The appearance of bias in international investment arbitrators and analysis of potential impediments to bias in the European Union’s proposal for a multilateral investment court

Abstract

ESAANZ ESSAY PRIZE WINNER International investment arbitration is in a controversial state. While the systems put into place by various treaties allow an investor to protect their investments directly by initiating proceedings against a government, claims of arbitrator bias are supported by the fact that arbitrators are appointed by the parties. There are transparency concerns which contribute to arbitrators being biased towards investors from developed countries. The regime of international investment arbitration is heading towards either abolition or reform. The European Union, being the partner to more investment treaties than any other country, proposes the creation of a multilateral investment court. As a structured arbitration court, there may be less bias than the current regime of investment arbitration as proceedings would be more transparent and open to the public, binding precedent would leave less grey area in decisions and add consistency to rulings, and judges no longer being appointed by the parties removes any incentive to rule in favour of their appointing party to secure future appointments. Together with an appeals system, this proposed structure purports to be a positive change in ISDS. However as the essay will show, this approach is not likely to be attractive to the majority of states who are interested in protecting their right to govern. These issues will need to be addressed if the investment court proposal is going to gain support.

Keywords

• international investment arbitration
• bias
• multilateral investment court
• european union
• investor-state dispute settlement