[Tullio Treves is a Professor of International Law at the University of Milano and a Public International Law Consultant at Curtis, Mallet-Prevost, Colt & Mosle LLP in Milan]
This chapter is entitled “
International investment dispute settlement in the twenty-first century: does the preservation of the public interest require an alternative to the arbitral model?” It is a detailed and well reasoned review of the criticisms raised against arbitration as the mechanism dominating the settlement of international investment disputes, of the steps already taken or underway to attenuate the negative aspects addressed by such criticism, and of the more ambitious reforms that have been proposed.
Among the criticisms addressed are the following: that the arbitral model “fails to live up to the basic precepts of democracy and the rule of law” and shows a lack of consideration of the public nature of the interests involved; that there exists a real or perceived bias of arbitrators (and of the arbitrators’ appointing authorities) in favor of investors due inter alia to the fact that many arbitrators are at the same time practicing lawyers in law firms which may have to cater to the interests of other clients not involved in the specific dispute; that the process lacks transparency; that contradictory decisions involve a risk of fragmentation. Notwithstanding these criticisms, the authors’ “interim conclusions” are that “arbitration works well most of the times” but that “in view of the requirements of the rule of law and in light of the public interest, ‘working well most of the time’ is not enough” (p. 434).
The “current reforms” examined by the authors and aimed at overcoming the criticisms concern transparency and the participation in proceedings by “non-parties” such as public interest non-governmental organizations as amici curiae. The assessment of the authors is summarized in the relevant chapter’s title: “too little, too late” and further elaborated explaining that: “these reforms are unlikely to resolve the legitimacy crisis by themselves. … the transparency reforms remain subject to the consent of the parties and therefore do not institutionalise transparency per se” (p. 438).
The more ambitious proposals for reforming the system are considered in a chapter entitled “Doing away with arbitration?”. As a matter of fact, only a short passage about alternative disputes resolution methods (as mentioned in the US Model BIT) concerns alternatives to arbitration. Most attention is given to the proposals, which are far from being accepted so far, for eliminating from investment agreements the exclusion of the exhaustion of local remedies rule and for introducing an appellate level, possibly through an institutionalized permanent body. The newly acquired European Union competence in the field of investment is seen as a factor that might change the present situation in which important reforms (including that concerning an appellate body) seem impossible. In a chapter on “Doing away with arbitration?”, one could have expected a discussion of the implication of recent denunciation, by various States, of the ICSID Convention and of BITs, which seems to me the most radical aspect of recent practice for “doing away with arbitration”.
