Recent Developments in Investor-State Dispute Settlement (ISDS)



• In 2012, 58 new cases were initiated, which constitutes the highest number of known treaty-based disputes ever filed in one year and confirms that foreign investors are increasingly resorting to investor-State arbitration.

• In 66% of the new cases, respondents are developing or transition economies. While the number of cases initiated by developing country investors has increased, the majority of new cases (64%) still originate from developed countries.

• Claimants have challenged a broad range of government measures, including those related to revocations of licences, breaches of investment contracts, irregularities in public tenders, changes to domestic regulatory frameworks, withdrawal of previously granted subsidies, direct expropriations of investments, tax measures and others.

• At least 42 arbitral decisions were issued in 2012, including decisions on objections to tribunal’s jurisdiction, merits of the dispute, compensation and applications for annulment of an arbitral award. 31 of these decisions are in the public domain.

• In 70% of the public decisions addressing the merits of the dispute, investors’ claims were accepted, at least in part. Nine public decisions rendered in 2012 awarded damages to the claimant, including the highest award in the history of ISDS (US$ 1.77 billion) in Occidental v. Ecuador, a case arising out of a unilateral termination by the State of an oil contract.

• For the first time in treaty-based ISDS proceedings, an arbitral tribunal affirmed its jurisdiction over a counterclaim lodged by a respondent State against the investor.

• The total number of known treaty-based cases reached 514 in 2012, and the total number of countries that have responded to one or more such case increased to 95.

• The overall number of concluded cases reached 244. Of these, approximately 42% were decided in favour of the State and approximately 31% in favour of the investor. Approximately 27% of the cases were settled.

• The public discourse about the usefulness and legitimacy of the ISDS mechanism is gaining momentum, especially given that the ISDS mechanism is on the agenda in numerous bilateral and regional international investment agreements (IIA) negotiations.

• While ISDS reform options abound, their systematic assessment including with respect to their feasibility, expected effectiveness and implementation methods remains wanting. A multilateral policy dialogue could help to develop a consensus about the preferred course for reform and ways to put it into action.


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