The regime of international investment agreements (IIAs) is at a critical juncture. Increasing public attention is given to IIAs that are being negotiated and concluded as well as to investor-State dispute settlement (ISDS) cases that are being brought under IIAs. Several important, technical and political, issues rise to the surface, such as the interpretation of IIAs’ often broad and vague clauses, and the policy space that such agreements preclude or allow countries to retain. With renewed interest, IIA stakeholders have engaged in a broader discourse about the role and implications of the IIA regime. On the one hand, IIAs are still seen as an important policy tool that serves the protection and attraction of foreign direct investment (FDI) by helping create a stable and predictable business climate. At the same time, a broad agreement emerges on the need to reform both the IIA network and the dispute settlement system.

Discourse about the future of the IIA regime forms the background for an UNCTAD Meeting, to be held in Geneva, Switzerland, from 25-27 February 2015. Several of the issues related to the transformation of the IIA regime that UNCTAD has been focusing on and that will be addressed in the February meeting include: 1) trends in IIAs and in ISDS; 2) five options of reform for investment dispute settlement; and 3) four paths of reform for the overall IIA regime and the way forward.

Trends in IIAs and ISDS. The global IIA regime reached close to 3,240 IIAs at the end of 2013. Developments over the last years brought a growing dichotomy in investment treaty making. A rising number of developing countries are disengaging from the regime. At the same time, there is an “up-scaling” trend in treaty making, which manifests itself in increasing dynamism (with more countries participating in ever-more-quickly-sequenced negotiating rounds) and in an increasing depth and breadth of issues addressed. IIA negotiators are more often taking novel approaches to existing IIA provisions and adding new issues to the negotiating agenda. For example, most of the IIAs from 2013 for which texts are available include sustainable development-oriented features, such as those identified in UNCTAD's Investment Policy Framework for Sustainable Development (IPFSD) and the 2012 and 2013 World Investment Reports (WIR).

At the same time, investors continued to bring cases - 2013 saw the second highest number of known investment law arbitrations filed in a single year (56), bringing the total number of known cases to 568.

Five options for reform of investment dispute settlement. In light of the increasing number of ISDS cases, the debate about the usefulness and legitimacy of the ISDS mechanism has gained momentum, especially in those countries and regions where ISDS is on the agenda of high-profile IIA negotiations. Although investment arbitration was conceived with many advantages, in practice systemic deficiencies of the ISDS regime have emerged, including: legitimacy of resort to ad hoc arbitral tribunals, transparency, nationality planning, consistency of arbitral decisions, erroneous decisions, the independence and impartiality of arbitrators, and high financial stakes.

These issues have prompted a debate about the challenges and opportunities of ISDS. This debate has been conducted in multiple fora, including UNCTAD's 2014 World Investment Forum (WIF). From these discussions, five options for reform have emerged: 1) promoting alternative dispute resolution; 2) tailoring the existing system; 3) limiting investors' access to ISDS; 4) introducing an appeals facility; and 5) creating a standing investment tribunal.

Reform of the IIA regime: four paths of action and a way forward. More broadly than ISDS, the entire IIA regime is undergoing a period of reflection, review and reform. While almost all countries are parties to one or several IIAs, few are satisfied with the current regime for several reasons: growing unease about the actual effects of IIAs in terms of promoting FDI or reducing policy and regulatory space, increasing exposure to ISDS and the lack of specific pursuit of sustainable development objectives. Furthermore, views on IIAs are strongly diverse. Add to this the complexity and multifaceted nature of the IIA regime and the absence of a multilateral institution (like the WTO for trade). All of this makes it difficult to take a systematic approach towards comprehensively reforming the IIA regime (and investment dispute settlement). Hence, IIA reform efforts have so far been relatively modest.

Nevertheless, IIA reform has been occurring at different levels of policymaking. At the national level, countries have revised their model treaties, sometimes on the basis of inclusive and transparent multi-stakeholder processes. Several countries are in the process of reviewing and revising their approaches to international-investment-related rulemaking. Countries have also continued negotiating IIAs at the bilateral and regional levels, with novel provisions and reformulations. Megaregional agreements are a case in point. A few countries are terminating some of their BITs or have denounced international arbitration conventions. At the multilateral level, countries have come together to discuss specific aspects of IIA reform.

Bringing together these recent experiences allows the mapping of four broad paths that are emerging regarding actions for reforming the international investment regime. These are: 1) maintaining the status quo; 2) disengaging from the regime; 3) introducing selective adjustments; and 4) engaging in systemic reform. These are discussed further in the IIA Issues Note on Reform of the IIA Regime.

25-27 February Expert Meeting. The IIA regime has reached a juncture that provides opportunities for change. At the 2014 WIF, participants and Member States called upon UNCTAD to develop a roadmap for reform (click here to learn more about the IIA session of the WIF), which will be at the heart of the February meeting. UNCTAD invites you to join the meeting and participate in this multi-disciplinary, multi-stakeholder, discussion on how to best shape the regime moving forward. Among other things, the meeting will also provide a platform for sharing the outcomes of other initiatives that address IIA reform, by means of facilitating a “report-back” on these initiatives. Report-backs will be placed in the publicly accessible “repository” of reform-oriented proposals.