Investor-State Dispute Settlement: Removal Or Reform
- IJLLR Journal
- Jul 7
- 1 min read
Saumya Gupta, UPES, Dehradun
ABSTRACT
The investor-state dispute resolution mechanism (ISDS) is a significant feature of international investment law which allows foreign investors to file direct claims against host nations for breach of investment treaties. ISDS was developed as a way to provide a neutral and effective forum for resolving disputes between foreign investors and host nations and has helped to build confidence with foreign investors and increase foreign direct investment (FDI). In more recent times, however, ISDS has faced considerable public criticism due to the imbalance it creates between investor rights and national sovereignty. Lack of transparency, inconsistent arbitral awards, expensive arbitration proceedings, and regulatory chill are just some of the reasons why many question whether ISDS is a legitimate and fair dispute resolution system. There are those who claim that ISDS may prevent countries from carrying out public policy, and those who continue to believe in the importance of ISDS as a means to provide protection for investors from state discretion. Many reforms are being discussed on a global scale as well as a national level to help make these issues easier to resolve. One example of this is India's new Model Bilateral Investment Treaty which they are adopting as a means of reforming the system. This article discusses the ongoing debate between reforms and complete elimination of ISDS (Investor-State Dispute Settlement System) indicating that reforms are needed due to some of the limitations of ISDS but that total elimination of ISDS could lead to a decrease in the trustworthiness of investors. Thus, the process of establishing the direction of international investment law needs to be balanced.
