The Changing Face of International Dispute Resolution: An Analysis of Factors Driving Trends in Investor-State Dispute Resolution and the WTO Dispute Resolution Mechanism

This paper provides a landscape analysis of international arbitration trends, and places special attention on the proliferation of investor-state dispute resolution (hereinafter “ISDR”) in free trade agreements (hereinafter “FTAs”) and, more widely, in international investment agreements (hereinafter “IIA”). The dispute settlement provisions of the proposed and pending Trans Pacific Partnership Agreement (hereinafter “TPP”) help provide context for these developments. This paper sources opinions and data from a number works, with a special attention to those capturing statistics on how ISDR changes the dynamic of international trade disputes and FTA negotiation. Over the past decade, FTA’s have increasingly segregated dispute resolution responsibility away from centralized World Trade Organization (hereinafter “WTO”) processes. Passage of an ISDR provision in the TPP would substantially further this trend by binding eleven more countries to ISDR requirements similar to those in sister agreements, including NAFTA, the Energy Charter Treaty and the Argentina-United States Bilateral Investment Treaty (hereinafter “BIT”). However, recent national sovereignty and public interest concerns over ISDR may mean a tapering off of this trend and a return to the WTO Dispute Settlement Mechanism (hereinafter “DSM”) and preference for judicial review by national courts. An analysis of whether ISDR infringes on national sovereignty and the public interest is provided to help frame and guide this discussion.