The investment tribunal included in the recently adopted text of the Comprehensive Economic Trade Agreement (CETA) may well be a game-changer for investor-state arbitration (ISA) in the future. But then — it may not.

Among the factors suggesting that it constitutes a radical and important change with respect to ISA as developed in many bilateral investment treaties and investment chapters of regional trade agreements are the following:

  • It rejects ad hoc arbitration in favour of a permanent tribunal composed of judges named in advance by the states parties.
  • The private litigant must accept the judges who will be named by the chief justice of the tribunal.
  • There is an appeal procedure that has power to overturn or revise an award on very wide grounds of fact and law.
  • Criticism of the absence of recourse to a standing tribunal has been a basic complaint of many critics, and this investment tribunal may be politically very appealing to the general public in Canada and in the European Union.
  • The inclusion of the investment tribunal in Chapter 8 of CETA may make the whole agreement much more acceptable to the European Parliament and to certain EU members, and thus assure its ratification.

On the other hand, a number of factors and questions suggest that this investment tribunal may not go much further than CETA and the EU-Vietnam Free Trade Agreement (FTA). In particular, one must note:

  • This investment tribunal has been accepted by only two partners — who could not refuse. It is not at all clear that the United States will accept the concept in the Transatlantic Trade and Investment Partnership (TTIP) negotiations or that China or India or Mexico will agree.
  • At best, this approach will produce a series of self-standing tribunals for each EU FTA. The more tribunals the European Union negotiates, the more unwieldy the management of these tribunals will become.
  • The logic of this approach to investor–state claims is the creation of a permanent international investment tribunal. Achievement of this goal will require an immense diplomatic effort by its supporters.
  • What will happen if the International Centre for Settlement of Investment Disputes succeeds in adopting an appeals procedure to replace its current annulment committee process? Will this not compete with the new investment tribunal approach?
  • Canada has not necessarily committed to this type of standing tribunal in its future foreign investment protection agreements or FTAs; indeed, in signing the Trans-Pacific Partnership, Canada has gone the traditional way.
  • It is by no means clear that recourse to a new form of tribunal will satisfy the many critics of the current network of investment agreements; many have already spoken out in criticism.
  • There are several more technical questions relating to the law of arbitration:
    • Is it still arbitration?
    • Will the awards be enforceable under the New York Convention?
    • Is it appropriate that the grounds of appeal under Chapter 8 are broader than the grounds of review under the New York Convention?

Thus, while the political appeal of the new investment tribunal may be considerable in the eyes of the European Union and some of its members, it is by no means certain that the new tribunal will prove workable as a functioning institution, or that it will be acceptable to many other states as the European Union seeks to negotiate new agreements. 

The most intriguing question — which will only be resolved as the investment tribunal decides concrete cases — is whether this institution is actually a form of arbitration or some new form of dispute settlement that is neither judicial nor arbitral?

The most intriguing question — which will only be resolved as the investment tribunal decides concrete cases — is whether this institution is actually a form of arbitration or some new form of dispute settlement that is neither judicial nor arbitral?
Thematics
CIGI’s International Law Research Program invited commentary by noted experts in the field about the promise and peril of CETA’s new investment tribunal and whether this development will enhance or hinder global rule of law. In this series, these experts opine on the tribunal’s potential impact on the often criticized system of ISA: whether it is a significant reform, a superficial adjustment or a retrenchment. Readers will have to draw their own conclusions as to whether this is a cosmic or cosmetic reform of the system of ISA.