Monday, October 15, 2012

Is Investor-State Arbitration Broken?

Is Investor-State Arbitration Broken? The short answer is yes. The reasons are many.

A few years ago I went over some of these same issues in an article discussing whether there was a level playing field in investor-state arbitration. The conclusion was that there was a serious problem of the perception of bias in the system, if not actual bias. Given the developments since then in this burgeoning area of practice, this seemed to be the right time to take another look to gauge how much has changed and whether the change has been in the right direction.

This second look is not a statistical study. Although statistical studies have been made, it is highly questionable whether any statistical analysis could ever answer the question posed in this article, at least not without undertaking the arduous task of analyzing in depth the merits of hundreds of investor-state claims. It is my personal experience and that of many of my colleagues, not statistics, that leads me to say that what is needed, and what seems further away now than ever, is a complete overhaul of investor-state arbitration, top to bottom, beginning to end. The expression “biting the hand that feeds you” may come to mind, but in the long run neither states nor the international arbitration community benefits from sweeping these issues under the rug.

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