Lord Goldsmith QC, Chair of Asian and European Litigation at Debevoise & Plimpton LLP, has delivered the keynote speech at the opening of the inaugural Tel Aviv Arbitration Day, where he asked if investment arbitration is at a crossroads in its development.
Some 3,000 Bilateral Investment Treaties (BIT) have been made since the first one was signed in 1959. Since then, the various rules and systems that form the bedrock of Investor State Dispute Settlement (ISDS) have evolved in an ad hoc fashion.
Lord Goldsmith QC explained that we are now at a point where “investors, sovereigns and administering institutions, as well as the wider public are revisiting the very foundations and assumptions of ISDS,” driven in part by “sharp and vocal criticism of ISDS, especially in the sphere of investment arbitration.”
He also suggested that this re-visiting of the rules and systems of ISDS “may permit smaller states to have a greater say in the shaping of the system than they previously had.”
Importantly, Lord Goldsmith QC also explored the potential impact of this reshaping of investment arbitration on commercial arbitration. “The current revision of investment arbitration must put pressure too on the commercial arbitration system. Is it not also at a crossroads? We saw some of that when the European Parliament first debated the proposed US/EU TIPP. Arbitrators were discussed in very uncomplimentary terms. Will it give way to that pressure? Will we see similar initiatives for commercial arbitration as the permanent investment court?... I am not suggesting there will be no international arbitration. The rationale for it and the reason for having it in some case are too strong to be ignored. But we could be seeing the start of a completely different system. Alarmist? Perhaps. Without any substance? Certainly not.”
The full text of Lord Goldsmith QC’s address can be found here.
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