Is International Investment Law Entering a Brave New World of Investor-State Relations Without Arbitration and Is This Even Possible?

Abstract

In conclusion, it is evident that evaluating the advantages and disadvantages of investor-state arbitration is not a straightforward issue. As was seen in chapter II there is a strong criticism against investor-state arbitration. Likewise there are also those who believe that the investor-state arbitration is the only legitimate mechanism to resolve disputes between foreign investors and host state. Therefore, the opinions on these questions are not unanimous. However, what is certain that alternatives to investor-state arbitration have been explored by different countries and international bodies such as UNCITRAL. The research has shown different alternatives to investor-state arbitration. It is evident that various attempts have been made to remedy the weaknesses of investor-state arbitration regime. Despite its strengths it would be wrong to conclude that replacing investor-state arbitration with a different regime is an easy option. It is because all other alternatives are less formal than arbitration. Therefore, they may lack the integrity that investor-state arbitration has. Furthermore, any alternative would require ensuring procedural fairness and additional scrutiny. This means that any reform to investor-state arbitration must take a holistic approach. As Caron and Shirlow argue “reforms to one procedure may produce unintended consequences for others.” This can be seen in the recent discussions in UNICTRAL’s Working Group III which aims to analyse and provides answers as to how to reform investor-state arbitration. It is suggested that the strengths of all other methods available should be taken into account as a way to improve investor-state arbitration. As Benedict and Schill argue if the strengths of alternative methods are not used as an means of improving investor-state arbitration then these methods will simply generate ‘an exit valve’ for States and investors seeking to resolve their disputes without ‘public scrutiny’ . For these reasons, abandoning investor-state arbitration and replacing it with an alternative dispute resolution method is not something that would happen in the near future. A more realistic approach is that the current calls for a reform as well as other alternative methods would serves as an insight on how to best improve the current investor-state arbitration.