* Teresa Cheng, GBS, SC, JP, is the Secretary for Justice of the Hong Kong Special Administrative Region of the People’s Republic of China. Prior to her appointment as the Secretary for Justice, she was a senior counsel in private practice, a chartered engineer, a chartered arbitrator and an accredited mediator. Apart from being a Past Chairperson of the Hong Kong International Arbitration Centre, Ms. Cheng is also a Past President of the Chartered Institute of Arbitrators, Past Vice President of the International Council of Commercial Arbitration and Past Vice President of the ICC International Court of Arbitration. Besides, Ms. Cheng is a member of the International Centre for Settlement of Investment Disputes Panel of Arbitrators and was a member of the World Bank’s Sanctions Board.
[1] UNCTAD, “Investment Dispute Settlement Navigator – Known Treaty” (30 September 2019), available at https://investmentpolicy.unctad.org/investment-dispute-settlement.
[2] UNCTAD, “IIA Issues Note – Fact Sheet on Investor-State Dispute Settlement Cases in 2018” (May 2019), at pp.1 – 2, available at https://unctad.org/en/PublicationsLibrary/diaepcbinf2019d4_en.pdf.
[3] European Commission, “Fact Sheet on EU-Japan Trade Agreement” (July 2018), p.6, available at https://trade.ec.europa.eu/doclib/docs/2017/july/tradoc_155684.pdf.
[4] ISDS Platform, “Why we must ban secret corporate courts from trade deals” (2 May 2018), available at https://isds.bilaterals.org/?why-we-must-ban-secret-corporate.
[5] The Hill, “New NAFTA must terminate corporate kangaroo courts” (9 November 2017), available at https://thehill.com/blogs/pundits-blog/economy-budget/350094-new-nafta-must-ban-corporate-kangaroo-courts.
[6] Charles Brower and Sadie Blanchard, “What’s in a Meme? The Truth about Investor-State Arbitration: Why It Need Not, and Must Not, Be Repossessed by States” (1 December 2014). Columbia Journal of Transnational Law, Vol. 52, 2014, 689 – 779, p.692.
[7] Bolivia, Ecuador, Venezuela, South Africa, Indonesia and India have terminated their bilateral investment treaties in recent years (See C. L. Lim, Jean Ho and Martins Paparinskis, “International Investment Law and Arbitration: Commentary, Awards and other Materials”, (Cambridge University Press), 2018, at p. 491). See also Leon Trakman and David Musayelyan, “Caveat investors – where do things stand now?”, in C. L. Lim (ed), “Alternative Visions of the International Investment Law on Foreign Investment – Essays in Honour of Muthucumaraswamy Sornarajah” pp.69 – 100, at pp. 96 – 98.
[8] Charles Brower and Shashank P Kumar, “Investomercial Arbitration: Whence Cometh It? What Is It? Whither Goeth It”, ICSID Review, Vol. 30, No. 1 (2015), pp. 35–55, at p.36. See also Global Arbitration Review, “There’s ‘no alternative’ to investment arbitration, says Schreuer” (22 December 2017), and C. L. Lim, Jean Ho and Martins Paparinskis, “International Investment Law and Arbitration: Commentary, Awards and other Materials”, (Cambridge University Press), 2018, at pp. 4 – 5.
[9] C. L. Lim, Jean Ho and Martins Paparinskis, “International Investment Law and Arbitration: Commentary, Awards and other Materials”, (Cambridge University Press), 2018, at pp. 4 – 5.
[10] “Chapter 1. An Overview of International Arbitration”, in Blackaby Nigel , Constantine Partasides , et al., “Redfern and Hunter on International Arbitration”, 6th edition (Kluwer Law International; Oxford University Press), 2015, pp. 1 – 70.
[11] VV Veeder, “The Historical Keystone to International Arbitration: The Party-Appointed Arbitrator – From Miami to Geneva” in David Caron, Stephan Schill, et al. (eds), “Practising Virtue: Inside International Arbitration” (Oxford University Press) (November 2015), pp. 127 – 149, at p. 148. See also Brigitte Stern, “To Examine the Desirability (or Undesirability) of Replacing Ad Hoc Arbitrator by Full-Time Judges”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 190 – 201, at pp.192, 195 and 196.
[12] C. L. Lim, Jean Ho and Martins Paparinskis, “International Investment Law and Arbitration: Commentary, Awards and other Materials”, (Cambridge University Press), 2018, at pp.59 – 60. In the Germany – Pakistan BIT, most of the provisions have antecedents in the FCN treaties, with exception of two new substantive provisions on national and MFN treatment with respect to compensation for losses due to armed conflict, revolution or revolt, and the requirement on observing any other obligation it may have entered into with regard to covered investments. It is also noteworthy that the Germany-Pakistan BIT does not contain the fair and equitable treatment provision commonly found in modern international investment agreements (Kenneth J. Vandevelde, “The liberal vision of the international law on foreign investment”, in C. L. Lim (ed), “Alternative Visions of the International Investment Law on Foreign Investment – Essays in Honour of Muthucumaraswamy Sornarajah” pp.43 – 68, at p.55).
[13] Karl-Heinz Böckstiegel, “The Future of International Investment Law – Substantive Protection and Dispute Settlement”, in Bungenberg, et al. (eds), “International Investment Law – A Handbook” (2015) (C.HBECK, Hart and Nomos) pp. 1863 – 1872, at pp.1863 – 1864.
[14] Karl-Heinz Böckstiegel, “Clayton Utz Lecture: Enterprise v. State: The New David and Goliath?”, Arbitration International, Volume 23, Issue 1, 1 March 2007, pp. 93–104, at p.104.
[15] Rudolf Dolzer and Christoph Schreuer, “History, Sources, and Nature of International Investment Law” in “Principles of International Investment Law” (2nd Edition), (2015), (Oxford University Press), at p.7.
[16] M. Sornarajah, “Creating jurisdiction beyond consent”, in “Resistance and Change in the International Law on Foreign Investment” (Cambridge University Press) (2015), pp. 136 – 190, at p. 140. See also C. L. Lim, Jean Ho and Martins Paparinskis, “International Investment Law and Arbitration: Commentary, Awards and other Materials”, (Cambridge University Press), 2018, at pp.87 – 95.
[17] Jan Paulsson, “Arbitration without Privity”, ICSID Review - Foreign Investment Law Journal, Volume 10, Issue 2, Fall 1995, pp. 232–257, at p.257.
[18] C. L. Lim, Jean Ho and Martins Paparinskis, “International Investment Law and Arbitration: Commentary, Awards and other Materials”, (Cambridge University Press), 2018, at p.73.
[19] Susan Franck, “The Legitimacy Crisis in Investment Treaty Arbitration: Privatizing Public International Law through Inconsistent Decisions”, TDM Journal, June 2005, Vol. 2 – issue 3, at pp. 1545 – 1546.
[20] Susan Franck, “The Legitimacy Crisis in Investment Treaty Arbitration: Privatizing Public International Law through Inconsistent Decisions”, TDM Journal, June 2005, Vol. 2 – issue 3, at pp. 1545 – 1546.
[21] Brigitte Stern, “The Future of International Investment Law: A Balance between the Protection of Investors and the States’ Capacity to Regulate” in Jose Alvarz and Karl Sauvant (eds), “The Evolving International Investment Regime: Expectation, Realities, Options”, (Oxford University Press) (2011) pp. 174 – 192, at pp. 181 – 186.
[22] Albert Jan van den Berg, “Appeal Mechanism for ISDS Awards: Interaction with New York and ICSID Convention”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 52 – 119, at pp. 54 – 58. See also Stanimir A. Alexandrov, “On the Perceived Inconsistency in Investor-State Jurisprudence”, in Jose Alvarz and Karl Sauvant (eds), “The Evolving International Investment Regime: Expectation, Realities, Options”, (Oxford University Press) (2011) pp. 60 – 69.
[23] Stephen M. Schwebel, “Keynote Address: In Defence of Bilateral Investment Treaties”, in Albert Jan Van den Berg (ed), “Legitimacy: Myths, Realities, Challenges”, ICCA Congress Series, Volume 18 (ICCA & Kluwer Law International, 2015) pp. 1 – 11, at pp. 8 – 9.
[24] VV Veeder, “The Historical Keystone to International Arbitration: The Party-Appointed Arbitrator – From Miami to Geneva” in David Caron, Stephan Schill, et al. (eds), “Practising Virtue: Inside International Arbitration” (Oxford University Press) (November 2015), pp. 127 – 149, at p. 148.
[25] Brigitte Stern, “To Examine the Desirability (or Undesirability) of Replacing Ad Hoc Arbitrator by Full-Time Judges”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 190 – 201, at p.200.
[26] Global Arbitration Review, “Gaillard’s Chaos Theory – Is Harmony in International Arbitration Overrated?” (2018), available at https://www.shearman.com/-/media/Files/Perspectives/2018/07/GaillardsChaosTheory.pdf?la=en&hash=35DB6448A2D524822AFECA54409EE985C9199437.
[27] James Crawford, “The Ideal Arbitrator: Does One Size Fit All”, 32 Am. U. Int'l L. Rev. 1003 (2017), at p.1005.
[28] Stephen M. Schwebel, “Keynote Address: In Defence of Bilateral Investment Treaties”, in Albert Jan Van den Berg (ed), “Legitimacy: Myths, Realities, Challenges”, ICCA Congress Series, Volume 18 (ICCA & Kluwer Law International, 2015) pp. 1 – 11, at p. 6.
[29] UNCTAD, “Investment Dispute Settlement Navigator – Known Treaty” (30 September 2019), available at https://investmentpolicy.unctad.org/investment-dispute-settlement.
[30] UNCITRAL, “Report of Working Group III (Investor-State Dispute Settlement Reform) on the work of its thirty-sixth session (Vienna, 29 October – 2 November 2018)” (6 November 2018, A/CN.9/964) (available at https://undocs.org/en/A/CN.9/964), at paras. 91 – 98.
[31] According to the data in 2017, among the top 25 arbitrators in terms of the number of appointments (which has taken up one third of all arbitral appointments), only two of them are female. In terms of statistics, a detailed study conducted by Susan Franck in 2006 of the then 102 publicly-available awards concluded that 5 out of 145 arbitrators were women (approximately 3%). As of 1 March 2012, based on the 254 “concluded cases” from 1972-2012 published on the ICSID website, it was concluded that 43 out of 745 arbitrators were women (5.63%) (See UNCITRAL, “Note by the Secretariat on arbitrators and decision makers – appointment mechanisms and related issues” (30 August 2018, A/CN.9/WG.III/WP.152) (available at https://undocs.org/en/A/CN.9/WG.III/WP.152)).
[32] According to the data in 2017, among the top 25 arbitrators in terms of the number of appointments (which has taken up one third of all arbitral appointments), with the exception of four arbitrators, all are listed as nationals of Western States. However, even the four exceptions are not particularly representative of the rest of the world, with one from Eastern Europe but residing in the United States for decades, the other three from Lain American States but maintaining their professional practices in the United States or Western Europe, and none from Asia or Africa (See Malcolm Langford, Daniel Behn and Runar Hilleren Lie, “The Revolving Door in International Investment Arbitration”, Journal of International Economic Law, 2017, 20, 301–331, at pp. 309 – 310). Furthermore, among the “top 10 nationalities” (France, United States, United Kingdom, Canada, Switzerland, Spain, Australia, Germany, Italy and Mexico), which have taken up over 50% of the appointments, arbitrators from France, the United States and the United Kingdom have consistently been the three largest group of appointees and have taken up almost 30% of the appointments (See Adrian Lai, “Appointment of Arbitrators and Related Issues”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 419 – 463, at pp.450 – 451).
[33] Lucy Reed, “Keynote address delivered at the 15th Annual ITA-ASIL Conference: Diversity and Inclusion in International Arbitration – The Math: Caution + Habit + Bias”, April 2018, available at http://itainreview.org/articles/Spring2019/the-math-reed-flores.html.
[34] See e.g. pp. 48 – 49 of the 2018 Annual Report of the ICSID on the steps taken to enhance gender diversity. In the case of ICSID, there has been constant improvement on gender diversity, with 12.3% of total female arbitrator appointments in 2015 to 24% in 2018 (See Adrian Lai, “Appointment of Arbitrators and Related Issues”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 419 – 463, at p.455). Further, according to an analysis for institutional appointments in international arbitration more generally (ISDS and international commercial arbitration), the percentage of female arbitrator appointments has increased from 6% in 2011 to 17% by 2016.
[35] Matthew Hodgson and Alastair Campbell, “Damages and Costs in Investment Treaty Arbitration Revisited”, Global Arbitration Review (14 December 2017).
[36] Matthew Hodgson and Alastair Campbell, “Damages and Costs in Investment Treaty Arbitration Revisited”, Global Arbitration Review (14 December 2017).
[37] Jeffery Commission, “How Long is Too Long to Wait for an Award”, Global Arbitration Review (18 February 2016).
[38] Jack J. Coe, Jr, “Towards a Complementary Use of Conciliation in Investor-State Disputes – A Preliminary Sketch”, Journal of Transnational Dispute Management, Vol.4, No.1, February 2007, see p.27.
[39] Jack J. Coe, Jr, “Should Mediation of Investment Disputes Be Encouraged, and, If So, by Whom and How?” in Arthur W. Rovine, “Contemporary Issues in International Arbitration and Mediation: The Fordham Papers (2009)”, Brill | Nijhoff, 20 May 2010, see pp.339 – 340.
[40] UNCITRAL, “Note by the Secretariat: Possible reform of investor-State dispute settlement (ISDS) – cost and duration” (31 August 2018, A/CN.9/WG.III/WP.153) (available at https://undocs.org/en/A/CN.9/WG.III/WP.153), at para. 8.
[41] UNCTAD, “IIA Issues Note – Reform of Investor-State Dispute Settlement: In Search of a Roadmap” (June 2013), available at https://unctad.org/en/PublicationsLibrary/webdiaepcb2013d4_en.pdf
[42] UNCITRAL, Press Release – “Successful conclusion of the UNCITRAL meeting in Vienna on the reform of investor-State dispute settlement” (21 October 2019) (available at http://www.unis.unvienna.org/unis/en/pressrels/2019/unisl285.html)
[43] UNCITRAL, “Report of Working Group III (Investor-State Dispute Settlement Reform) on the work of its thirty-fourth session (Vienna, 27 November – 1 December 2017) – Part I” (19 December 2017, A/CN.9/930/Rev.1) (available at https://undocs.org/en/A/CN.9/930/Rev.1), at paras. 20, 27 – 30. See also UNCITRAL, “Submission from the Government of South Africa on the possible reform of Investor-State Dispute” (17 July 2019, A/CN.9/WG.III/WP.176), at paras. 19 – 20.
[44] Schill, Stephan, and Geraldo Vidigal, “Cutting the Gordian Knot: Investment Dispute Settlement à la Carte”, (2018), available at https://uncitral.un.org/sites/uncitral.un.org/files/rta_exchange_-_investment_dispute_settlement_-_schill_and_vidigal.pdf.
[45] The Investment Chapter of the CPTPP is available at https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Text/9.-Investment-Chapter.pdf. The code of conduct on arbitrator for the CPTPP is available at https://www.mfat.govt.nz/assets/CPTPP/Code-of-Conduct-for-ISDS.pdf.
[46] The Investment Chapter of the USMCA is available at https://www.international.gc.ca/trade-commerce/assets/pdfs/agreements-accords/cusma-aceum/r-cusma-14.pdf.
[47] Joint Leaders’ Statement on the Regional Comprehensive Economic Partnership (RCEP) (4 November 2019, Bangkok, Thailand), available at https://asean.org/storage/2019/11/FINAL-RCEP-Joint-Leaders-Statement-for-3rd-RCEP-Summit.pdf.
[48] The Conversation, “India’s not joining the latest free-trade deal which limits Australia’s market access” (4 November 2019), available at https://theconversation.com/indias-not-joining-the-latest-free-trade-deal-which-limits-australias-market-access-126343. See also the Conversation, “Suddenly, the world’s biggest trade agreement won’t allow corporations to sue governments” (17 September 2019), available at https://theconversation.com/suddenly-the-worlds-biggest-trade-agreement-wont-allow-corporations-to-sue-governments-123582.
[49] The Calvo Doctrine emerged during the 1800’s against the background in which Latin American countries experienced diplomatic and military intervention by foreign investors. The doctrine was named after the Argentinian diplomat and jurist, Carlos Calvo, who considered that “it is certain that aliens who establish themselves in a country have the same rights to protection as nationals, but they ought not to lay claim to a protection more extended”. Calvo felt that recognition of the international law concept would result in allowing “an exorbitant and fatal privilege, especially favourable to the powerful states and injurious to the weaker nations, establishing an unjustifiable inequality between nationals and foreigners” (See James Baker and Lois Yoder, “ICSID and the Calvo Caluse – A Hindrance to Foreign Direct Investment in LDCs”, Journal of Dispute Resolution, Vol 5:1 (1989), pp. 75 – 95, at p.90). It is of interest to note that the Max Planck Encyclopedias of International Law considers that the Calvo Doctrine nowadays seems obsolete because the ISDS mechanism has evolved in such a way as to render it useless (See Patrick Julliard, “Calvo Doctrine / Calvo Clause”, (January 2007), Max Planck Encyclopedias of International Law). Professor Christoph Schreuer remarked that we should be weary of the tendencies for the re-emergence of the Calvo Doctrine or its variations (See Christoph Schreuer, “Calvo’s Grandchildren: The Return of Local Remedies in Investment Arbitration”, (2005), available at https://www.univie.ac.at/intlaw/pdf/cspubl_75.pdf)
[50] See Model Text for the Indian Bilateral Investment Treaty (2016), available at https://www.mygov.in/sites/default/files/master_image/Model%20Text%20for%20the%20Indian%20Bilateral%20Investment%20Treaty.pdf.
[51] As of December 2019, India has only signed one BIT (India – Belarus BIT (2018)) that is based on its new model. As for Brazil, since the adoption of the CFIA in 2015, only the one with Angola has entered into force.
[52] G20 Guiding Principles for Global Investment Policymaking (2016), available at https://www.oecd.org/daf/inv/investment-policy/G20-Guiding-Principles-for-Global-Investment-Policymaking.pdf, see Principle III.
[53] G20 Guiding Principles for Global Investment Policymaking (2016), available at https://www.oecd.org/daf/inv/investment-policy/G20-Guiding-Principles-for-Global-Investment-Policymaking.pdf, see Principles III and IV.
[54] According to the statistics on known treaty-based ISDS cases (as of July 2019) available on UNCTAD’s Investment Policy Hub ( https://investmentpolicy.unctad.org/investment-dispute-settlement), approximately 60% of the 983 known treaty-based ISDS cases were administered under the ICSID Arbitration Rules and the ICSID Additional Facility Rules, with approximately 31% administered under the UNCITRAL Arbitration Rules and approximately 5% administered under the SCC Arbitration Rules.
[55] Albert Jan van den Berg, “Appeal Mechanism for ISDS Awards: Interaction with New York and ICSID Convention”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 52 – 119, at pp.70 – 73.
[56] UNCITRAL, “Report of Working Group III (Investor-State Dispute Settlement Reform) on the work of its thirty-sixth session (Vienna, 29 October – 2 November 2018)” (6 November 2018, A/CN.9/964) (available at https://undocs.org/en/A/CN.9/964), at para. 40.
[57] The Report of the Departmental Advisory Committee on Arbitration Law on the Arbitration Bill (February 1996), at paras. 284 – 292.
[58] s.69(1) of the UK Arbitration Act 1996 provides that:
“Unless otherwise agreed by the parties, a party to arbitral proceedings may (upon notice to the other parties and to the tribunal) appeal to the court on a question of law arising out of an award made in the proceedings.
An agreement to dispense with reasons for the tribunal’s award shall be considered an agreement to exclude the court’s jurisdiction under this section.”
[59] See ss.5 – 7 of Schedule 2 of the Arbitration Ordinance (Cap. 609 of the Laws of Hong Kong).
[60] Chester Brown, “Supervision, Control, and Appellate Jurisdiction: The Experience of the International Court”, ICSID Review, Vol. 32, No.3 (2017), pp. 595 – 610, at p.596.
[61] See Kershaw Mechanical Services Ltd v Kendrick Construction Ltd [2006] EWHC 727 (TCC), which has been cited by in PEC Ltd v Thai Maparn Trading Co Ltd [2011] EWHC 3306 (Comm) and Seagrain LLC v Glencore Grain BV [2013] EWHC 1189 (Comm)). See also Silverburn Shipping (IoM) Ltd v Ark Shipping Company LLC [2019] EWHC 376 (Comm).
[62] See Polaris Shipping Co Ltd v Sinoriches Enterprises Co Ltd [2015] EWHC 3405 (Comm).
[63] Robert Merkin, “Arbitration Act 1996” (3rd Edition), Informa Law, June 2005, at p.177.
[64] See Article 17.6 of the WTO Dispute Settlement Understanding.
[65] World Trade Organization, “The Stage in a Typical WTO Dispute”, in “A Handbook on the WTO Dispute Settlement System” (2nd Edition), (Cambridge University Press) (September 2017), pp. 49 – 129, at pp. 105 – 106.
[66] The classic test for distinguishing between question of law and question of fact is set out in in Finelvet AG v Vinava Shipping Co Ltd; The Chrysalis [1983] 2 All ER 658, which stated that:
“… the answer is to be found by dividing the arbitrator's process of reasoning into three stages: (1) The arbitrator as-certains the facts. This process includes the making of findings on any facts which are in dispute. (2) The arbitrator ascertains the law. This process comprises not only the identification of all material rules of statute and common law, but also the identification and interpretation of the relevant parts of the contract, and the identification of those facts which must be taken into account when the decision is reached. (3) In the light of the facts and the law so ascertained, the arbitrator reaches his decision.
…
The second stage of the process is the proper subject matter of an appeal under the 1979 Act. In some cases an error of law can be demonstrated by studying the way in which the arbitrator has stated the law in his reasons. It is, however, also possible to infer an error of law in those cases where a correct application of the law to the facts found would lead inevitably to one answer, whereas the arbitrator has arrived at another; and this can be so even if the arbitrator has stated the law in his reasons in a manner which appears to be correct: for the court is then driven to assume that he did not properly understand the principles which he had stated.” (emphasis added)
[67] Robert Merkin, “Arbitration Act 1996” (3rd Edition), Informa Law, June 2005, at p.177.
[68] David Wolfson and Susanna Charlwood, “Chapter 25: Challenges to Arbitration Awards”, in Julian David Mathew Lew, Harris Bor , et al. (eds), “Arbitration in England, with chapters on Scotland and Ireland”, ( Kluwer Law International 2013) pp. 527 – 562, at pp. 547 – 549.
[69] Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R, 22 December 2000, at paras. 150 – 151.
[70] Rüdiger Wolfrum and Peter-Tobias Stoll (eds), “Max Planck Commentaries on World Trade Law – Institution and Dispute Settlement”, Max Planck Institute for Comparative Public Law and International Law, 2006, at p.458.
[71] See e.g. Fence Gate Ltd. v NEL Construction (2001) 82 Con LR 41. See also Robert Merkin, “Arbitration Act 1996” (3rd Edition), Informa Law, June 2005, at p.177 and David Wolfson and Susanna Charlwood, “Chapter 25: Challenges to Arbitration Awards”, in Julian David Mathew Lew , Harris Bor , et al. (eds), “Arbitration in England, with chapters on Scotland and Ireland”, ( Kluwer Law International 2013) pp. 527 – 562, at pp. 547 – 548.
[72] A relevant issue is related to the function of WTO Panels under Article 11 of the WTO Dispute Settlement Understanding, which provides that “[t]he function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements. Accordingly, a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements. Panels should consult regularly with the parties to the dispute and give them adequate opportunity to develop a mutually satisfactory solution” (emphasis added).
[73] Rüdiger Wolfrum and Peter-Tobias Stoll (eds), “Max Planck Commentaries on World Trade Law – Institution and Dispute Settlement”, Max Planck Institute for Comparative Public Law and International Law, 2006, at p.457.
[74] See Article 17 of the WTO Dispute Settlement Understanding.
[75] Zhang Yuejiao, “Whether an Appeal Mechanism for ISDS is Desirable and Practicable in the Light of the Experience of the WTO Appellate Body and ICSID”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 129 – 143, at p.146. See also Freya Bartens, “Judicial Review of International Adjudicatory Decisions: A Cross-Regime Comparison of Annulment and Appellate Mechanisms”, (2017), Journal of International Dispute Settlement, Volume 8, Issue 3, 1 September 2017, pp. 432–459, at p.438.
[76] According to the statistics of the English Commercial Court, from the period from 2015 to early 2018, there were 162 applications for leave to appeal under s.69 of the UK Arbitration Act, with only 30 cases (approximately 18.5%) in which leave to appeal was granted and 5 successful appeals (approximately 3%) (See Judiciary of the England and Wales, “Commercial Court Users’ Group Meeting Report – March 2018” (3 May 2018), available at https://www.judiciary.uk/wp-content/uploads/2018/04/commercial-court-users-group-report.pdf). The statistics indicate that the threshold for granting leave to appeal under s.69 of the UK Arbitration Act is high.
[77] John Christopher Thomas, “The Evolution of the ICSID System as an Indication of What the Future Might Hold”, in Albert Jan Van den Berg (ed), “International Arbitration: The Coming of a New Age?”, ICCA Congress Series, Volume 17 (ICCA & Kluwer Law International 2013) pp. 563 – 606, at pp. 602 – 603.
[78] Appellate Body Report, United States – Final Anti-Dumping Measures on Stainless Steel from Mexico, WT/DS344/AB/R (30 April 2008), at para 160.
[79] Reuters, “U.S. files appeal into WTO system it has broken” (19 December 2019), available at https://www.reuters.com/article/us-usa-trade-wto/wto-chief-sees-no-end-in-sight-to-us-blockage-idUSKCN1QA2IW . See also WTO, “Appellate Body Members” (2019), available at https://www.wto.org/english/tratop_e/dispu_e/ab_members_descrp_e.htm.
[80] Article 17.2 of the WTO Dispute Settlement Understanding provides that “[t]he DSB shall appoint persons to serve on the Appellate Body for a four-year term, and each person may be reappointed once”. Article 2.4 of the WTO Dispute Settlement Understanding further provides that “[w]here the rules and procedures of this Understanding provide for the DSB to take a decision, it shall do so by consensus”. Specifically, footnote 1 to Article 2.4 provides that “[t]he DSB shall be deemed to have decided by consensus on a matter submitted for its consideration, if no Member, present at the meeting of the DSB when the decision is taken, formally objects to the proposed decision”.
[81] Geraldo Vidigal, “Addressing the Appellate Body Crisis: A Plurilateral Solution?”, Amsterdam Center for International Law No. 2019-03, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3359555.
[82] Albert Jan van den Berg, “Appeal Mechanism for ISDS Awards: Interaction with New York and ICSID Convention”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 52 – 119, at pp.75 – 78.
[83] Albert Jan van den Berg, “Appeal Mechanism for ISDS Awards: Interaction with New York and ICSID Convention”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 52 – 119, at pp.85 – 110.
[84] Albert Jan van den Berg, “Appeal Mechanism for ISDS Awards: Interaction with New York and ICSID Convention”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 52 – 119.
[85] Lucy Reed and Christine Sim, “Potential Investment Treaty Appellate Bodies: Open Questions”, ICSID Review, Vol. 32, No. 3 (2017), pp. 691–695.
[86] Albert Jan van den Berg, “Appeal Mechanism for ISDS Awards: Interaction with New York and ICSID Convention”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 52 – 119, at pp. 108 – 109. As remarked by Zhang Yuejiao, a former Appellate Body member of the WTO, while it is desirable to establish an appellate mechanism in ISDS, it will be more difficult than establishing the Appellate Body in the WTO. In her view, a reason for the establishment of an ISDS appellate mechanism is to correct manifest legal errors in ISDS arbitral awards. She also considers that it is much less difficult to modify the existing annulment ad hoc committee system within ICSID or create a new Appellate Body within ICSID than establishing a new Appellate Body mechanism from scratch in other international forums. (See Zhang Yuejiao, “Whether an Appeal Mechanism for ISDS is Desirable and Practicable in the Light of the Experience of the WTO Appellate Body and ICSID”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 129 – 143, at pp.140 – 142).
[87] According to the statistics on known treaty-based ISDS cases (as of July 2019) available on UNCTAD’s Investment Policy Hub ( https://investmentpolicy.unctad.org/investment-dispute-settlement), 62.6% of the 983 known treaty-based ISDS cases were administered by ICSID.
[88] See Article 52 of the ICSID Convention.
[89] Charles Brower and Jawad Ahmad, “From the Two-Headed Nightingale to the Fifteen-Headed Hydra: The Many Follies of the Proposed International Investment Court”, 41 Fordham International Law Journal 791 (2018).
[90] Charles Brower and Sadie Blanchard, “What’s in a Meme? The Truth about Investor-State Arbitration: Why It Need Not, and Must Not, Be Repossessed by States” (1 December 2014). Columbia Journal of Transnational Law, Vol. 52, 2014, 689 – 779. See also Brigitte Stern, “To Examine the Desirability (or Undesirability) of Replacing Ad Hoc Arbitrator by Full-Time Judges”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 190 – 201.
[91] James Crawford, “The Ideal Arbitrator: Does One Size Fit All”, 32 Am. U. Int'l L. Rev. 1003 (2017), at pp. 1018 - 1022. See also Karl-Heinz Böckstiegel, “The Future of International Investment Law – Substantive Protection and Dispute Settlement”, in Bungenberg, et al. (eds), “International Investment Law – A Handbook” (2015) (C.HBECK, Hart and Nomos) pp. 1863 – 1872, at p.1870), and Global Arbitration Review, “Schwebel criticizes EU act of ‘appeasement’” (24 May 2016) and Global Arbitration Review, “Fortier on the cola wars” (18 October 2019).
[92] Brigitte Stern, “To Examine the Desirability (or Undesirability) of Replacing Ad Hoc Arbitrator by Full-Time Judges”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 190 – 201, at p.199.
[93] James Crawford, “The Ideal Arbitrator: Does One Size Fit All”, 32 Am. U. Int'l L. Rev. 1003 (2017), at pp. 1018 - 1022.
[94] See Charles Brower and Shashank P Kumar, “Investomercial Arbitration: Whence Cometh It? What Is It? Whither Goeth It”, ICSID Review, Vol. 30, No. 1 (2015), pp. 35–55, at p.36.
[95] Charles Brower, “State Parties in Contract-based Arbitration – Origins, Problems, and Prospects of Private-Public Arbitration” (2019), available at https://www.itainreview.org/articles/Fall2019/state-parties-in-contract-based-arbitration.html. See also Global Arbitration Review, “Veeder and van den Berg on the future of investment arbitration” (11 April 2019) and Global Arbitration Review, “Nassib Ziadé on ‘Do we need a permanent investment court’” (13 February 2019).
[96] Charles Brower considers that it is an absolute fallacy – a false trichotomy – to consider that there are clean borders separating commercial arbitration, treaty-based investor-state arbitration and inter-state forms of dispute resolution involving foreign investments. In his view, what matters is not the stage on which the dispute is played out, but rather the competing private and public interests at stake (see Charles Brower, “State Parties in Contract-based Arbitration – Origins, Problems, and Prospects of Private-Public Arbitration” (2019), available at https://www.itainreview.org/articles/Fall2019/state-parties-in-contract-based-arbitration.html).
[97] M. Sornarajah, “An International Investment Court: panacea or purgatory”, August 2016, available at http://ccsi.columbia.edu/files/2013/10/No-180-Sornarajah-FINAL.pdf.
[98] Red Carpet Courts, “Still rolling out the red carpet: The EU’s ISDS push for VIP corporate privileges” (June 2019), available at http://10isdsstories.org/eu-isds-push/.
[99] Charles Brower and Jawad Ahmad, “From the Two-Headed Nightingale to the Fifteen-Headed Hydra: The Many Follies of the Proposed International Investment Court”, 41 Fordham International Law Journal 791 (2018) See also Charles Brower and Jawad Ahmad, “Why the ‘Demolition Derby’ That Seeks to Destroy Investor-State Arbitration?”, 91 S. Cal. L. Rev. 1140 (2018), and CIArb, “Evolution not Revolution: CIArb sets out its approach to the question of ISDS reform”, 14 February 2019, available at https://ciarb.org/news/evolution-not-revolution-ciarb-sets-out-its-approach-to-the-question-of-isds-reform/.
[100] In fact, the concept of an investment court is not new. During the previous negotiations for the multilateral investment agreement under the OECD, while Norway has put forward a proposal to establish an international investment tribunal, the negotiators did not consider such proposal as a viable alternative to investment arbitration (See Walid Ben Hamida, “The First Arab Investment Court Decision”, Journal of World Investment Trade, 7(5), 699-722, at p.699). One of the rare examples of investment courts is the Arab Investment Court established under the Unified Agreement for the Investment of Arab Capital in the Arab States (“Unified Agreement”). The Arab Investment Court has compulsory jurisdiction over investment disputes between investors and the host States arising under the Unified Agreement. However, such compulsory jurisdiction is secondary in the sense that recourse to the Court is only allowed if disputing parties fail to agree to submit it to conciliation or arbitration, if the conciliator fails to reconcile the parties or if the arbitrator(s) fail to make a ruling within the specified period. (See John Gaffney, “The EU proposal for an Investment Court System: what lessons can be learned from the Arab Investment Court”, (29 August 2016), available at http://ccsi.columbia.edu/files/2013/10/Perspective-Gaffney-Final-Formatted.pdf). It should be noted that while the Arab Investment Court was established in 1985, it only became operational in 2003 (See Walid Ben Hamida, “The First Arab Investment Court Decision” Journal of World Investment Trade, 7(5), 699-722, at p.700). It has also been reported that despite the existence of the Arab Investment Court, an Oman investor opted for making an investment arbitration claim against the Republic of Yemen to an ICSID tribunal in 2006 (Desert Line Projects LLC v. The Republic of Yemen, ICSID Case No.ARB/05/17) (See Ning Hongling and Qi Tong, “A Chinese Perspective on the Investment Court System in the Context of Negotiating EU-China BIT”, 11 Tsinghua China L. Rev. 91 (2018), 91 – 127, at footnote 134).
[101] See e.g. UNCITRAL, “Submission from the Government of China on the possible reform of investor-State dispute settlement” (19 July 2019, A/CN.9/WG.III/WP.177), available at https://undocs.org/en/A/CN.9/WG.III/WP.177; “Submission from the Governments of Chile, Israel, Japan, Mexico and Peru” (2 October 2019, A/CN.9/WG.III/WP.182), available at https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/wp_182_chile_and_others_.pdf; “Submission from the European Union and its Member States on the possible reform of investor-State dispute settlement” (24 January 2019, A/CN.9/WG.III/WP.159/Add.1), available at https://undocs.org/A/CN.9/WG.III/WP.159/Add.1; “Submission from the Government of Thailand on the possible reform of investor-State dispute settlement” (8 March 2019, A/CN.9/WG.III/WP.162), available at https://undocs.org/A/CN.9/WG.III/WP.162; “Submission from the Government of South Africa on the possible reform of investor-State dispute settlement” (17 July 2019, A/CN.9/WG.III/WP.176), available at https://undocs.org/A/CN.9/WG.III/WP.176; and “Submission from the Government of Indonesia on the possible reform of investor-State dispute settlement” (9 November 2018, A/CN.9/WG.III/WP.156), available at https://undocs.org/A/CN.9/WG.III/WP.156.
[102] UNCTAD, “Investor-State Disputes: Prevention and Alternatives to Arbitration”, (2010). See also E. Sussman, “The Advantages of Mediation and the Special Challenges to its Utilization in Investor State Disputes”, Journal of Transnational Dispute Management, Vol.11, No.1, January 2014.
[103] E. Sussman, “The Advantages of Mediation and the Special Challenges to its Utilization in Investor State Disputes”, Journal of Transnational Dispute Management, Vol.11, No.1, January 2014, at p.8.
[104] See the discussion on the different types of arbitration-mediation hybrid procedure in David Ng, “Investment Mediation”, Proceedings of ISDS Reform Conference 2019 – Mapping the Way Forward, (Asian Academy of International Law) pp. 290 – 338, at pp. 326 – 332.
[105] The CEPA Investment Agreement is available at https://www.tid.gov.hk/english/cepa/legaltext/cepa14.html.
[106] See Articles 19 and 20 of the CEPA Investment Agreement.
[107] The texts of the CEPA Mediation Mechanism and the CEPA Hong Kong Investment Mediation Rules are available at https://www.tid.gov.hk/english/cepa/investment/mediation.html.
[108] Under Article 1(2) of the CEPA Hong Kong Investment Mediation Rules, it is provided that save for certain fundamental provisions, the disputing parties may agree to exclude or vary any of the Rules.
[109] See Article 3 of the CEPA Hong Kong Investment Mediation Rules.
[110] See Article 5(1) of the CEPA Hong Kong Investment Mediation Rules.
[111] See para. 1.6 of the CEPA Mediation Mechanism.
[112] Article 7(1) of the CEPA Hong Kong Investment Mediation Rules provides that each mediator shall be independent and impartial and shall mediate the dispute in a manner that is transparent, objective, equitable, fair and reasonable.
Under Article 7(3) of the CEPA Hong Kong Investment Mediation Rules, mediators are required to avoid their performance from being affected by their own financial, business, professional, family or social relationships or responsibilities.
Moreover, according to Article 7(4) of the CEPA Hong Kong Investment Mediation Rules, unless otherwise agreed by the disputing parties, by accepting an appointment as mediator of a dispute under the CEPA Investment Agreement, the mediator is deemed to agree not to act in any other role (including but not limited to counsel, arbitrator, expert or witness) in respect of: (i) any differences or disputes which are the subject of the mediation; or (ii) any other differences or disputes in which a party is involved as a disputant pending the resolution of the dispute in mediation.
Furthermore, Article 7(6) of the CEPA Hong Kong Investment Mediation Rules requires that if the disputing parties are unable to resolve the dispute through mediation, the mediators who were appointed to conduct the mediation shall not be appointed as judge, arbitrator, agent or legal adviser of any disputing party in any subsequent proceedings (including litigation and arbitration proceedings) of the same or related dispute, unless the disputing parties otherwise agree.
Article 7(5) of the CEPA Hong Kong Investment Mediation Rules also requires that, if, during the course of the mediation, a mediator becomes aware of any facts or circumstances that may call into question the mediator’s independence or impartiality in the eyes of the parties, the mediator is required under the CEPA Hong Kong Investment Mediation Rules to disclose those facts or circumstances to the parties in writing without delay.
[113] In terms of the mediation process, the CEPA Hong Kong Investment Mediation Rules seek to ensure efficiency by introducing the mechanism of mediation management conference (See Article 9 of the CEPA Hong Kong Investment Mediation Rules).
[114] According to Article 12(2) of the CEPA Hong Kong Investment Mediation Rules, the solutions under the mediated settlement agreement shall be confined to the following: (i) monetary compensation and any applicable interest; (ii) restitution of property or monetary compensation and any applicable interest in lieu of restitution of property; and (iii) other legitimate means of compensation agreed upon by the Parties. Such legitimate means of compensation may include a wide variety of non-monetary remedies, such as: (i) provision of a different location or project for the investment as an alternative compensation for the denial of a permit or license to operate a particular investment; (ii) re-negotiation of the terms of a concession project; (iii) re-evaluation of the return of a project and provisions of additional guarantees or sources of revenue; and (iv) self-assessments and reappraisals by governments of problematic measures they have enacted (See UNCTAD, “Investor-State Disputes: Prevention and Alternatives to Arbitration”, (2010), see p.32).
[115] Jack J. Coe, Jr, “Towards a Complementary Use of Conciliation in Investor-State Disputes – A Preliminary Sketch”, Journal of Transnational Dispute Management, Vol.4, No.1, February 2007, see pp.27 and 40. For example, in the standard contract of the Government of the Hong Kong Special Administrative Region, it is provided that the Government may disclose the outline of any terms of settlement for which a settlement agreement has been reached with the contractor or the outcome of the arbitration or any other means of resolution of dispute to the Public Accounts Committee of the Legislative Council upon its request.
[116] See Article 11(4)(a) of the CEPA Hong Kong Investment Mediation Rules. Pursuant to Article 11(4)(b)(i) of the CEPA Hong Kong Investment Mediation Rules, the confidentiality obligation does not apply where the disclosure of mediation communication is agreed by the disputing parties and the mediation commission, and for such purposes as approved by them.
[117] Jack J. Coe, Jr, “Towards a Complementary Use of Conciliation in Investor-State Disputes – A Preliminary Sketch”, Journal of Transnational Dispute Management, Vol.4, No.1, February 2007, at footnote 129.