Introduction
This publish addresses points being thought of 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 assorted reform choices being developed by UNCITRAL Working Group III to the in depth community of present 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 contributors 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 essentially the most developed proposal for an MIIR, the idea additionally has broader relevance past dispute settlement reform. Quite, a plurilateral reform treaty may function a authorized instrument for implementing substantive reforms throughout present 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 therapy contained in older funding treaties, has lately additionally thought of the problem of ‘[a] successive plurilateral settlement to vary the rights and obligations contained in a doubtlessly massive inventory of older treaties’ (OECD Monitor 2 web site). The OECD secretariat lately printed two notes addressing the problem of a subsequent plurilateral modifying treaty, which had 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 present funding treaties ‘might present a chance to additionally apply changes of considerable provisions underneath the identical course of. Utilizing the identical procedural framework for procedural and substantial changes might convey important effectivity good points’ (OECD secretariat analysis word, 27 June 2023, para 13).
Primary Construction of an MIIR
The proposed MIIR is structured as a framework conference accompanied by non-obligatory protocols comparable 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 of by Working Group III – written at an earlier stage of the method – see Roberts and St John 2019). States would want to determine whether or not to develop into a celebration to the MIIR and whether or not to develop into a celebration to its numerous protocols, with an extra 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 Social gathering can 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 another 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 assist. The report notes, in response to this suggestion:
it was usually felt that this is able to run opposite to the intention of the Conference, which was to offer a easy mechanism for its Events to change present treaties by indicating the reforms that they wished to use. It was famous that underneath 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 occasion to the treaty submitted a corresponding notification (artwork. 7, para. 2). It was talked about that requiring joint notifications might pose sensible difficulties and be burdensome as it might, in essence, require a renegotiation of present 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 era treaties, which had 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 is able to successfully quantity to requiring States to have interaction 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 can be utilized to present funding treaties. As touched on within the above quote, whereas ‘a notification by a Social gathering … 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 embrace 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 fascinating 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 number 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 usually been debated as a matter of treaty legislation, primarily in relation to the Power Constitution Treaty (see eg Schaugg and Nikièma 2024; Huremagić and Tropper 2021). The method adopted in Working Group III successfully permits multi-speed funding treaty reform to maneuver forward the place solely a number 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 (underneath the MIIR) by which Events to the MIIR (and even maybe non-parties to the MIIR) might focus on requests for a joint interpretation of an funding treaty and thru which Events to the MIIR (and related entities not Social gathering to the MIIR) might 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 basically 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 by 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 might determine ‘to ascertain a sub-group to look at such a request and to open such a gaggle to entities which aren’t occasion 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 seemingly that different Events to the MIIR, in addition to these that are occasion to the treaty in relation to which a joint interpretation is requested, might ‘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 by which the EU’s proposed provision on joint interpretations is essential is that it creates a multilateral construction whereby a celebration agreeing to a joint interpretation of an funding treaty might 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 occasion to’ the MIIR (EU draft provision para 6). Considerably, underneath the draft provision, any Social gathering to the MIIR, or different entity not occasion to the MIIR, that needs to simply accept and apply such a joint interpretation to its personal funding treaties might submit a notification to that impact to the secretariat (EU draft provision para 6). The secretariat can be chargeable for sustaining ‘an inventory of joint interpretations together with which Events to the’ MIIR have accepted them, and this record can be stored updated and publicly obtainable (EU draft provision para 7). Because the EU’s submission notes, this is able to create ‘a central repository of’ joint interpretations (EU submission, commentary para 7).
The above elements of the EU’s draft provision on joint interpretations are important as a result of they reply to the truth that, as a result of similarity in language throughout many funding treaties, joint interpretations developed in relation to at least one funding treaty might usually have wider implications for quite a few different funding treaties. Because of this, it’s justifiable to open the sub-group underneath the MIIR, chargeable for contemplating a request for a joint interpretation, to different Events to the MIIR (eg who might have similar language in their very own treaties), and to permit different Events to the MIIR (and even related entities not occasion 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 occasion 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 develop into binding the place the opposite occasion (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 might 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 of (together with the authorized foundation for his or her participation) and that they need to be allowed to take part solely when so meant by the treaty events’ (ibid, emphasis added). This means that additional considering could also be wanted relating to the edge/necessities for establishing a sub-group underneath the MIIR to think about a request for a joint interpretation – eg maybe whether or not such a sub-group might solely be opened to different Events to the MIIR (and even related entities not occasion 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 considerations what the necessities must be for amending the MIIR, together with including further protocols. It’s because it’s foreseeable that there might 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 present funding treaties.
The preliminary secretariat draft steered, albeit in sq. brackets, a requirement for the adoption of further 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 further 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 further Protocols must be adopted’ with a competing suggestion that ‘somewhat than requiring consensus of the Events to the Conference, a extra versatile method must be taken for the adoption of further Protocols, in order to facilitate additional reforms’ (A/CN.9/1196 para 82, emphasis added). In the end, the settlement arrived at on this challenge was that the edge for the adoption of further protocols to the MIIR could possibly be decrease than that for amending the physique of the MIIR or for amending present protocols, on condition that any further protocols would solely apply on an opt-in foundation (A/CN.9/1196 para 85). In distinction, the adoption of amendments to present protocols would require consensus of the Events to the related protocol (ibid).
In my opinion this opening for subsequently adopting further 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 probability that the MIIR could possibly be used as a mechanism to implement ‘multi-speed’ funding treaty reform. In such a ‘multi-speed’ method to funding treaty reform, further protocols (containing additional reforms) could possibly 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 might transfer forward amongst a subset of events to the MIIR prepared to simply accept them. Whereas in my opinion this multi-speed method is preferable, additional thought could also be wanted relating to whether or not including further protocols to the MIIR, even when solely making use of on an opt-in foundation, might 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 can be resourced, whether or not the function ‘could possibly be undertaken by present 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 a complete’, there’s a query of how States can create mechanisms that can facilitate their ongoing monitoring of, and changes to, the funding treaty regime, notably 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 extremely 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 big physique of present funding treaties with out requiring treaty-by-treaty renegotiation. Inside the design of an MIIR, I’ve steered room must be made for a ‘multi-speed’ method to funding treaty reform, whereby reforms can transfer forward amongst a subset of States prepared to simply accept them.
This publish attracts on the writer’s presentation in a webinar on ‘Rising Developments in Worldwide Funding Arbitration’ hosted by the College of Leicester on 2 April 2025.
