International investment law is one of the fastest growing subbranches of international law. In international investment agreements (IIA) states regulate the rights and obligations between the host country and the foreign investor. Contracting parties in IIA often confer jurisdiction to resolve disputes to international investment arbitration.
International Investment arbitration is a one-stage mechanism for resolving international investment disputes. The lack of an appeal mechanism is one of the main criticisms, as inconsistent and substantively incorrect decisions are made, and at the same time the application of substantive law, which is common to all international investment agreements, is not uniform. International investment arbitration is also plagued by non-transparency and excessively long procedures, which lead to excessive cost burden for small and medium-sized enterprises. At the same time, the arbitrator selection mechanism does not necessarily guarantee their independence and impartiality.
At the bilateral level, the gaps in international investment arbitration are addressed through a so-called system of investment courts, which provide for a permanent judicial mechanism with an appellate instance, where judges are appointed for a term. Judges must comply with high ethical requirements. Higher degree of transparency of the procedure is closer to democratic decision-making. The envisaged time constraints on decision making and cost measures bring the dispute settlement mechanism closer to small and medium-sized enterprises. For the first time, such a mechanism is comprehensively and legally binding regulated in the CETA agreement.
The so-called system of investment courts eliminates shortcomings only at the bilateral level, hence within the UN, proposals are being prepared for the reform of the current settlement of investment disputes, where the idea of establishing of a multilateral investment court prevails.
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