I Introduction

What is the future of investor–state arbitration? In recent years, observers have questioned whether investor–state arbitration will or should be a feature of the next generation of free trade and bilateral investment treaties (BITs). Commentators have suggested a 'backlash' against the system of investor–state arbitration that has developed over the past half-century. Critics allege that investor–state arbitration disproportionately favours investors; that private lawyers sitting as arbitrators are too close to claimants; and that investment awards encroach upon state sovereignty and upon states' 'right to regulate'. Others more broadly object to investor–state arbitration on the ground that it uses mechanisms derived from 'private law' to resolve 'public' disputes without sufficient transparency.2

Proponents of investor–state arbitration respond that: (1) statistics do not support the notion that investor–state dispute settlement disproportionately favours investors;3 (2) mechanisms already exist to address arbitrator conflicts of interest;4 and (3) that the international investment law system only infringes upon state sovereignty to the extent that such incursions have been consented to by states seeking to attract lawful investment by entering into investment treaties. Nevertheless, these criticisms, whatever their merits, prompted some governments to demand changes to treaty frameworks and led to the emergence of alternative investment treaty models.

Some states, like Brazil, have rejected investor–state arbitration outright. Tanzania, for example, enacted several pieces of legislation prohibiting international arbitration in disputes relating to natural resources.5 Other states, like Ecuador, Bolivia, Indonesia, India and South Africa, have repudiated the BITs they had previously signed.6

Still, other states and groups of states have tried to revise the legal framework for investment treaty dispute resolution. Most notably, the United States, Mexico and Canada agreed to replace the North American Free Trade Agreement (NAFTA) with the US–Mexico–Canada Trade Agreement (USMCA), which systematically narrows the availability of investor treaty dispute resolution.7 More dramatically, perhaps, the European Union has pressed for replacing the system of investment treaty arbitration with a new permanent multilateral investment court.8

Nevertheless, and especially in the Pacific Rim, a number of states have sought incremental changes – to adjust the scope of treaty provisions in light of their experience in past cases and often to enhance transparency in arbitration proceedings – while remaining committed to arbitration as the standard mechanism for resolving investor–state disputes. As at the time of writing, efforts are underway to forge a free trade arrangement among 16 Asia-Pacific countries called the Regional Comprehensive Economic Partnership (RCEP), whose investment chapter is widely expected to provide for institutional arbitration of investor–state disputes.9

Conscious of the limits of any attempt to generalise developments concerning a system of international investment law defined by thousands of distinct bilateral and multilateral agreements, this chapter attempts to summarise recent investment treaty dispute resolution proposals emerging from some of the world's largest economies.

II USMCA to Replace NAFTA

One of the most significant developments of 2019 in the area of international investment law was the 30 November 2018 agreement in principle between the United States, Canada and Mexico to revise and replace NAFTA with USMCA,10 which is a new stand-alone agreement comprising no less than 34 chapters, 13 annexes and 14 side letters.11 President Donald J Trump called USMCA 'the most modern, up-to-date, and balanced trade agreement in the history of our country, with the most advanced protections for workers ever developed',12 while Canadian Prime Minister, Justin Trudeau, announced that USMCA would 'maintain stability for Canada's entire economy'.13

USMCA largely preserves NAFTA's substantive protections. These include a guarantee of a minimum standard of treatment under customary international law, protection against indirect expropriation and free transfer of investment (such as profits and dividends).14 However, claims based on the most favoured nation provision, or national treatment with respect to the establishment or acquisition of an investment, are expressly excluded in investor–state arbitration for US–Mexico claims.15 But this limitation is inapplicable if a claimant is a party to a covered government contract (i.e., activities related to oil and natural gas; supply of power generation, telecommunication and transportation services; and ownership or management of infrastructure). 16 In those circumstances, the claimant may rely on other benefits in USMCA, including claims for violations of the minimum standard of treatment afforded under customary international law, claims for indirect expropriation or claims with respect to the establishment of acquisition of an investment.

USMCA, if ratified, would nevertheless significantly curtail investors' ability to bring international arbitration claims17 by: imposing important procedural prerequisites on claims involving the United States and Mexico, and US and Mexican investors; and phasing out investor–state arbitration for disputes involving Canada or Canadian investors entirely.18

This would leave US and Canadian investors with the option of: (1) pursuing contractual or other remedies available in national courts; (2) seeking to escalate disputes to the state level within Chapter 31 of USMCA; or (3), potentially for Mexican and Canadian investors, taking advantage of the dispute settlement provisions in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to which Canada and Mexico are both parties.19 Once USMCA goes into effect, it is likely that Canada may negotiate a separate agreement to provide for an international arbitration mechanism for Canadian and US investors.

With respect to Mexican and US investors, USMCA imposes a number of conditions precedent before an investment arbitration claim may be commenced by an investor. USMCA requires an investor to start a domestic proceeding and obtain a 'final decision from a court of last resort' or wait for '30 months' from the initiation of the domestic proceeding before commencing international arbitration.20 To the extent that an investor seeks to bring a claim based on a taxation measure, USMCA, however, requires the investor to first refer the dispute to domestic authorities, and if the domestic authorities 'do not agree to consider the issue or . . . fail to agree that the measure is not an expropriation within a period of six months', the investor may then move forward with international arbitration.21

USMCA also includes a fork-in-the-road provision barring a US investor from bringing an international arbitration claim against Mexico if that investor has 'alleged that breach of an obligation' under USMCA 'as distinguished from breach of other obligations under Mexican law' before Mexican courts.22

Whether USMCA will ever be ratified remains an open question. While the Trump administration has threatened to denounce NAFTA to force the US Congress' hand, USMCA has met with a lukewarm reception in Congress, from trade sceptics and free-trade advocates who are reluctant to abandon NAFTA.23

III The European Union's international investment court proposal

Since 2017, the official position of the European Union – which claims authority to negotiate trade and investment treaties agreements on behalf of its 28 Member States – has been that, at least 'for the EU', investor–state arbitration is 'dead'.24 European officials have been explicit that Europe intends to pursue an international 'system of investment courts' in all future investment agreements.25 The European Union's campaign against investor–state arbitration has drawn momentum from the Achmea judgment, holding that intra-EU BITS, namely BITs among EU Member States, are incompatible with the European Union's legal order. As a result, EU Member States have warned the 'investor community that no new intra-EU investment arbitration proceeding should be initiated', and that Member States 'will terminate all bilateral investment treaties concluded between them'.26

The European Union's enthusiasm for replacing the 'old, traditional system' of investor–state arbitration with the 'public justice' of an investment court in 'all . . . ongoing and future trade negotiations' has been on display in the investment chapters27 of three of the European Union's most recent international trade and investment agreements. The EU–Canada Comprehensive Economic and Trade Agreement (CETA), the EU–Vietnam free trade agreement (FTA) and the EU–Singapore FTA (none of which are yet in force), each provide for an investment tribunal system in place of standard investor–state arbitration.28

The European Union's approach in these treaties breaks away from arbitration of investor–state disputes in several important ways. In particular:

  1. A fundamental aspect of investor–state arbitration – the parties' opportunity to participate in the choice of arbitrators and structuring of the applicable procedure – would be abandoned in favour of proceedings before standing bodies whose members, comprised in equal thirds of members chosen respectively by the European Union, the other treaty party and jointly from third countries, would serve for fixed terms.29 European officials have praised this system as one that would 'break the link' between parties and arbitrators in favour of 'independent' judges, but critics have noted that a standing international investment court or 'Tribunal' whose members would be appointed entirely by governments, would only break the link for claimants.30
  2. The European Union's approach would provide for appellate review, including for 'errors in the application or interpretation of applicable law' and 'manifest errors in the appreciation of the facts, including the appreciation of relevant domestic law' before a separately established 'Appeal Tribunal'.31 Appellate review is highly anomalous in the international arbitration context, where awards may ordinarily be set aside by the courts of the seat of arbitration or through an ICSID annulment process only on the narrowest of grounds.32 Moreover, although the concept of binding precedent is also largely absent from arbitration, proponents of the European Union's approach have urged that, '[b]y sitting permanently and deciding cases over time, judges would deliver consistent decisions'.33
  3. Investor–state proceedings would be largely public. Through incorporation of the UNCITRAL Rules on Transparency in Treaty-Based Investor–State Arbitration into both the CETA and the EU–Vietnam FTA, hearings would be open to the public and submissions published, as would be the case in many countries' courts.34
  4. In addition, the CETA, the EU–Vietnam FTA and the EU–Singapore FTA explicitly anticipate a future transition to a multilateral dispute settlement mechanism, and call upon the parties to work toward the establishment of such multilateral arrangements.35

Interestingly, and despite these changes, the European approach seeks to make use of both the physical and legal infrastructure of the investor–state arbitration system that it aspires to replace. Under the CETA and the EU–Vietnam FTA, proceedings before the investment tribunal would be administered through the ICSID Secretariat or the Permanent Court of Arbitration in The Hague.36 Strikingly, in the context of an attempted shift towards a 'court', the results of investor–state proceedings under both agreements are styled 'awards' and are (hoped) to be enforceable under the ICSID or New York Conventions.37 Thus, even while breaking away from what may be investor–state arbitration's most material aspects – the party's role in arbitrator selection and the finality of awards – the European Union's approach would retain many of its forms.

All this being said, these agreements have yet to come into force. At present, the CETA remains mired in a complex process of ratification by each of the European Union's individual Member States, while the EU–Vietnam FTA faces related hurdles.38 The EU–Singapore FTA was only recently approved by the European Parliament on 13 February 2019.39 That said, there is every indication that, for the foreseeable future, the European Union will remain committed to its vision of a multilateral investment court.

IV The Pacific Rim favours incremental adjustments to a familiar arbitration-based model

In contrast with Europe and North America's apparent scepticism towards investment treaty arbitration, the CPTPP will join Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam in a common trade and investment framework that provides a much more familiar arbitration-based approach to investor–state dispute resolution reform.40 The CPTPP entered into force among Canada, Australia, Japan, Mexico, New Zealand and Singapore on 30 December 2018, and Vietnam on 14 January 2019.

It extends reciprocal investment protections comparable to those available under most BITs. It also stays within the ambit of investor–state arbitration, allowing investors to arbitrate claims under the ICSID Convention, the UNCITRAL Rules or other rules of the parties' choice.41 Consistent with the principle of party autonomy, both claimant investors and respondent states will participate in choosing arbitrators to hear their dispute.42

This is not to say that the CPTPP ignores concerns – warranted or otherwise – about investor–state arbitration. To the contrary, a number of its provisions are plainly intended to advantage respondent states in arbitration. For example:

  1. In direct response to critics of the 'regulatory chill', the CPTPP explicitly affirms states' authority to regulate and warns that its provisions should not be construed 'to prevent a Party from adopting, maintaining or enforcing any measure' intended to 'ensure that investment . . . is undertaken in a manner sensitive to environmental, health or other regulatory objectives'.43 A special Annex similarly records the parties' 'shared understanding' that a state's 'nondiscriminatory regulatory actions' directed towards 'legitimate public welfare objectives' will not ordinarily constitute indirect expropriation.44
  2. In addition, language in the CPTPP may arguably be read to narrow the scope of its guarantee of 'fair and equitable treatment' (FET) to foreign investors.45 This is significant because claimed breaches of FET are perhaps the most common basis for investor–state claims, and the scope of the FET obligation is a matter of recurrent debate.46 Reflecting the resistance of some states to a broad reading of FET, the CPTPP warns that 'the mere fact that' a state may act in a manner 'inconsistent with an investor's expectations' will not in itself constitute a breach of FET.47

In addition to these provisions,48 other aspects of the CPTPP respond to many of the same criticisms of investor–state arbitration that seem to animate the European Union's push for a permanent multilateral court, without breaking from the widespread acceptance of arbitration as a means of resolving investor–state disputes. For example:

  1. Hearings in arbitrations pursuant to the CPTPP will be open to the public, with the parties' submissions and the tribunal's decisions also being made publicly available.49 This represents a step away from typical investor–state arbitration practice in which, as in commercial arbitration, pleadings and hearings are usually private.50
  2. The CPTPP calls for the establishment of an official commission appointed by the state parties with the power to issue binding joint interpretations of treaty provisions on behalf of the state parties.51
  3. In addition, the CPTPP parties are to provide binding 'guidance' on a code of conduct for arbitrators as well as 'on the application of other relevant rules or guidelines on conflicts of interest' prior to the agreement's entry into force.52 This guidance may reflect concerns about private arbitrators' conflicts and incentives in the context of investor–state arbitration.

In contrast with Europe's push for an international investment court and USMCA's truncated arbitration regime, the CPTPP can be characterised as calibrating but not abandoning the familiar mechanism of investor–state arbitration. Other recent investment agreements suggest that the CPTPP's incrementalism is broadly consistent with its signatories' preferences and with those of other non-European economies.

In this regard, it may be significant that Canada – a party to both the EU–CETA and the CPTPP – agreed to the CPTPP despite the latter's lack of provision for a court comparable to that found in the CETA. This would seem to indicate that the eventual establishment of a multilateral investment court is of significantly greater concern to the European Union than it is to Canada.

Japan's attitude may also be indicative, inasmuch as investor–state dispute settlement was left out of the final EU–Japan Economic Partnership Agreement – the European Union's largest trade and investment agreement to date. Japan, a party to the CPTPP and more than 40 international investment agreements, has historically favoured arbitration of investor–state disputes.53 Over the course of extensive negotiations, Japan refused to accept the European Union's proposed inclusion of an investment court, even while the European Union in turn refused to accept Japan's proposed inclusion of an investor–state arbitration clause. Although Tokyo and Brussels initially announced that they will negotiate the issue, the result is that the EU–Japan Economic Partnership Agreement entered into force on 31 January 2019 without an investor–state dispute settlement mechanism.54

Although it is not a party to the CPTPP, China's investment treaty practice promises to be highly influential for the future of investor–state dispute resolution. Since the adoption of its Second Model BIT in the late 1990s, China, with more than 100 investment agreements in place, has broadly favoured classical investor–state dispute settlement provisions consistent with a strategy of promoting Chinese foreign investment abroad.55 The 2012 Canada–China Foreign Investment Protection Agreement provides for investor–state arbitration, while incorporating transparency provisions.56

In any case, China appears less likely to support a judicialised approach to investor–state disputes given both its substantial pro-sovereignty stance in international affairs and reluctance to subject itself to supranational jurisdiction. These traditional policy stances reinforce China's ongoing efforts to promote arbitration of investment disputes within China as part of the 'Belt and Road Initiative'. Chinese arbitral institutions are readying themselves for this role. The China International Economic and Trade Arbitration Commission announced dedicated investment arbitration rules and a 'Silk Road Arbitration Centre', as well as the Shenzhen Court of International Arbitration's amendment of its rules to administer investment disputes.57 China's views are also likely to be decisive in the development of the RCEP among the Association of Southeast Asian Nations (ASEAN)-6 countries, whose investment chapter is widely expected to provide for institutional arbitration of investor–state disputes among 16 Asia-Pacific economies.58 Cambodia is hosting the seventh RCEP Intersessional Ministerial Meeting to negotiate market access for goods, services and investment.

V Concluding thoughts

All told, investor–state arbitration appears likely to endure as the standard model for resolving disputes, despite its detractors and perennial debates about its proper scope.

Outside of Europe's uniquely supranational institutional context, the quest for a multilateral investment court seems to have found little support. Smaller or ideologically sympathetic negotiating partners may well agree to resolve disputes in an investment court, of course, but one lesson from the negotiation of the EU–Japan Economic Partnership Agreement may be that it will be difficult for European negotiators to persuade peer economies to buy into the concept of submitting their measures to a permanent multilateral court.

This should not necessarily come as a great surprise. Though a bilateral court established under an agreement like the CETA might give states some advantages in disputes with investors, its evolution into a multilateral body would likely increase the distance between states and adjudicators, evolving toward a scenario in which neither the state nor the claimant will ultimately have much role in selecting those charged with deciding their dispute. Thus, to the extent that concern over investor–state arbitration is driven by resistance to the prospect of states being bound by the decisions of international tribunals, the perceived threat to sovereignty might be even greater from a court. In addition, in the context of the current nationalist backlash to economic globalisation, internationalists critical of investment treaty arbitration, but concerned with preserving some form of investor–state dispute resolution, may decide to backtrack from efforts at reform, concluding that reform negotiations are more likely to be hijacked by forces hostile to any international system than lead to the types of reforms sought by the European Union's multilateral investment court model.

The United States may be a case in point. Although historically a driving force behind the development of international investment law, US policymakers have lately taken a negative view, even entertaining the possibility that investor–state arbitration could be eliminated from the NAFTA framework as seen in the current draft of USMCA relating to Canada. Crucially, however, these kinds of proposals have been justified in terms of the supposed threat to 'sovereignty' posed by investor–state arbitration.59 If the United States has historically been reluctant to commit to supranational courts, such a proposal would be particularly difficult to reconcile with an 'America First' trade policy. Yet, even a change in US politics after the 2020 elections may not bring an administration into power that is committed to investor–state arbitration.60

Even amid such concerns, the apparent success of the CPTPP, the ongoing negotiation of other treaties including investor–state arbitration and the practical political difficulty of enacting dramatic institutional changes at the international level, all seem to confirm that most states believe there are benefits to be realised from including investor–state dispute mechanisms in their investment agreements.61 As a result, incremental adjustments to settled practice – whether through carefully wording substantive provisions, or greater provision for transparency, which does not implicate sovereignty concerns to the same degree – seem more likely to characterise the next generation of investment treaties than widespread adoption of a multilateral judicial regime.


Footnotes

1 Carlos Ramos-Mrosovsky is counsel and Rajat Rana is a senior associate at Alston & Bird LLP.

2 For criticisms of investor–state arbitration, see Michael Waibel, Asha Kaushal, Kyo-Hwa Chung & Claire Balchin (eds.), The Backlash Against Investment Arbitration: Perceptions And Reality (Kluwer Law International, 2010); Gabrielle Kaufmann-Kohler & Michele Potestà, Can The Mauritius Convention Serve As A Model For The Reform Of Investor-State Arbitration In Connection With The Introduction Of A Permanent Investment Tribunal Or An Appeal Mechanism? Analysis And Roadmap (CIDS – Geneva Center for International Dispute Settlement, 2016), pp. 9–10, http://www.uncitral.org/pdf/english/CIDS_Research_Paper_Mauritius.pdf.; Julian Arato, The Private Law Critique of International Investment Law, 113(1) AJIL 1 (2019); see also Thomas Schultz and Cédric Dupont, Investment Arbitration: Promoting the Rule of Law or Overpowering Investors? A Quantitative Empirical Study, 25(4) EJIL 1147 (2015); SD Franck, The Legitimacy Crisis in Investment Treaty Arbitration: Privatizing Public International Law Through Inconsistent Decisions, 73 Ford LR 1521 2005); WW Burke-White, 'The Argentine Financial Crisis: State Liability under BITs and the Legitimacy of the ICSID System', 3 Asian Journal of WTO and International Health Law and Policy 199, 209–28 (2008); Charles N. Brower and Stephan W. Schill, 'Is Arbitration a Threat or a Boon to the Legitimacy of International Investment Law?', 9 Chicago Journal of International Law 471 (2009).

3 Statistics maintained by the United Nations Conference on Trade and Development indicate that of the concluded investor–state arbitrations, 28.1 per cent have been decided in favour of investors, 22.9 per cent settled and 35.9 per cent decided in favour of states, with the remainder having either been discontinued or resulting in a finding of liability without damages awarded. See United Nations Conference on Trade and Development, Investment Policy Hub, 'Concluded original arbitration proceedings', http://investmentpolicyhub.unctad.org/ISDS.

4 See, e.g., Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) Articles 14, 56–58 (requiring that arbitrators in investor–state disputes be 'persons of high moral character and recognized competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment' and providing for the replacement and disqualification of conciliators and arbitrators who manifestly lack these qualities).

5 See e.g., the Written Laws (Miscellaneous Amendments) Act (2017); the Natural Wealth and Resources (Permanent Sovereignty) Act (2017); the Natural Wealth and Resources Act (2017); and Public-Private Partnership (Amendment) Act, No. 9 (2018).

6 Having previously cancelled all of its BITs, Ecuador has recently asked 16 former treaty partners to renegotiate those BITs on the basis that investor–state arbitrations under its terms are seated in Latin America. See Tom Jones, 'Ecuador begins talks over new BITs', Global Arbitration Review (February 23, 2018), https://globalarbitrationreview.com/article/1159285/ecuador-begins-talks-over-new-bits. In 2017, India terminated BITs with 58 countries, including 22 EU countries. Alison Ross, 'India's Termination of BITs to begin', Global Arbitration Review (March 22, 2017); see also Ben Bland and Shawn Donnan, 'Indonesia to Terminate More Than 60 Bilateral Investment Treaties', Financial Times (March 26, 2014).

7 Bill Chappell, 'USMCA: Trump Signs New Trade Agreement with Mexico and Canada to Replace NAFTA', National Public Radio (Nov. 30, 2018). USMCA, however, requires ratification in the House and Senate as well as legislatures in Canada and Mexico before it can replace the original NAFTA that took effect in 1994.

8 Recently, in a speech by the European Commissioner for Trade, Cecilia Malmström, at a high-level event hosted by the Belgian Minister for Foreign Affairs, Didier Reynders, Commissioner Malmström noted that the European Unions's latest agreements with Canada, Singapore, Vietnam and Mexico all provide for an international investment court system. See the speech by European Commissioner for Trade Cecilia Malmström, 'A Multilateral Investment Court: A Contribution to the Conversation About Reform of Investment Dispute Settlement', Nov. 22, 2018.

9 See, generally, ASEAN, 'Regional Comprehensive Economic Partnership (RCEP): Guiding Principles', http://asean.org/storage/2012/05/RCEP-Guiding-Principles-public-copy.pdf; 'Singapore sees “strong political will” to finish China-backed trade talks by end-2018', Reuters (March 2, 2018), https://www.reuters.com/article/us-asean-singapore-rcep/singapore-sees-strong-political-will-to-finish-china-backed-trade-talks-by-end-2018-idUSKCN1GE1FM; Amiti Sen, 'RCEP: India moves to narrow differences with China on tariff elimination in Bali Round', BusinessLine (Feb. 20, 2019).

10 Andres Schipani and James Politi, 'US, Canada and Mexico sign deal to replace NAFTA', Financial Times (Nov. 30, 2018).

11 The new chapters include those on labour, the environment, digital trade and macroeconomic policy, and annexes include alcohol and proprietary food formulas as well as bilateral side letters on distinctive products, auto safety standards, biologics, cheese names, wine, water, research and development expenditures, https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/agreement-between.

13 Andres Schipani and James Politi, 'US, Canada and Mexico sign deal to replace NAFTA', Financial Times (Nov. 13, 2018).

14 Articles 14.6, 14.8 and 14.9, USMCA.

15 Under USMCA Article 14.5.1, most favoured nation claims arise when a state's treatment of an investor is 'less favorable than the treatment it accords, in like circumstances, to investors of any other Party or of any non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory'. Readers of the new USMCA will be particularly careful to read footnote 22 in Chapter 14, which provides that 'the “treatment” referred to in Article 14.5 (Most-Favored-Nation Treatment) excludes provisions in other international trade or investment agreements that establish international dispute resolution procedures or impose substantive obligations; rather, 'treatment' only includes measures adopted or maintained by the other Annex Party, which may include measures adopted or maintained pursuant to or consistent with substantive obligations in other international trade or investment agreements'. Like other provisions in Chapter 14 of USMCA, the language of this provision may depart substantially from the definitions used in other investment agreements.

16 See Annex 14-E, USMCA.

17 USMCA would have no effect on disputes arising out of investments made between 1 January 1994 and NAFTA's termination, providing that the respective investors start arbitral proceedings within three years of NAFTA's termination. See Annex 14-C, USMCA. If USMCA is ultimately ratified, its first consequence may well be to provoke last minute legacy NAFTA claims.

18 See Article 14.2(4) and Annex 14-D (Mexico–United States Investment Disputes), USMCA and Annex 14-D.

19 Mexico has carved out its consent to investment arbitration under the CPTPP relating to government contracts involving infrastructure projects. See Chapters 9 and 14, CPTPP; Annex-14-E (Mexico–United States Investment Disputes Related to Covered Government Contracts).

20 Article 14.D.5, USMCA.

21 Article 32.3(8), USMCA.

22 Appendix 3, Annex 14-D, USMCA.

23 Jim Tankersley, 'Trump Loves the New NAFTA. Congress Doesn't', The New York Times (Feb. 6, 2019).

24 See, e.g., EU–Japan Free Trade Agreement Factsheet, European Commission (December 8, 2017) at 6 ('A new system – called the Investment Court System, with judges appointed by the two parties to the FTA and public oversight – is the EU's agreed approach that it is pursuing from now on in its trade agreements . . . Anything less ambitious, including coming back to the old Investor-to-State Dispute Settlement, is not acceptable. For the EU ISDS [investor–state dispute settlement] is dead'), http://trade.ec.europa.eu/doclib/docs/2017/july/tradoc_155684.pdf. By way of background, the European Union's commitment to an international investment court emerged in the context of hostility towards investor–state arbitration from European non-governmental organisations and other pressure groups during the negotiation of the Transatlantic Trade and Investment Partnership (TTIP) with the United States. In a May 2015 'Concept Paper', the European Commission proposed that Europe 'should pursue the creation of one permanent court' that 'would apply to multiple agreements and between different trading partners' and with a view ultimately 'to multilateralise the court either as a self-standing international body or by embedding it into an existing multilateral organization'. See European Commission Concept Paper, 'Investment in TTIP and beyond – the path for reform: enhancing the right to regulate and moving from current ad hoc arbitration towards an Investment Court' (May 5, 2015), at 11-12, http://trade.ec.europa.eu/doclib/docs/2015/may/tradoc_153408.PDF. See also European Parliament, Resolution of 8 July 2015 containing the European Parliament's recommendations to the European Commission on the negotiations for the TTIP (2014/2228(INI)) (instructing the European Commission to pursue the replacement of investor–state arbitration by a 'new system' in which disputes would be decided 'in a transparent manner by publicly appointed, independent professional judges in public hearings and which includes an appellate mechanism'), http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+­P8-TA-2015-0252+0+DOC+XML+V0//EN. By November of 2015, the European Union had presented a formal proposal for an investment court system to the United States. See Proposal for Investment Protection and Resolution of Investment Disputes (November 12, 2015) (EU TTIP Proposal), http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_153955.pdf.

25 Support for a multilateral investment court dovetails with the European Commission's long-standing objection to BITs providing for investor–state arbitration between EU Member States, which it considers incompatible with the European Union's competence over investment protection issues. The European Commission's position appears to have been upheld by the European Court of Justice (ECJ) in the Achmea case, in which the ECJ found investor–state arbitration under intra-EU BITs to have an adverse effect on the autonomy of EU law, and are therefore incompatible with EU law. See ECJ Judgment (Grand Chamber) in Case C-284/16 Slowakische Republik v Achmea BV (March 6, 2018) (ECLI:EU:C:2018:158), http://curia.europa.eu/juris/document/document.jsf. However, at least in one ICSID arbitration, the tribunal rejected the applicability of the Achmea decision to investment treaty arbitration under the ICSID Convention. UP and C.D. Holding Internationale v. Hungary, ICSID Case No. ARB/13/35, Award (Oct. 9, 2018).

26 'Declaration of the Representatives of the Governments of the Member States of 15 January 2019 on the Legal Consequences of the Judgment of the Court of Justice in Achmea and on Investment Protection in the European Union', available at https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190117-bilateral-investment-treaties_en.pdf.

27 See Cecilia Malmström, Proposing an Investment Court System, European Commission, The Commissioners Blog (September 16, 2015), https://ec.europa.eu/commission/commissioners/2014-2019/malmstrom/blog/proposing-investment-court-system_en. See also EC press release, 'Commission proposes new Investment Court System for TTIP and other EU trade and investment negotiations', Brussels (September 16, 2015), http://europa.eu/rapid/press-release_IP-15-5651_en.htm.

28 See the CETA between Canada, of one part, and the European Union and its Member States, of the other part (Chapter Eight, Section F), agreed text, published in the Official Journal of the European Union, L 11/23 (January 14, 2017), http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:22017A0114(01)&from=EN; EU–Vietnam Free Trade Agreement (EU–Vietnam FTA) (Section 3 'Resolution of Investment Disputes'), agreed text (February 1, 2016), http://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154210.pdf; Free Trade Agreement Between the European Union and the Republic of Singapore, Chapter 3, http://trade.ec.europa.eu/doclib/docs/2018/april/tradoc_156731.pdf. On 13 February 2019, the European Parliament approved the EU–Singapore FTA, http://trade.ec.europa.eu/doclib/press/index.cfm?id=1980. The European Union and Mexico have also agreed to the framework of a new trade deal, including provisions for a permanent two-tier investment court to hear investor–state disputes. See Cosmo Sanderson, 'Mexico Embraces EU Approach to ISDS in New Trade Deal', Global Arbitration Review (April 22, 2018).

29 See CETA, Article 8.27(5) (providing for 15 members appointed to five-year terms, renewable once); EU–Vietnam FTA, Article 12(2)-(5) (providing for nine members appointed to four-year terms, renewable once); EU TTIP Proposal, Article 9(2)-(5) (providing for 15 judges appointed for six-year terms, renewable once); EU–Singapore FTA, Article 3.9(2) (providing for six members for eight-year terms).

30 See European Commission Concept Paper, 'Investment in TTIP and beyond – the path for reform: enhancing the right to regulate and moving from current ad hoc arbitration towards an Investment Court' (May 5, 2015), at 7, http://trade.ec.europa.eu/doclib/docs/2015/may/tradoc_153408.PDF. But see 'The Proposals of the European Commission for Investment Protection and an Investment Protection System', Remarks by Judge Stephen M Schwebel (May 17, 2016) ('The question arises, if there is a risk, real or perceived, of bias of ad hoc arbitral tribunals, as the EU appears to insinuate, is there not a risk, real or perceived, of bias – in favor of States and against investors – in the EU Commission's proposals?'), http://isdsblog.com/wp-content/uploads/sites/2/2016/05/THEPROPOSALSOFTHEEUROPEANCOMMISSION.pdf.

31 See CETA, Article 8.28(2); EU–Vietnam FTA, Article 28(1); EU TTIP Proposal (Article 29(1)). The EU–Singapore FTA provides for rules on public access to the documents, hearings and the possibility of third persons to make submissions under Annex 8.

32 The grounds for annulment found in Article 52 of the ICSID Convention are incorporated into the CETA (Article 8.28(2), EU–Vietnam FTA (Article 28(1), EU TTIP Proposal (Article 29(1)); and EU–Singapore FTA (Art. 3.19).

33 European Commission, 'A Multilateral Investment Court', (September 2017) at 3, http://trade.ec.europa.eu/doclib/docs/2017/september/tradoc_156042.pdf.

34 See CETA, Article 8.36; EU–Vietnam FTA, Article 20; EU TTIP Proposal, Article 18, (incorporating the UNCTIRAL Transparency Rules into both treaties); and EU–Singapore FTA, Article 3.16.

35 See CETA Text, Article 8.29 ('The Parties shall pursue with other trading partners the establishment of a multilateral investment tribunal and appellate mechanism for the resolution of investment disputes. Upon establishment of such a multilateral mechanism, the CETA Joint Committee shall adopt a decision providing that investment disputes under this Section will be decided pursuant to the multilateral mechanism and make appropriate transitional arrangements'); EU–Singapore FTA, Article 312 ('The Parties shall pursue with each other and other interested trading partners, the establishment of a multilateral investment tribunal and appellate mechanism for the resolution of international investment disputes. Upon establishment of such a multilateral mechanism, the Committee shall consider adopting a decision to provide that investment disputes under this Section will be resolved pursuant to that multilateral mechanism, and to make appropriate transitional arrangements'.) Compare EU–Vietnam FTA, Article 15 (providing that the Parties 'shall enter into negotiations for an international agreement providing for a multilateral investment tribunal' and that 'the Parties may consequently agree on the non-application of relevant parts of this Section').

36 See CETA, Article 8.27(6); EU–Vietnam FTA, Article 12.3. However, under EU–Singapore FTA, proceedings would be administered only through the ICSID Secretariat. Article 3.9(16). See also CETA, Article 8.27(16)('The ICSID Secretariat shall act as Secretariat for the Tribunal and provide it with appropriate support'); EU–Vietnam FTA, Article 12(18); and EU TTIP Proposal, Article 9(16) (providing for similar support from the ICSID Secretariat or the Permanent Court of Arbitration).

37 See CETA, Article 8.41; EU–Vietnam FTA, Article 31; EU TTIP Proposal, Article 30, EU–Singapore FTA, Article 3.22. It is not clear that an enforcing court would agree that the product of the proposed investment court would constitute an 'award' under either instrument.

38 See 'Notice concerning the provisional application of the CETA', published in the Official Journal of the European Union, L 238/9 (September 16, 2017), section (a); see also European Parliamentary Research Service, 'Briefing: International Agreements in Progress, EU-Vietnam Free Trade Agreement' (October 2016), http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/589835/EPRS_BRI(2016)589835_EN.pdf.

39 'Agreement with Singapore set to give a boost to EU-Asia Trade', http://trade.ec.europa.eu/doclib/press/index.cfm?id=1980 (Feb. 13, 2019).

40 The CPTPP revives the multilateral investment agreement formerly known as the Trans-Pacific Partnership (TPP). See CPTPP, Article 1(1) ('The Parties hereby agree that, under the terms of this Agreement, the provisions of the Trans-Pacific Partnership Agreement, done at Auckland on 4 February 2016 (“the TPP”) are incorporated, by reference, into and made part of this Agreement mutatis mutandis'). Finalised in January 2018, the CPTPP does not incorporate the United States, which withdrew from the TPP negotiations in January 2018. See Peter Baker, 'Trump Abandons Trans-Pacific Partnership, Obama's Signature Trade Deal' The New York Times (January 23, 2017), https://www.nytimes.com/2017/01/23/us/politics/tpp-trump-trade-nafta.html. See also Colin Dwyer, 'The TPP is Dead. Long Live the Trans-Pacific Trade Deal,' NPR (March 8, 2018), https://www.npr.org/sections/thetwo-way/2018/03/08/591549744/the-tpp-is-dead-long-live-the-trans-pacific-trade-deal. The full CPTPP text and associated documents are available at https://www.mfat.govt.nz/assets/CPTPP/Comprehensive-and-­Progressive-Agreement-for-Trans-Pacific-Partnership-CPTPP-English.pdf. The underlying text of the TPP is available at https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Text/9.-Investment-Chapter.pdf.

41 See TPP Article 9.19(4) (incorporated by reference at Article 1(1) of the CPTPP).

42 See TPP Article 9.22 (incorporated by reference at Article 1(1) of the CPTPP).

43 See TPP Article 9.16 (incorporated by reference at Article 1(1) of the CPTPP).

44 See TPP Annex 9-B (incorporated by reference at Article 1(1) of the CPTPP). Notably, neither the CPTPP nor the TPP explain how states will reconcile this understanding with the consequences of regulatory measures that have the direct effect of destroying private law property rights.

45 See TPP Article 9.6(1) (incorporated by reference at Article 1(1) of the CPTPP).

46 See Rudolf Dolzer & Christoph Schreuer, Principles of International Investment Law (2d ed. 2012) at 130 ('Most . . . investment treaties provide for fair and equitable treatment (FET) of foreign investments. . . . Today, this concept is the most frequently invoked standard in investment disputes').

47 See TPP Article 9.6(4) (incorporated by reference at Article 1(1) of the CPTPP). This language stops short of the question of whether a state may induce an investment with implicit or explicit promises and then withdraw those promises without liability.

48 The CPTPP also omits the 'umbrella clause' included in the earlier TPP, which would have allowed investors to bring claims on the basis of 'investment agreements' and 'investment authorizations'. See CPTPP Article 2 and Annex (suspending provisions of the TPP to this effect). See also New Zealand Ministry of Foreign Affairs & Trade, 'CPTPP vs TPP' ('Suspensions in the Investment Chapter will mean that claims are no longer permitted in relation to investment contracts and approvals (called “investment agreements” and “investment authorisations” in the TPP). This means that under CPTPP private companies who enter into an investment contract with the Government will not be able to use ISDS clauses if there is a dispute about that contract'), https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade­-agreements-concluded-but-not-in-force/cptpp/tpp-and-cptpp-the-differences-explained/#dispute#sue.

49 See TPP Article 9.24 (incorporated by reference at Article 1(1) of the CPTPP).

50 Article 9.24 of the CPTPP is in step with a broader movement towards increased transparency in investor–state arbitration that appears to be gaining momentum, as reflected in the 2014 UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration and the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (adopted on 10 December 2014, opened for signature on 17 March 2015). That said, a number of states, including the United States, have consistently published all pleadings submitted in their disputes.

51 See TPP Articles 27.1-27.4 (incorporated by reference at Article 1(1) of the CPTPP).

52 See TPP Article 9.22(6) (incorporated by reference at Article 1(1) of the CPTPP).

53 See Shotaro Hamamoto, 'Debates in Japan over Investor-State Arbitration with developed states', Investor-State Arbitration series, Center for International Governance Innovation, paper no. 7 (June 20, 2016), at 5 https://www.cigionline.org/sites/default/files/isa_paper_no.5.pdf.

54 'EU-Japan Trade Agreement Enters into Force', Press Release (January 31, 2019), http://europa.eu/rapid/press-release_IP-19-785_en.htm. This outcome resembles the terms of Australia and New Zealand's agreement to participate in the CPTPP. Both governments are sceptical of investor–state arbitration and have signed onto the CPTPP subject to a side agreement clarifying investment disputes arising between Australia or New Zealand, and their reciprocal investors will not be subject to arbitration under the CPTPP. See Exchange of Notes between Trade Ministries, constitutive of an agreement between Australia and New Zealand (February 4, 2016), http://dfat.gov.au/trade/agreements/tpp/official-documents/Documents/australia-new-zealand-investor-state-dispute-settlement-trade-remedies-and-transport-services.PDF.

55 See S.W. Schill, 'Tearing Down the Great Wall: The New Generation Investment Treaties of the People's Republic of China', TDM 1 (2009), www.transnational-dispute-management.com.

56 See Canada–China Foreign Investment Protection Agreement (FIPA-2012), Section C, Articles 19 to 32. China's most recent new BIT with Tanzania, for example, also provides for traditional investor–state arbitration before ICSID or under UNCITRAL Rules. See China–United Republic of Tanzania Bilateral Investment Treaty (2014), Art. 13.

57 See Global Arbitration Review, 'CIETAC launches investment rules and opens “Silk Road” Centre' (September 22, 2017) https://globalarbitrationreview.com/article/1147579/cietac-launches-investment-rules­-and-opens-silk-road-centre; Shenzen Court of International Arbitration, Arbitration Rules (2016), Art. 2(2) ('The SCIA accepts arbitration cases related to investment disputes between states and nationals of other states').

58 See generally ASEAN, 'Regional Comprehensive Economic Partnership (RCEP): Guiding Principles', http://asean.org/storage/2012/05/RCEP-Guiding-Principles-public-copy.pdf; 'Singapore sees “strong political will” to finish China-backed trade talks by end-2018', Reuters (March 2, 2018), https://www.reuters.com/article/us-asean-singapore-rcep/singapore-sees-strong-political-will-to-finish-china-backed-trade-talks-by-end-2018-idUSKCN1GE1FM; May Kunmakara, 'Cambodia to host RCEP Ministerial Meeting', Khmer Times (Feb. 22, 2019).

59 See, e.g., William Mauldin, 'Canada, Mexico Reject Proposal to Rework NAFTA Corporate Arbitration System' The Wall Street Journal (January 28, 2018) (noting the position of US negotiators that investor–state arbitration under NAFTA 'erodes the sovereignty of the U.S. by allowing multinational companies to circumvent domestic courts'), https://www.wsj.com/articles/canada-mexico-reject-proposal-to-rework-nafta-corporate-arbitration-system-1517179473. The United States has never lost an investor–state dispute under NAFTA. See also Office of the United States Trade Representative, 'Statement of United States Trade Representative Robert Lighthizer at the Sixth Round of NAFTA Renegotiations', (January 29, 2018) ('What sovereign nation would trust to arbitrators or the flip of a coin their entire defense against unfair trade?'), https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/january/closing-statement-ustr-robert.

60 See e.g., Elizabeth Warren, 'The Trans-Pacific Partnership Clause Everyone Should Oppose', The Washington Post (Feb. 25, 2015).

61 See, e.g., Burlington Resources Inc. v. Republic of Ecuador, ICSID Case No. ARB/08/5, Decision on Reconsideration and Award dated February 7, 2017; Occidental Petroleum Corporation and Occidental Exploration and Production Company v. The Republic of Ecuador, ICSID Case No. ARB/06/11, Award dated October 5, 2012; Chevron Corporation (USA) and Texaco Petroleum Company (USA) v. The Republic of Ecuador, UNCITRAL, PCA Case No. 34877, Award dated August 31, 2011.