Partner, DMDB Law
UNCITRAL’s Working Group III (“WG III”) on Investor-State Dispute Settlement (ISDS) Reform met in Vienna from 22 to 26 March 2026.
The agenda for the 54th meeting of WG III contained the following items:
Structure and design of a standing mechanism for the resolution of international investment disputes;
Draft statute of a permanent tribunal for international investment disputes;
Draft statute of a permanent appellate tribunal for international investment disputes.
Due to the austerity measures in place at the UN, it was decided that the meeting on Monday be an informal meeting, and hence the formal session of WGIII began only on Tuesday.
Since 2004, CEPANI is represented in UNCITRAL Working Group II on Dispute Settlement, and since 2023, CEPANI is represented in UNCITRAL Working Group III.
Draft statute of a permanent tribunal for international investment disputes
The first item on the agenda was the continuation of the discussion of the “Draft statute of a permanent tribunal for international investment disputes”, starting with Article 24. As a reminder, in a previous session, WG III had decided to split the statutes of both the permanent tribunal for international investment disputes and the appellate mechanism (now termed “Permanent appellate tribunal for international investment disputes”).
The discussion of the Draft statute of a permanent tribunal for international investment disputes” (he first instance tribunal), in this session, started with the financing of the tribunal (Article 24). The WG agreed with most provisions. Some clarifications were made, notably on the fact that discretion was provided to the Conference of the Parties, if a member State would be in default of its contributions, to decide whether to limit or modify the rights or obligations as provided, and that circumstances leading to the default would be taken into account. The proposal, in paragraph 3, to charge user fees for the services was supported, and the user fees would be the main source of funding. The proposal in paragraph 4 to allow the Permanent Tribunal to receive voluntary contributions raised some discussions. Notably, concerns were expressed about voluntary contributions, as these could result in conflicts of interest.
Article 25 covers the legal status and liability of the Tribunal. It was agreed to modify paragraphs 3 to 5, which concern the privileges and immunity of the Tribunal in order to align these with the relevant provisions of the Statute of the Advisory Centre. In relation to the privileges and immunity of the members of the Bureau, the members of the Permanent Tribunal, the Registrar and the staff members of the Registry, it was provided that these shall be accorded the same level of privileges and immunities that is accorded to the staff members of permanent diplomatic missions or international organizations.
Paragraph 7 provides that the privileges and immunity provided for the members of the Tribunal and the staff members of the Tribunal would also extend to “the persons appearing in proceedings of the Permanent Tribunal as parties, agents, legal representatives, witnesses or experts, as is necessary for the proper functioning of the Permanent Tribunal and insofar as in connection with their travel to and from, and their stay at, the place of the proceedings”. These provisions raised some debate. Some proposed that it would be necessary to accord broader privileges and immunities to members of the Permanent Tribunal and to the Registrar than to staff members, and questioned whether persons appearing in proceedings of the Tribunal as parties, agents, legal representatives, witnesses or experts indeed should be accorded the same level of privileges and immunities.
In the end, it was decided to provide that members of the Tribunal and the Registrar should have diplomatic immunity similar to that usually granted to members of diplomatic missions, and to follow more closely the privileges and immunity provisions included in the draft statute of the advisory centre, and those provided for in other conventions for the immunities of counsel and witness amongst others.
Article 29, concerning the right to vote, provides that each Contracting Party has one vote. However several delegations opposed the second paragraph as included, and which provides: “a regional economic integration organization that is a Contracting Party shall exercise its right to vote on matters within its competence with a number of votes equal to the number of its member States that are Contracting Parties to this Protocol. Such an organization shall not exercise its right to vote if any of its member States exercises its right to vote and vice versa.” Some delegations proposed to include a provision to the effect that the vote of a regional economic integration organization (REIO), ie the EU amongst others, would only be equal to the number of its member States that are Contracting Parties which are present ; other delegations proposed to delete this paragraph. No agreement was reached on this point.
On the entry into force (Article 30), delegations supported the idea of having a sufficient required number of states who deposit their instrument of ratification, acceptance or approval or of accession which would be necessary to finance the operation of the tribunal. One proposal was made to not only provide for a minimum number of states who deposit their instrument, but also to ensure that there is a sufficient number of treaties listed for the standing mechanism to effectively be able to exercise jurisdiction. It was agreed, however, that the entry into force would be based solely on the number of ratifications ; the precise number of required ratifications would be determined at a later stage.
There was also some discussion on whether a two thirds majority for the adoption of amendments would be preferable, compared to the requirement of unanimity, and on the time frame for a withdrawal to take effect.
Draft statute of a permanent appellate tribunal for international investment disputes
The discussion in WG III continued with the consideration of the “Draft statute of a permanent appellate tribunal for international investment disputes”, on which it was agreed to take into account the deliberations of the WG with regard to the Statute of the Permanent Tribunal.
Specifically in relation to the Appellate Tribunal, there was however some discussion on, amongst others, the need to carefully consider the entry into force of the Statute, as this would need be coordinated with the entry into force of the Statute of the Permanent Tribunal, and to consider the consequences of withdrawal from the Appellate Tribunal, if a Member State was a party to both the Permanent Tribunal and the Appellate Tribunal.
Structure and design of standing mechanisms for the resolution of international investment disputes
The third item on the agenda, was the Structure and design of standing mechanisms for the resolution of international investment disputes. This item concerns in essence the operation of both the Permanent Tribunal and the Permanent Appellate Tribunal, and the scope and jurisdiction of both mechanisms, which are included in the Draft Statutes of both tribunals.
In relation to the jurisdiction of the Permanent Tribunal, there was general support for the limitation to international investment disputes based on investment treaties only, though some delegations expressed the preference to also include investment disputes based on contracts and/or domestic legislation. In the end, it was decided that the Secretariat should provide different options of the drafting of the provisions on jurisdiction, delineating also the possibility for the Conference of the Parties to extend the jurisdiction to investment disputes based on contracts and/or domestic legislation.
Also in relation to the jurisdiction of the Permanent Tribunal, there was some discussion on the question whether it should extend to State-to-State disputes. While it was observed that such disputes are different from ISDS, other delegations argued that the need for a consistent interpretation of investment treaties could also arise in the context of State-to-State disputes, and hence would require the Tribunal to also deal with these to the extent that they relate to investment issues. The Secretariat was in the end asked to provide several drafting proposals on the definition of “international investment dispute”, and the option to include State-to-State disputes in the jurisdiction of the Tribunal.
A next question related to whether the Permanent Tribunal would have exclusive or non-exclusive jurisdiction, whereby, in the latter scenario, the Permanent Tribunal would in essence be an additional option for dispute settlement. The Secretariat here too was asked to provide a revised text which would provide for exclusive jurisdiction of the Permanent Tribunal, when the Contracting Parties have expressly consented to the jurisdiction of the Permanent Tribunal, and also to provide for the possibility for a Contracting Party to expressly choose between exclusive and non-exclusive jurisdiction when a treaty is notified by a Contracting Party.
A potential problem arising from the debate, and which triggered some discussion was how to deal with the situation in which consent to jurisdiction or exclusive jurisdiction did not match. This would occur for example when both treaty parties would be Contracting Parties to the Permanent Tribunal, but only one of the treaty parties listed the treaty, or when only one of the treaty parties was a Contracting Party to the Permanent Tribunal. While several delegations expressed the view that a treaty-based dispute should not be heard by the Permanent Tribunal unless all treaty parties had expressly consented to jurisdiction, other delegations considered that the Parties could still opt to submit the dispute to the Tribunal. In the end, the Secretariat was requested to prepare a text reflecting the various options.
In relation to the jurisdiction of the Appellate Tribunal, there was much discussion on whether only treaty-based investment disputes should be covered, or also contract disputes, taking into account the fact that the objective of the reform was precisely to tackle, amongst others, issues with the perceived lack of consistency in the interpretation of investment treaties. There also was discussion on the question whether the jurisdiction of the Appellate Tribunal would cover not only decisions of the Permanent Tribunal (ie the First Instance Tribunal), but also arbitral awards rendered under the ICSID Convention, and non-ICSID arbitral awards, and on whether the Appellate Tribunal should be the exclusive recourse for all decisions by the Permanent (First Instance) Tribunal. Delegations disagreed, as some delegations considered that the Contracting Parties to the Permanent Tribunal should have the option to further decide on the appropriate recourse. As a reminder, as both Statutes are envisaged as separate documents, some States might become parties to the Permanent Tribunal only, the Appellate Mechanism only, or both. A further difficulty also arises when a decision is subject to appeal but could also potentially be subject to set aside proceedings. Most delegations agreed, however, on the fact that once States have consented to the jurisdiction of the Appellate Tribunal, appeal should be the only remedy to a decision by the Permanent Tribunal. At the same time, there was much discussion on Article 19 of the Draft Statute for the Appellate Mechanism, which covers the conditions for appeal. This Article provides for two alternatives, being either a waiver of the right to pursue other remedies as a condition for appeal, or an automatic exclusion of other remedies.
The secretariat was asked to draft a revised text taking into account the fact that appeal would be exclusive if there is a ‘perfect match’ between listed treaties and that in case of arbitration under a listed treaty, the arbitration should be seated in a Contracting Party of the Appellate Tribunal. In relation to the waiver, the secretariat was asked to draft a revised text to the effect that the disputing parties would be required to submit a waiver in case of an appeal is requested.
Finally, in relation to the recognition and enforcement of decisions of the Permanent Tribunal, there was general support for including a provision similar to article 54(1) of the ICSID Convention which provides for an ‘automatic enforcement’ of awards. This was already provided for in Article 23 of the Draft Statute of the Permanent Tribunal. There was however discussion on whether decisions of the Permanent Tribunal would qualify as awards and hence how these should be enforced in a non-Contracting Party. It was agreed to delete the fourth paragraph, which provided that “recognition and enforcement may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent court or authority where the recognition and enforcement is sought, proof that: [grounds to be listed and the procedure to be detailed]”. Some delegations had indeed considered to be contrary to the exclusive nature of the appeal against decisions by the Permanent Tribunal.
Finally, in relation to the next steps, it was proposed that the 55th session would consider the remaining provisions of the procedural rules and cross‑cutting issues, as well as the draft guidelines on the calculation of damages and compensation in ISDS. The 56th session (in 2027) would consider the revised draft Statutes of the Permanent Tribunal and the Appellate Tribunal, which could then be finalized during the 57th session.