The International Investment Court System: The Way Forward for Asia?

The proposal by the European Commission (‘EC’) to pursue an investment court system (‘ICS’) has received much critical attention. The ICS is touted by the EC as a solution to the problems underlying the ad hoc arbitration model operated in the ICSID system. The EC has expressed its desire to integrate the ICS system into its latest trade and investment negotiations, namely the EU – Vietnam FTA, the EU – Canada CETA and also the proposed Transatlantic Trade and Investment Partnership (‘TTIP’) with the US. The EC proposals envisage the introduction of a dual-layered tribunal to hear investor-state disputes. The first layer consists of the Tribunal of First Instance (‘TFI’) and the second an Appellate Tribunal (‘AT’). Across the three initial trade/investment instruments mentioned above, the rules of appointment and composition of the adjudicators are largely the same. The proposal, however, is the addition of an appellate functionality to the arbitration process which is missing under the current Investor-state Dispute Settlement System (‘ISDS’) model. In particular, the EC insists that standards of treatment extended to foreign investors will be designed in a way that ensures they do not compromise public interest regulation by the host governments.<br/>This move by the EC represents a shift in a new direction in international investment law. Previously, under the ad hoc approach, regulation was largely influenced by private law tradition, however, under a court-based approach, the ICS adopts a more public law-oriented approach to ISDS. This article critically addresses the salient features of the ICS model from an Asian regulatory perspective. The aim of the article is to assess the extent to which the proposed ICS will affect Asian countries. In this regard, the EU – Vietnam FTA (which is the first FTA for any Asian country to incorporate the ICS) provides a useful starting point. The ICS proposal is an EU-centric solution to the question of foreign investment regulation and ISDS. Given the fact that the EU countries are some of the largest investors in Asia, it is only natural that the EC derives a long-term solution that suits the EU’s own trade and investment interests. Whether the ICS proves to be a credible and legitimate dispute settlement mechanism or merely proves to be old medicine in a new bottle remains to be seen.

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