Past Event

Exploring Alternatives to ISDS

October 31, 2016
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Columbia University, New York

International investment agreements (IIAs) are often described as instruments aiming to advance four main objectives (1) promote investment flows; (2) depoliticize disputes between investors and states; (3) promote the rule of law; and (4) provide compensation for harms to investors – objectives of varying degrees of importance to multinational enterprises, home states, host states, and other stakeholders. The investor-state dispute settlement (ISDS) mechanism contained therein is, in turn, cited as a necessary means of achieving those objectives. While, at first glance, each of these objectives may seem desirable, there are important and difficult questions that arise regarding what we mean by these objectives, how much we do or should seek to achieve them, and which mechanisms are best suited to advance those aims. Moreover, evidence suggests that the inclusion of ISDS into investment treaties may not actually be effective in achieving any of these objectives, and can give significant costs (e.g., in terms of political and economic costs of negotiating treaties, defending ISDS cases, paying ISDS claims, reputational costs associated with claims and liability, and constraints on legitimate policy space).

There are, however, alternative approaches to investor protections that, when used alone or in combination, might be better able to serve the stated objectives above, and to do so at less of a cost. These alternatives include: (1) strengthening domestic legal systems, (2) the use of political risk insurance by investors, (3) using existing human rights mechanisms for certain kinds of redress, and (4) using state-state cooperation and dispute settlement mechanisms.

On October 31, 2016, CCSI organized a multistakeholder workshop to examine these potential alternatives to ISDS.  For each of the alternatives, the workshop examined both (1) whether and to what extent it can help advance the currently stated goals of investment treaties; and (2) whether and to what extent it reflects the policy coherence and attention to sustainable development that are imperative for 21st century international economic governance.