Partner, DMDB Law
UNCITRAL’s Working Group III (“WG III”) on Investor-State Dispute Settlement Reform met in New York from 1 to 5 April 2024. WG III had three main items on its agenda: the “Draft statute of an advisory centre on international investment dispute resolution”, the “Draft guidelines on prevention and mitigation of international investment disputes”, and the “Draft statute of a standing mechanism”.
Since 2004, CEPANI is represented in UNCITRAL Working Group II on Dispute Settlement, and is since 2023 represented in UNCITRAL Working Group III.
Advisory centre
The first item on the agenda of WG III was the proposed creation of an Advisory Centre on International Investment Dispute Resolution (“Advisory Centre”), and a draft statute for the establishment of that Centre. During the meeting, WG III finalized the discussion on the Advisory Centre.
During the final discussion on the draft statute establishing the Advisory Centre, WG III agreed on several outstanding issues, some of which had also been addressed during the previous meeting in Vienna, such as the categorization and classification of its potential member States (to determine their contribution to the Centre), the structure and functioning of the Centre , the role of its organs, and the fees to be charged to non-Member States, amongst others.
It was also decided to leave it to Governing Committee to determine whether state to state dispute settlement services could be provided, as there was no agreement between de members of WG III in this. It was agreed that the Centre would be established within the UN system and headquartered in one State (although no decision was reached on the location of the headquarters) with the possibility for the Centre to establish regional offices. Finally, it was agreed that States would not be able to make reservations to the Statute.
The final approval of the work on the Advisory Centre will be on the agenda of the UNCITRAL Commission Session in July 2024 for consideration and final approval.
WG III finally agreed that further meetings and consultations would be necessary to operationalize the Centre, and this will be taken up already in an intersessional meeting of WG III which Thailand proposed to be held in Bangkok in December 2024.
Draft guidelines on prevention and mitigation of international investment disputes
The Committee also briefly discussed its work on the “Draft guidelines on prevention and mitigation of international investment disputes”. There was disagreement on the precise status of these guidelines, and it was therefore decided that the Secretariat prepare a new version of the guidelines as a “toolkit” compiling the practices of the States and avoiding any prescriptive language.
Draft statute of a standing mechanism
The third item on the agenda of WG III was the “Draft statute of a standing mechanism for the resolution of international investment disputes”, and the Annotations to the draft statute. This constitutes one of the more important items on the agenda of WG III. WG III started the discussion on the Draft statute of a standing mechanism only towards the end of WG III, and hence discussion of this item was not finalized.
There was no agreement among the States as to whether the first-tier (Tribunal) and second-tier (an appellate mechanism) should be covered on one single protocol or in two separate protocols to the ‘Multilateral instrument on ISDS reform’ (MIIR). The EU and most EU member States proposed one single protocol. Other states in turn preferred two separate protocols for States to decide to join each tier or mechanism separately. In the end, it was agreed to start the discussion on the ‘first-tier’ of the mechanism only, without prejudice to the question of whether one or two protocols should in the end be adopted.
Discussions focused on several draft provisions, relating to general principles (Article 2), the structure of the Tribunal and the role of the secretariat (Articles 3-6), including the question whether the standing mechanisms should have its own secretariat or instead rely on the services of other institutions such as the PCA or ICSID. An important issue that was also discussed was the question of jurisdiction (Articles 14 et s.). It was discussed how consent is to be expressed, whether the Tribunal has exclusive jurisdiction over disputes based on the list of instruments which a Contracting Party can provide, and which would signify consent to the jurisdiction of the Dispute Tribunal. Article 16 (Panels and the assignment of disputes) and Article 17 (Powers and functions of the Panel) were also discussed, including in relation to whether the Panels would be composed of fixed members or whether ad hoc members should be appointed.