An Appellate Mechanism for Review of Arbitral Decisions in Investor-State Disputes

At a time when complaints and decisions in investor-state arbitration are proliferating as never before, concerns are being raised by the U.S. Congress, NGOs and some foreign governments over the lack of consistency (or serious errors) among the decisions that emanate from the largely ad hoc arbitral panels that are created under the provisions of bilateral investment treaties and the investment provisions of free trade agreements, such as NAFTA, Chapter 11. As a result, it is suggested that an appellate mechanism, perhaps patterned after the generally successful Appellate Body of the World Trade Organization, be created, possibly under the auspices of the World Bank's International Centre for the Settlement of Investment Disputes. The United States--Central American--Dominican Republic Free Trade Agreement is likely to be the locus of the first serious negotiation aimed at creating such a body, given that such negotiations are mandated under that FTA's provisions. The chances of success, however, particularly in the near term, may well be elusive, in view of the extensive legal and practical challenges to creating a well-functioning mechanism, and the divergent constituencies that would have to be satisfied.