Investor-State Dispute Settlement Mechanism: The Quest for a Workable Roadmap

The last decade has witnessed an unprecedented increase in the use of investor-State arbitration, highlighting numerous shortcomings of the existing investor-State dispute settlement system. The legitimacy of the International Investment regime has been under severe criticism due to the growing discontent amongst the investors as well as the host States. The increased litigation has led to both the process and the outcome being questioned and has undermined the growth of harmonious relationships between foreign investors and host States. The object of this paper is to explore a workable roadmap for the investor-State dispute settlement mechanism by tracing the evolution of the existing system and by analysing the dispute settlement mechanism in major international investment agreements. Furthermore, it highlights the causes and the possible consequences of the denunciation of Bilateral Investment Treaties ('BITs') and the International Centre for Settlement of Investment Disputes ('ICSID') by host nations, which have been plagued by a myriad of investment suits. The authors suggest the need for doing away with highly protective investor-State dispute settlement mechanisms ('ISDSMs') in future investment agreements and recommend the need for designing an appellate mechanism for bringing consistency and predictability to the system.