the assessment of damages and compensation was addressed, with key points including the need to prevent excessive damages, accurately reflect customary international law, ensure only simple interest is awarded and prohibit speculative damages.
Multilateral Instrument
In relation to the draft multilateral instrument on ISDS reform, it was proposed that the instrument should include binding substantive obligations for all contracting parties, referred to as "core provisions." It was suggested that these core provisions could either be included in the main body of the instrument or that contracting parties would need to commit to at least one protocol containing these provisions. Further discussions are necessary due to differing views on which provisions should be classified as core, and the importance of maintaining flexibility and optionality within the multilateral instrument.
The Way Forward
The Working Group will continue deliberating on the draft statute of a standing mechanism, the draft provisions on procedural and cross-cutting issues and the draft multilateral instrument on the ISDS reform during the fiftieth session scheduled for 20–24 January 2025 in Vienna.
