Introduction
This publish addresses points being thought-about within the UNCITRAL Working Group III course of in relation to the design of a multilateral instrument on investor–State dispute settlement (ISDS) reform (hereinafter an ‘MIIR’). An MIIR is envisioned because the authorized mechanism for making use of the varied reform choices being developed by UNCITRAL Working Group III to the in depth community of current funding treaties. A primary draft of an MIIR was printed by the UNCITRAL secretariat in July 2024 (A/CN.9/WG.III/WP.246) and this was mentioned by Working Group III within the first a part of its Fifty-First session in February 2025 (A/CN.9/1196 paras 31–94) and in its Forty-Ninth session in September 2024 (A/CN.9/1194 paras 105–121). Forward of the Working Group’s February 2025 session, some members additionally made written submissions on the subject of an MIIR, together with the European Union (EU) and america.
Though UNCITRAL Working Group III has superior probably the most developed proposal for an MIIR, the idea additionally has broader relevance past dispute settlement reform. Slightly, a plurilateral reform treaty may additionally function a authorized instrument for implementing substantive reforms throughout current funding treaties. On this regard the OECD’s Monitor 2 course of on the way forward for funding treaties, which focuses on potential reforms to the substantive requirements of remedy contained in older funding treaties, has in recent times additionally thought-about the difficulty of ‘[a] successive plurilateral settlement to vary the rights and obligations contained in a probably giant inventory of older treaties’ (OECD Monitor 2 web site). The OECD secretariat lately printed two notes addressing the difficulty of a subsequent plurilateral modifying treaty, which have been mentioned in Monitor 2’s November 2024 assembly (DAF/INV/TR2/WD(2024)8/REV2 and DAF/INV/TR2/WD(2024)9/REV2). As has been famous within the OECD Monitor 2 course of, the discussions in UNCITRAL Working Group III relating to methods to apply the reforms developed to current funding treaties ‘could present a chance to additionally apply changes of considerable provisions below the identical course of. Utilizing the identical procedural framework for procedural and substantial changes could convey important effectivity positive factors’ (OECD secretariat analysis observe, 27 June 2023, para 13).
Fundamental Construction of an MIIR
The proposed MIIR is structured as a framework conference accompanied by optionally available protocols equivalent to the completely different reform choices (A/CN.9/WG.III/WP.246 arts 1–2 and paras 3, 7–11). (For prior evaluation on this weblog of the attainable design of a framework instrument to convey collectively the completely different reforms being thought-about by Working Group III – written at an earlier stage of the method – see Roberts and St John 2019). States would want to resolve whether or not to change into a celebration to the MIIR and whether or not to change into a celebration to its numerous protocols, with a further opt-in required for every of the protocols (see A/CN.9/WG.III/WP.246 artwork 3(5)–(6) and paras 11, 19). After depositing an instrument of ratification or accession to the MIIR, a Occasion could be required to undergo the secretariat an inventory of its funding treaties to which every of the protocols that it has ratified or acceded to shall apply (A/CN.9/WG.III/WP.246 artwork 6(1)–(2) and paras 30–34).
Whereas america in its written submission proposed an alternate process, which might require joint notifications ‘by all related events to an underlying funding settlement’ (United States submission pp. 8–9), it seems from the UNCITRAL secretariat’s report of the Working Group’s February 2025 session that this place didn’t obtain important help. The report notes, in response to this suggestion:
it was usually felt that this may run opposite to the goal of the Conference, which was to offer a easy mechanism for its Events to change current treaties by indicating the reforms that they wished to use. It was famous that below the Conference, whereas Events would have the ability to submit notifications unilaterally, such a notification would solely take impact and modify the listed funding treaty when the opposite celebration to the treaty submitted a corresponding notification (artwork. 7, para. 2). It was talked about that requiring joint notifications may pose sensible difficulties and be burdensome as it might, in essence, require a renegotiation of current treaties with a number of counterparts. It was talked about that this might considerably delay the specified reforms and efforts must be made to offer an efficient framework to amend previous technology treaties, which have been urgently in want of reform (A/CN.9/1196 para 40, emphasis added).
Enabling Multi-Pace Funding Treaty Reform
In my opinion it’s important that Working Group III has not adopted the Unted States’ proposal of requiring joint notifications by all events to an funding treaty, as this may successfully quantity to requiring States to interact in treaty-by-treaty renegotiation of funding treaties with every treaty accomplice and thus considerably decelerate the velocity at which the Working Group III reforms could be utilized to current funding treaties. As touched on within the above quote, whereas ‘a notification by a Occasion … signifies its intent to change the funding treaties listed therein’, the related funding treaty would solely be deemed to be modified the place ‘all events to an funding treaty embody that treaty of their notification[s]’ (A/CN.9/WG.III/WP.246 artwork 7(1)–(2) and paras 40–42).
The final level raises attention-grabbing questions in relation to funding treaties with three or extra events, the place a key query is whether or not notifications by some, however not all, of the treaty events ought to allow treaty modification (through the MIIR’s protocols) among the many subset of treaty events which have listed the treaty of their notifications? Curiously, in Working Group III’s February 2025 session, it was agreed to make clear article 7(2) to replicate that ‘within the case of a multilateral funding treaty, corresponding notifications by a few of the events to that treaty would represent an settlement to change the treaty amongst them’ (A/CN.9/1196 para 58, emphasis added). That is important as it might allow inter se modification of multilateral funding treaties by two or extra events to the treaty, the permissibility of which has typically been debated as a matter of treaty regulation, primarily in relation to the Power Constitution Treaty (see eg Schaugg and Nikièma 2024; Huremagić and Tropper 2021). The strategy adopted in Working Group III successfully permits multi-speed funding treaty reform to maneuver forward the place solely a few of the events to a multilateral funding treaty are in favour of making use of the related reforms to the multilateral funding treaty.
The EU’s Proposed Provision on Joint Interpretations
The EU in its written submission of February 2025 proposed a provision on joint interpretation of funding treaties to be included within the physique of the MIIR that’s noteworthy in a number of respects. Whereas I’ll unpack the EU submission within the following paragraphs, in a nutshell the proposal is critical as it might create a multilateral construction (below the MIIR) through which Events to the MIIR (and even maybe non-parties to the MIIR) may focus on requests for a joint interpretation of an funding treaty and thru which Events to the MIIR (and related entities not Occasion to the MIIR) may additionally point out their acceptance of a joint interpretation and their settlement to use the interpretation to their very own funding treaties.
The EU’s proposed provision on joint interpretations makes use of as a foundation the draft provision on joint interpretations that was beforehand printed by the UNCITRAL secretariat as a part of the Working Group’s work on procedural and cross-cutting points (A/CN.9/WG.III/WP.248 p. 2 Draft Provision 21). Nevertheless, the EU’s submission primarily leverages the multilateral nature of the MIIR to create alternatives for actors apart from the events to the related funding treaty, in relation to which a joint interpretation is requested or adopted, to be concerned in contemplating a proposed joint interpretation and in accepting a joint interpretation as binding for their very own funding treaties.
A primary respect through which the EU’s proposed provision on joint interpretations is noteworthy is that it means that the place there’s a request for a joint interpretation of an funding treaty the Events to the MIIR could resolve ‘to determine a sub-group to look at such a request and to open such a gaggle to entities which aren’t celebration to this Conference’ (EU draft provision para 2). That is important as a result of it ‘would get pleasure from offering a multilateral construction for such discussions’ and since it’s probably that different Events to the MIIR, apart from these that are celebration to the treaty in relation to which a joint interpretation is requested, may ‘additionally [be] within the joint interpretation, for instance as a result of they’ve comparable provisions of their treaties’ (EU submission, commentary paras 7 and 10).
A second respect through which the EU’s proposed provision on joint interpretations is vital is that it creates a multilateral construction whereby a celebration agreeing to a joint interpretation of an funding treaty may request the secretariat to the MIIR to flow into the joint interpretation to all Events to the MIIR and in addition to ‘related entities not celebration to’ the MIIR (EU draft provision para 6). Considerably, below the draft provision, any Occasion to the MIIR, or different entity not celebration to the MIIR, that needs to simply accept and apply such a joint interpretation to its personal funding treaties may submit a notification to that impact to the secretariat (EU draft provision para 6). The secretariat could be answerable for sustaining ‘an inventory of joint interpretations together with which Events to the’ MIIR have accepted them, and this checklist could be saved updated and publicly out there (EU draft provision para 7). Because the EU’s submission notes, this may create ‘a central repository of’ joint interpretations (EU submission, commentary para 7).
The above facets of the EU’s draft provision on joint interpretations are important as a result of they reply to the truth that, because of the similarity in language throughout many funding treaties, joint interpretations developed in relation to at least one funding treaty could typically have wider implications for quite a few different funding treaties. Because of this, it’s justifiable to open the sub-group below the MIIR, answerable for contemplating a request for a joint interpretation, to different Events to the MIIR (eg who could have similar language in their very own treaties), and to permit different Events to the MIIR (and even related entities not celebration to the MIIR) to point their acceptance of any joint interpretation adopted. Whereas the EU’s draft provision permits Events to the MIIR (and related entities not celebration to the MIIR) to point unilaterally their acceptance of a joint interpretation circulated and their intention to use the interpretation to their very own funding treaties, nonetheless a joint interpretation would solely change into binding the place the opposite celebration (or events) to the related funding treaty had additionally indicated their acceptance of the joint interpretation (EU submission, commentary para 14).
In Working Group III’s February 2025 session the EU’s proposed provision was briefly mentioned and a priority was raised that ‘such an article on joint interpretation may set a precedent for permitting non-parties to affect treaty interpretations and impose unintended interpretations’ (A/CN.9/1196 para 91). ‘In response, it was mentioned that the participation of non-treaty events wanted to be fastidiously thought-about (together with the authorized foundation for his or her participation) and that they need to be allowed to take part solely when so supposed by the treaty events’ (ibid, emphasis added). This means that additional pondering could also be wanted relating to the edge/necessities for establishing a sub-group below the MIIR to contemplate a request for a joint interpretation – eg maybe whether or not such a sub-group may solely be opened to different Events to the MIIR (and even related entities not celebration to the MIIR) with the settlement of the events to the funding treaty in relation to which a joint interpretation was requested.
Necessities for Including Extra Protocols to the MIIR
One other important design query issues what the necessities must be for amending the MIIR, together with including extra protocols. It is because it’s foreseeable that there could a necessity for additional reforms past these developed by the UNCITRAL Working Group III course of, which is because of conclude in 2027 (A/CN.9/WG.III/WP.248 para 36), and an MIIR could also be a helpful mechanism for making use of such reforms to current funding treaties.
The preliminary secretariat draft advised, albeit in sq. brackets, a requirement for the adoption of extra protocols of a easy majority of Events to the MIIR current and voting (A/CN.9/WG.III/WP.246 artwork 10(3)). In distinction, america, in its written submission, proposed a requirement of consensus of the Events to the MIIR for amending the MIIR, together with including extra protocols (United States submission p. 11). The UNCITRAL secretariat report of the Working Group’s February 2025 assembly notes ‘[v]iews diverged on how amendments or extra Protocols must be adopted’ with a competing suggestion that ‘slightly than requiring consensus of the Events to the Conference, a extra versatile strategy must be taken for the adoption of extra Protocols, in order to facilitate additional reforms’ (A/CN.9/1196 para 82, emphasis added). Finally, the settlement arrived at on this situation was that the edge for the adoption of extra protocols to the MIIR might be decrease than that for amending the physique of the MIIR or for amending current protocols, on condition that any extra protocols would solely apply on an opt-in foundation (A/CN.9/1196 para 85). In distinction, the adoption of amendments to current protocols would require consensus of the Events to the related protocol (ibid).
In my opinion this opening for subsequently adopting extra protocols to the MIIR, with a decrease threshold than a requirement of consensus of all Events to the MIIR, is critical as a result of it will increase the chance that the MIIR might be used as a mechanism to implement ‘multi-speed’ funding treaty reform. In such a ‘multi-speed’ strategy to funding treaty reform, extra protocols (containing additional reforms) might be added to the MIIR, with one thing extra versatile than a requirement of consensus of all Events to the MIIR, and thus additional reforms may transfer forward amongst a subset of events to the MIIR keen to simply accept them. Whereas in my opinion this multi-speed strategy is preferable, additional thought could also be wanted relating to whether or not including extra protocols to the MIIR, even when solely making use of on an opt-in foundation, could nonetheless have implications for all Events to the MIIR, eg by way of resourcing the secretariat. On the final level, whereas the draft of an MIIR envisages the Conference having a secretariat (A/CN.9/WG.III/WP.246 artwork 6 and para 38), numerous important points stay to be settled, such because the exact capabilities of the secretariat, how the secretariat could be resourced, whether or not the position ‘might be undertaken by current our bodies or establishments’, and the way the secretariat to the MIIR would relate to secretariats envisaged by sure Protocols to the MIIR (A/CN.9/1196 para 56; A/CN.9/1194 para 108).
Conclusion
Whereas UNCITRAL Working Group III arguably at the moment serves ‘as a typical hub the place states focus on the [investment treaty] system as an entire’, there’s a query of how States can create mechanisms that may facilitate their ongoing monitoring of, and changes to, the funding treaty regime, significantly as soon as the UNCITRAL course of is over (see Roberts and St John 2022, pp. 127–128; Roberts and St John 2019). The drafting of an MIIR is very related to such questions. The MIIR ought to, at a minimal, present an efficient means for making use of the UNCITRAL Working Group III reforms to the massive physique of current funding treaties with out requiring treaty-by-treaty renegotiation. Throughout the design of an MIIR, I’ve advised room must be made for a ‘multi-speed’ strategy to funding treaty reform, whereby reforms can transfer forward amongst a subset of States keen to simply accept them.
This publish attracts on the writer’s presentation in a webinar on ‘Rising Traits in Worldwide Funding Arbitration’ hosted by the College of Leicester on 2 April 2025.
