The ICS vs. the ICSID system: a possible compromise in the light of the sustainable development

Abstract

Abstract The current inclination to direct investment efforts towards sustainable development, coupled with the 2030 Agenda for Sustainable Development, unveiled in 2015, which included the 16th goal of granting equal access to justice and reinforcing the rule of law on a universal level, has brought investor-state dispute settlement (ISDS) mechanisms to the forefront of global investment discussions. The ICSID has carried out a crucial role in overseeing the ISDS system, offering arbitration facilities for disputes between investors and states for over six decades. However, the ISDS system has faced criticism in recent years. In response, a new Investment Court System (ICS) implemented by the EU that aims to address these concerns by establishing a permanent court formed with judges who have been appointed by member states in advance and are distributed to disputes in a rotating and random manner. It also limits the parties’ freedom to opt the applicable law and considers that the substantive provisions in investment agreements are the applicable law to the raised disputes and inserts an appellate mechanism review for law and fact matters as well. The paper discusses the relationship between the ICS and the ICSID system in the light of sustainable development and examines a possible compromise between both systems by considering the ICS as inter se modification of the ICSID convention based on investigation of its compatibility with requirements of the VCLT. Ultimately, the paper finds that recognizing the ICS as an amendment between some parties to the ICSID convention does not conflict with the VCLT.