The Impetus for the Creation of an Appellate Mechanism 

  • Elsa Sardinha
  • ICSID Review—Foreign Investment Law Journal

    Vol 32(3), 503–27

  • 2017

By design, investor-State arbitration affords no possibility of review for errors of law for arbitral awards rendered under the ICSID regime, and rarely pursuant to judicial review for non-ICSID processes. The long-standing ‘one-kick-at-the-can’ nature of international arbitration has generated concerns from some critics, which in turn have coalesced into a call for the creation of a centralized appellate review mechanism. Establishing an appellate body is seen by some commentators as a way to resolve inconsistencies in how similar and identical points of law are interpreted and applied. While investor-State dispute settlement (ISDS) has grown rapidly, the field is still nascent in many respects, and concerns about its legitimacy, efficacy, and long-term sustainability could endanger its future. The article presents a comprehensive review of the factors that have driven the pressure to create one or more appeals facilities to review arbitral awards for errors of law and fact. The discussion highlights the ways in which States have sought to remedy perceived problems or uncertainties in the ISDS system through a recent shift towards more detailed treaty-drafting. Better drafting will, it seems, inevitably lessen the risk of tribunals getting it ‘wrong’ on the law. Interestingly, for many proponents of an appeals mechanism, like the EU in its recent treaties with Canada and Vietnam, appellate review is but one part of a broader package of reforms that ought to be introduced in order to address a host of criticisms against the current system, including: the alleged problems with the constitution of tribunals (in particular, the tradition of party-appointed arbitrators and the lack of transparency and common understanding as to what is appropriate behaviour of parties and arbitrators when it comes to appointing a presiding arbitrator and deliberations); conflicts of interest for counsel and arbitrators; the alleged lack of arbitrator independence in comparison to tenured judges; perceived commercial incentives for arbitrators seeking further appointments, and how those might influence their exercise of judgment; skeletally drafted and generally worded treaty provisions that confer broad discretion on arbitrators; and, finally, how tribunals conceive of their role in evaluating State determinations of the public interest.

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