The Investment Court System (ICS) has emerged as a new investment dispute resolution mechanism advocated by the EU, aiming to address the deficiencies of the traditional Investor-State Dispute Settlement (ISDS). As more regional trade agreements are negotiated, there is increasing controversy over ISDS. ICS intends to enhance the independence and impartiality of arbitrators through institutional reforms. This article analyzes the background, key features, and potential impacts of ICS.
ISDS Criticisms Lead to ICS Proposal
The ISDS system has come under criticism for issues like inconsistent rulings, lack of transparency, and regulatory chill effects on public policymaking. Developing countries have also faced large compensation payments. In response, the EU has put forward ICS as an alternative framework for investment arbitration.
Key Differences Between ICS and ISDS
The ICS introduces new features like a permanent roster of judges, an appeal mechanism, stricter conflict of interest rules for judges, and increased transparency. However, issues remain around enforcing ICS rulings under existing international conventions.
Potential Implications of ICS Adoption
If widely adopted, the ICS could enhance consistency and foreseeability in investment arbitration rulings. But given differing state interests, achieving multilateral consensus faces challenges. Gradual ICS reforms may gather more international support.
As deficiencies of the ISDS system lead more countries to question traditional investor protections, the EU’s ICS proposal represents an effort to reform investment dispute settlement. But systemic reform requires reconciling varying interests of developed and developing states.