Transcript Lessons for a Young Practitioner

KEY ISSUES IN INVESTORSTATE ARBITRATION
Lessons for a Young Practitioner
Presented by Isaiah Bozimo, FCIArb
ISDS
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Who Wins More, Investors or States?
United Nations Conference on Trade and Development (UNCTAD)
World Investment Report 2015 (WIR)
The United Nations Conference on Trade and Development (UNCTAD) recently
published in annual snapshot of known arbitration claims under international
investment treaties - the World Investment Report 2015.
Chapter III of the Report gives some new and insightful data on investor-state dispute
settlement (ISDS) cases - who wins more, Investors or States?
FDI
IIAs
ISDS
$1.23 trillion
3,268 International Investment Agreements
608 Known Cases (1987-2014)
UNCTAD
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ISDS OUTCOMES IN 2014
9%
9%
2%
2%
Breach but no damages
In 8 cases, a treaty breach was found
but no monetary compensation was
awarded to the investor
Discontinued
37 cases were discontinued for
reasons other than settlement (or
for unknown reasons)
26%
26%
Settled
105 cases were settled.
27%
In favour of Investor
111 cases ended in favour of the
Investor.
36%
405
CONCLUDED
CASES
27%
36%
In favour of State
Out of the overall concluded
cases in 2014, 144 were
decided in favour of the
State.
ISDS
Do States really “win” more than Investors?
Most observers acknowledge that States never actually “win”; they only do not lose.
Looking into the Substance behind the Statistics
•One key caveat is that UNCTAD is only able to report statistics for “known” cases. This creates a methodological
problem for the statistical analysis of non-ICSID cases. Unlike ICSID cases, non-ICSID cases are, for the time being,
not subject to any specific reporting or transparency framework.
•UNCTAD’s methodology amalgamates decisions on jurisdiction with decisions on the merit. The 144 cases decided
in favour of States include all claims, either dismissed on jurisdictional grounds or dismissed on the merits.
•From the statistics, tribunals rendered final awards in 255 cases (144 in favour of States + 111 in favour of Investors).
•Out of the 255 cases in which final awards were given, 71 were dismissed by tribunals for lack of jurisdiction.
•Taking out the 71 jurisdictional decisions that terminated the arbitrations, 184 cases were decided on the merits.
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UNCTAD
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DECISIONSSales
ON JURISDICTION
0%
72%
of jurisdictional decisions in favour
of Investors
255 Cases
In favour of States
In favour of Investors
Assuming all arbitrations faced a
jurisdictional challenge, States “won”
28% (71 cases).
Assuming all arbitrations faced a
jurisdictional challenge, Investors
won 72% (184 cases).
UNCTAD
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DECISIONSSales
ON
THE
MERIT
0%
60%
of decisions on the merit in favour of
Investors
184 Cases
In favour of States
In favour of Investors
States “won” 73 or 40% of cases
decided on the merit.
Investors won 111 (or 60% of cases
decided on the merit.
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Why the distinction between jurisdiction & merits matters
•If it is relatively easy to reach the merits phase, it will be
worth filing an investment claim even if jurisdiction is
unclear.
•If the win rate on the merits is high, investors may be more
willing to take a chance at jurisdiction, even if the case is
weak on that issue.
•The combination of law barriers to entry and high win
rates may motivate investors and third party funders to
initiate more cases.
72%
60%
Probability of winning decision
on jurisdiction.
Probability of winning decision
on the merits
Low Barriers to Entry
High Win Rates
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WHO WINS MORE, INVESTORS OR STATES?
Conclusions
• Statistical analysis of investment treaty claims
provides a very useful tool for policy makers,
investors and States respondent to arbitral
proceedings.
• In the proper context, the UNCTAD data
suggests that investors won 72% in of the
decisions on jurisdiction, and 60% of the cases
decided on the merits in the year 2014.
• There is no conclusive evidence that the
investment arbitration system is biased against
either investors or States. The balance in the
ISDS system cannot be measured by wins and
losses alone. Other significant factors are often
involved. But with these new numbers, at least
it can no longer be said, simplistically, that the
system is balanced because States win more
than investors—they clearly do not when
comparing the proper numbers.
• However, the data must be read with caution.
The UNCTAD report only gives the statistics for
known cases. It may be years before details of
cases filed and/or concluded in 2014 begin to
surface, if indeed they ever do.
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Thank you for listening
Isaiah Bozimo
Deputy Head of Chambers
Ikwueto - A Registered Law Firm
[email protected]