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No. 186,  10 October 2019
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Last chance for the Global South? Pursuing the South’s interests in reforming the Investor-State Dispute Settlement system in the multilateral arena

By Jose Manuel Alvarez Zarate and Maciej Żenkiewicz

The current Investor-State Dispute Settlement (ISDS) system is mainly criticized for its lack of transparency, unbalanced rights and obligations between State and investors, and the expansive interpretation of arbitrators of the investment protection treaties' vague rules. Any reform of the ISDS should benefit developing countries that are facing most of the ISDS claims. The decisions taken at the  thirty-seventh session of the United Nations Commission for International Trade Law (UNCITRAL) Working Group III (WGIII) on ISDS Reform (New York, 1-5 April 2019) are likely to influence the way in which the discussions about the reform of ISDS at the multilateral level will go. The developing countries should shape their agenda in such a way to facilitate consensus in the context of advancing their collective interests and perspectives.
Le système actuel de règlement des différends entre investisseurs et États fait l’objet de nombreuses critiques liées principalement à son manque de transparence, au déséquilibre qui existe entre les droits et obligations des états et ceux des investisseurs et à l'interprétation large que les arbitres font des règles vagues issues des traités de protection des investissements. Toute tentative visant à réformer ce système doit pouvoir bénéficier aux pays en développement, qui sont les plus attaqués par les entreprises. Les décisions prises à la trente-septième session du Groupe de travail III (GTIII) de la Commission des Nations Unies pour le droit commercial international (CNUDCI) sur la réforme du système de règlement des différends entre investisseurs et États (New York, 1er-5 avril 2019) sont susceptibles d'influencer la manière dont les discussions sur la réforme du système se poursuivront au niveau multilatéral. Il est essentiel, dans cette perspective, que les pays en développement définissent des actions susceptibles de leur permettre de parvenir à un consensus en vue de défendre leurs intérêts et une vision commune.
El actual Sistema de Solución de Controversias entre Inversionistas y Estados (SCIE) es criticado principalmente por su falta de transparencia, por el desequilibrio que existe entre los derechos y obligaciones del Estado y los Inversionistas, y por la amplia interpretación de los árbitros sobre las reglas imprecisas de los tratados de protección a las inversiones. Toda reforma al sistema de SCIE debería beneficiar a los países en desarrollo que se enfrentan a la mayoría de los reclamos por la SCIE. Es probable que las decisiones adoptadas por el Grupo de Trabajo III (WGIII) en el trigésimo séptimo período de sesiones de la Comisión de las Naciones Unidas para el Derecho Mercantil Internacional (CNUDMI) sobre la Reforma del Sistema de Solución de Controversias entre Inversionistas y Estados (Nueva York, 1-5 de abril de 2019) influyan en la manera en que se desarrollarán los debates sobre dicha reforma a nivel multilateral. Los países en desarrollo deben definir sus agendas de modo que se facilite el consenso en el contexto de la promoción de sus intereses y perspectivas colectivos.


The thirty-seventh session of the United Nations Commission for International Trade Law (UNCITRAL) Working Group III on Investor-State Dispute Settlement (ISDS) Reform (hereafter WGIII) took place in New York from 1 to 5 April 2019. The role of the WGIII when it was created was defined in the following terms: “The Commission entrusted Working Group III with a broad mandate to work on the possible reform of investor-State dispute settlement […] while benefiting from the widest possible breadth of available expertise from all stakeholders, would be Government-led, with high-level input from all Governments, consensus-based and fully transparent”(1) . During the previous meetings of WGIII, it was agreed that the discussions should address 1) the cost and length of the proceedings, 2) inconsistency and incorrectness of decision-making, and 3) problems with arbitral diversity and independence. Although characterized as “broad”, the mandate of the WGIII has excluded important issues of interest that have been affecting developing countries facing investors’ claims. 

During the thirty-seventh session, it was agreed that the work of the delegates would be devoted to: “(i) considering whether the reform was desirable in relation to concerns relating to third party funding; (ii) identifying any other concerns; and (iii) considering the options available to facilitate the workplan to be developed as well as proposals for the workplan, as part of discharging the third phase of its mandate.”(2)  

The thirty-seventh session was the most attended session of WGIII so far. Officially, 105 delegations from States (members and observers)(3), together with 59 observers from various international organizations(4) participated during the session. The debate started by focusing especially on how to structure the future work of the Working Group, with two main positions emerging among those that favoured ‘incremental’ reforms and those that favoured ‘systemic’ reforms(5)

The key question in this regard that was raised was how WGIII should deal with the various reform proposals – i.e. whether WGIII should proceed incrementally, systematically, sequentially (moving to new proposals after finishing previous one) or concurrently (by working on the various reform proposals simultaneously). 

The sequential approach, supported by Chile, Israel, Japan, the United States (US), Mexico, and Russia, would start with the least controversial issues, described as “picking the low hanging fruit”. The advantage of such an approach would be to have some of the results of the WGIII come out relatively soon as these “low hanging fruit” issues are resolved. The challenge for the Global South, however, is that these “low hanging fruit” may fall short and the more ambitious proposals that are more systemic in nature that could benefit the Global South would be left at the end of the queue, leaving serious concerns about when (and if) they will be finally debated and approved.(6)  

The concurrent approach, proposed by Switzerland and supported inter alia by the European Union (EU), Germany and Mauritius, has been proceeding on two tracks: one dealing with incremental reforms, and another with systemic reforms. As proposed by A. Roberts these two postures may be explained as follows: “Incrementalists view the criticisms of the current system as overblown and argue that investor-state arbitration remains the best option available. Hence, they favor retaining the existing dispute resolution system but instituting modest reforms that would redress specific concerns” and “Systemic reformers see merit in retaining investors’ ability to file claims directly on the international level, but view investor-state arbitration as a seriously flawed system for dealing with such claims. They champion more significant, systemic reforms, such as replacing investor-state arbitration with a multilateral investment court and appellate body”.(7)
Although the EU and developed countries such as Canada are the principal promoters of multilateral ISDS reform at the UNCITRAL, any reform of the ISDS should also benefit developing countries that are facing most of the ISDS claims.

Outcome of the thirty-seventh session

At the thirty-seventh WGIII Meeting, the Chair announced a compromise, which was described as making everyone “equally unhappy”(8). The WGIII would proceed concurrently, not be limited to two potential reforms, but would discuss, elaborate, and develop multiple potential reform solutions at the same time(9). This sought to move away from the “incremental” versus “systemic” dichotomy by creating a new division between “structural reform” and “other potential solutions”.
As an outcome of the meeting, a number of topics to be researched by the Secretariat were specified by the Working Group, namely: an arbitrator code of conduct, indirect claims and reflective loss, appointment of adjudicators, third-party funding, and the establishment of an advisory center for developing states(10). What is also important is that interested states had been invited by the WGIII to submit views on the future work to the UNCITRAL Secretariat by 15 July 2019(11). This provided developing countries with the opportunity to widen the agenda for WGIII to include topics that are of interest to them.

Analysis of the thirty-seventh session 

The decisions taken at the thirty-seventh session of the WGIII will influence the way in which the discussions about the reform of ISDS at the multilateral level will go. Therefore, it is important to analyse and comment on the constructive and undesirable aspects of outcomes of the WGIII’s thirty-seventh session.

First, the participation of a large number of States in the WGIII enriched the discussion. Many States voiced their concerns and were heard during the plenary session of the WGIII. A positive trend of WGIII is its openness, cooperation with the Academic Forum and Practitioners Group, international organizations and civil society, and its consideration of the work carried out by the Organisation for Economic Co-operation and Development (OECD) and the International Centre for Settlement of Investment Disputes (ICSID), on the research of some topics. 

The participation of more States, especially from developing countries, and other interested stakeholders gave those participants the opportunity to be heard and helps to legitimize the process. But it remains to be seen if the proposals made by States will be taken into account in WGIII building a broad negotiating agenda. Doing so could give more transparency and inclusiveness to the process, despite the fact that there is no guarantee that all the proposals would be discussed.   

The current ISDS system is mainly criticized for its lack of transparency, unbalanced rights and obligations between State and investors, and the vagueness of its rules that are often shaped by the expansive interpretation of arbitrators, not by the States, but WGIII has been reluctant to include some of the issues relating to these critiques into its agenda. If in the process of reforming the existing system, the same mistakes made at the WTO or in previous negotiations where international courts were negotiated are committed,(12)  very serious doubts would emerge regarding the fairness and legitimacy of that reform. In that light, the leading proponents of multilateral ISDS reform should bear in mind not to commit the same errors from the past, and not to undermine and taint any reformed multilateral ISDS system with any accusations of not having been fully transparent, inclusive and deliberative when such system was being developed. 

Potential risks

In this context, the following risks to the transparency and legitimacy of the discussion for a new or reformed multilateral ISDS system could be identified, although it should be noted that the identification of the potential risks does not mean that they had already frustrated the process; it simply means that participants should be aware and careful to avoid them: 

Risky dominance of strong participants and labelling 

First, a risk to the process is the perceived threat of having the most influential States, or the establishment of a bloc of States, dominating and monopolizing the negotiations. What was observed during the thirty-seventh session is that when the debate is between two strongly supported or dominant positions, some States find themselves forcefully labelled as one of those position’s supporters, even against their will(13). The most obvious and most present bipolar division concerned incremental and systemic approach supporters. Those two groups, each of which had strong gravity, were seeking to pull other delegations into their respective groups. This sometimes left little room during the session for other States to present their ideas or proposals, without being squeezed and framed within that existing duopoly. 

As a consequence of the bipolarized debate, there was another risk observed. From the first day, it was made clear that the two main camps were the ‘incrementalists’ and ‘systemic’ reformers(14), and therefore some States, especially new ones at the WGIII, when presenting their ideas and proposals, were labelled or identified as supporters or critics of one of the two main groups. Such an attitude restrains and prevents the WGIII from taking into account new ideas or approaches that may be presented by States that do not necessarily fall into either of the two main approaches, but artificially pushes all of the participants into two already existing opposing sides. That attitude could easily result in the frustration of the delegations – who do not want to be labelled within the existing framework, but to express their interests. Monopolizing the discussions at this stage of the process poses a risk of restraining it only to the already existing proposals, and to a strong accusation of not taking into account some serious doubts and some legitimate proposals from other States, which may escape that dichotomised division. 

Another worrying trend which was observed was that the two opposing groups tried to define the views of the other side in a simplistic, and sometimes pejorative manner, not observing diplomatic protocol, but as litigants in trials behave and using ‘legalistic’ language and arguments. Some effort was made to equate the “incrementalist” position with an attitude against profound reform and with allegations that they are adopting the technique to obstruct the progress of the others. States’ positions were sometimes interpreted in a way that resulted in those States finding themselves in the middle of the polarized debate. As a delegate expressed: “There is a small group of states that have made it clear that they do not want for this work to take place at all.”(15)  

There were more victims of simplifications.  The so-called systemic reformers, i.e. States who are in favor of profound systemic reform, were associated with those supporting the Multilateral Investment Court (MIC) as the only solution(16). However, the landscape is more complex. Recognizing only two options regarding the reform -either incrementalist (allegedly slow, prolonged, prone to fail or bear fruits in a remote future) or systemic reformers (allegedly quick and effective)- may pose a risk for States participating in the WGIII, especially for developing states, and it would make even more difficult the participation of those countries that joined the discussions for the first time. Basically, it could mean, in practice, that those states might be deprived of the possibility of fully presenting their views and concerns, but they would be squeezed into an already established dichotomized situation, which would prevent them from articulating the interests that do not fit into any of the positions, and force them to take sides, and fight and defend one of the two positions which is not necessarily theirs. 

In addition, it is not useful for purposes of furthering the discussions to frame the debate in terms of a zero-sum game i.e. either one is in favour of a systemic reform (understood by some as being in favour of MIC) or one is against it. 

Many delegations seemed to be against such a binary framing, with some of them strongly presenting their concerns about it during the plenary session. As the delegate of Chile stressed at the plenary session, it is unwanted to be labelled; its statement warned against the creation of “imaginary blocs against each other”(17). Even if the Chilean position was in support of the incremental way of work, it does not automatically mean that Chile is not committed to the reform. This shows clearly the harmfulness of bipolarization of the debate (at this stage of the work), as it was clearly articulated by some states. 

One observation is due. Not every proposal or debate orbits around the position of the EU and the MIC. It seems that there is an attempt to frame the debate in such way, which is probably beneficial for those most interested in such a reform but, it is harmful for the debate in general. There are states that may have different agendas and interests. They can be more or less neutral regarding the MIC, but want to push for their own issues or agenda. However, by such a dichotomy, they are pushed into the already existing framework. This was precisely the focus of the intervention of Russia during the plenary session, when they opposed the excessive language, and also criticised the labelling of all those who are not in favour of the creation of the MIC as not being constructive or acting in good faith(18). Such a technique of the debate poses a serious threat to the process, hampering its inclusiveness and may be discouraging other states from standing up for their proposals, leaving them just simply waiting for the results and seeing if their interests were reflected.

Even if at the end the distinction between incremental and systemic was left aside(19), two lessons should be remembered from that heated debate.  First, that the same labels may return and strike back, maybe under slightly changed names or definitions. Second, that WGIII should learn from that clash that in any future debate the premature bipolarization of States’ positions does not lead to a more effective and open debate but, on the contrary, to entrenchment of opposing positions with States hardening their positions.
A risky split in the debate from plenary to small groups

The thirty-seventh session of WGIII also saw the use of small informal groups of States to debate issues, rather than remaining in plenary. This for many of the State participants was a disturbing and criticized development. When a plenary debate was stuck in a deadlock on Wednesday, the Chair announced a consultation break which was then followed by informal small group negotiations. These informal small group negotiations, participated in by small groups of delegates, resulted in a compromise that allowed for the work of WGIII to be pushed forward. 

And here we encounter one of the biggest dilemmas. On the one hand, it is understandable that, as a negotiation technique and in light of the deadlock, some remedies needed to be taken. WGIII needed to reach some conclusions because it is not possible to debate ad infinitum. However, the recourse to negotiating techniques that may not be fully transparent, inclusive nor participatory may raise some serious concerns. Given that the EU has justified the need to reform the multilateral ISDS system due to the fundamental lack of trust by the public, heavy critique of the system by the academics, and serious doubts and concerns regarding the legitimacy and transparency of the whole investment law system, any process for reforming such multilateral ISDS system should be conducted in a more inclusive, more transparent, and thus more legitimate way.

Reforming a system which is accused of being flawed by the lack of transparency, unbalanced rights and obligations of States and investors, in favour of the latter, should be undertaken through a process that does not replicate the same mistakes and fall for the same sins that the reform is supposed to address in the first place. The process of the reform should be free from even slight suspicions of not being totally transparent, inclusive and deliberative. The practice observed during the WGIII meeting, even if effective in breaking a deadlock, poses a threat to the transparency of deliberations. 

This problem was stressed by delegations of some States. After the break, the States reconvened at the plenary session during which the consensus reached in the informal small group of delegates(20) was presented to the plenary. Many states (e.g. Morocco, the Democratic Republic of the Congo (DRC), Sierra Leone and Ecuador) voiced their serious concerns regarding such modus operandi, namely that the process should be conducted in a transparent manner, which means that consultations which lead to a drafting exercise should be conducted among all representatives, not during the break and only among some, not all, delegations. It seems that also many States were not convinced by the assurance of the Chair that every State will be given a chance to comment on the draft of the compromise. Normally, agreements reached by a small informal group of States cannot bind the plenary as such agreements must first be brought back to the plenary for its consideration and, if it so wishes, its adoption. However, the common perception of the excluded States was that there is little room left to challenge the proposal reached by a few during informal meetings. 

Nobody would be against an efficient mode of conducting the meeting with a large number of delegates. It goes without saying that from time to time, to break an impasse and to move forward an agenda, the tactics of calling for a consultation break and to try to convince, negotiate and decide in smaller groups seems like a reasonable solution. However, efficiency cannot mean crushing transparency and inclusiveness. This is a threat particularly for developing countries if plenary deliberations are substituted by informal small group negotiations because they could be they could be de facto excluded from the decision making process.

Risk of fast and slow track 

 As a result of the thirty-seventh session, the delegates agreed to work concurrently on two issues: “structural reforms” and “other potential solutions”, and to allocate time for both in a balanced way(21). However, this situation can raise at least one risky trap. Bifurcating the proceedings (to be more precise, into one defined subject and others) may result in dividing the work of the WGIII into two tracks with different speeds of work. It can be easily imagined that in one of the tracks, some States or group of States would focus their efforts on structural reform and pushing it forward effectively and rapidly, while the other working track may be moving much more slowly. As we remember from history, in an extreme situation, one track could be pushed forward while the other, after prolonged and futile disputes, could be ultimately abandoned. 

Also, there is a growing fear that the already well-structured proposal of the EU about the MIC could overshadow the work on other important issues of interest of developing countries. As noted, various states have other interests or proposals, and they feel that they are being pushed or forced to take a side in the dispute in favour or against MIC.

Lack of substantial issues

Another observation relevant here refers to limiting the debate only to procedural issues. The question of substantial issues resurfaced again, when the topic of “other concerns” was discussed.  Some States and many observers stressed the need to discuss “other concerns” as well, such as, inter alia, alternative dispute resolution, exhaustion of local remedies or calculation of damages. 

The reaction of the Chair and some States regarding the substantial issues may be summarised as follows: the mandate of the WGIII focuses only on procedural reforms of the system which is a very formal way to avoid the discussion on important substantive issues such as interpretation of the treaties(22). The Chair also said that the substantive issues should be amended by the States themselves in their bilateral or multilateral negotiations(23). This recalls the negotiating experience at the world trading system: while the multilateral Doha Round was failing, at the same time numerous bilateral Regional Trade Agreements (RTAs) were negotiated between developed and developing countries. The experience has shown that bilateral negotiations were unbalanced because the strong countries knew how to exercise their power and obtained many of the concessions that were not obtained at the Uruguay Round (e.g. in the areas of intellectual property, financial services, etc.) while the developing countries did not still get real market access for some of their products nor access to technology to support their development. While the UNCITRAL WGIII is working to multilateralize the ISDS framework, at the same time the EU has a policy to change it by negotiating bilaterally as discussed below. 

We understand the scope of the WGIII mandate; however the process may be perceived as non-transparent and unfair if States were prevented from bringing substantive issues up, while later other substantive issues could enter the back door via procedural issues. This could result in a sense of unfairness for the States who were advocating for substantive issues and who were refused any debate about them, if later other substantive issues could re-emerge on the agenda in the guise of procedural reform issues. Also, despite the fact that procedural reform is advisable, the creation of a MIC will not solve the main problems of the ISDS, such as the problem of interpretation and law making by the adjudicators.

What can be generally observed is that there is a constant struggle between two values during the work of WGIII. On the one hand, the reform has to be efficient and should bear fruit in some near future. Prolonging the negotiations and postponing the reform may result in no reform at all. Therefore, in favour of that value, the informal deliberations took place to break the deadlock. There is also a preoccupation to include too many issues, and there is a resistance by some to debate substantial issues.  On the other hand, the values of transparency and inclusiveness are stressed. And on many times those values are clashing with the efficiency of the debates. A proper balance between them should be found. 

Peculiar position of the EU Commission during the debate

As an example of these problems, the position of the EU may be examined. It has to be clearly noted that in this analysis, the authors are not advocating for or against any proposal. At this stage of the reform, all the proposals should be duly taken into account. The main concern of the authors is the way in which the discussion was conducted, especially in the light of the values of transparency, equality, inclusiveness and real deliberation. Without doubt, the joint position of the EU, represented by the European Commission and mainly supported by its Member States, is an example of a robust and well elaborated position. On the one hand, it should not be criticised that any participant in the debate may bring forth their own proposal to the table – on the contrary, this is a rather desirable situation. However, in the current WGIII debate, the situation of having such a strong player with a strong agenda, when confronted with many States who are open-minded and ready for a general discussion, may result in the unbalanced situation mentioned above: danger of domination of the debate, danger of labelling, danger of cherry picking, and danger of the EU not moving an inch from its stated position. 

Another issue is the attitude of the EU regarding the reform in general. It is obvious that not all States necessarily have the same agenda. The main interest of the European Commission is the development of a permanent court and/or appellate mechanism. This option for every state is still on the table, but as one of the alternatives, not the only one. By no means is it negative to have its own agenda; however taking part in the negotiations should mean at least being open for debate on any possible and different solutions. When meeting and sitting at the same table, it is commonly accepted under international law making practices that all parties have to arrive with the intention to negotiate and accept the possibility of moving from their original position. However, the legitimate question is whether the EU, by taking part in WGIII, is there to duly scrutinize all possible options in search of the best solution for all or, given that they already have their own solution, whether the EU will only advocate for it without any openness to explore, compromise or take on board other perspectives. If it is the latter, it would overshadow the whole of WGIII’s quest in search of an universally acceptable ISDS reform. 

Once again, the concern of States especially from the South is whether we are really deliberating on the reform with all options at the table, or whether this is only a forum for the EU to find supporters for its already decided agenda. It is not without reason that this question is being posed. At the same time, while deliberating multilaterally at the WGIII forum, the EU is strongly pushing bilaterally for its own proposal. As far as it is known, apart from the treaty with Canada(24)  and Vietnam(25), the EU has recently negotiated with Mexico the new investment chapter in a Free Trade Agreement (FTA), which includes a permanent court system.(26)  It is now negotiating with Chile on the same proposal, and plans to do the same with other trading partners.  

It is a possible future development that the prolonged debate in UNCITRAL will be outpaced by the bilateral negotiations of the EU, and maybe when finally, UNCITRAL’s work is done, the landscape of the investment dispute settlement will already have been amended by the EU practice and establishment of the MIC. It does not automatically mean that we should be per se against any development, and that States cannot take other steps but to wait for UNCITRAL to finish its work. However, the argument that the time in UNCITRAL is wasted because progress is happening somewhere else may be raised at any moment. Maybe before the end of the talks of UNCITRAL, the discussions will become irrelevant and futile because the system will have already been reformed bilaterally by the EU through its bilateral treaties. What if the UNCITRAL reaches other conclusions after many years of profound and inclusive negotiations, just to find it in a new reality developed by the EU? It could again leave a lot of States, who would have invested time and effort for the work in UNCITRAL, with the sense of having ultimately futile work and with the sense of being excluded.

Lessons for the future

The meeting of the WGIII showed the importance of the participation of new delegations or delegations from States, especially developing countries, which were not the key players before. The role of these delegations should be more active; they should present submissions and send their ideas to the Secretariat (the deadline was 15 July 2019) to have an opportunity to influence the agenda. 

One lesson from the thirty-seventh session of WGIII is that developing countries have a tremendous and responsible role to play in this process. Any State or group of States pushing for their ideas needs support from at least some other developing states’ delegations to succeed. 

The voice of developing countries when acting alone often goes unheard. As a result, they are prone to joining an already existing bloc of States that may include developed countries to the extent that such bloc might be reflective of some of their interests, but doing so might not be effective in pushing for their own collective interests as developing countries. 

Therefore, a new alliance should be forged and at least some of the States from the Global South should agree and elaborate on their own coordinated agenda(27). Obviously, such an agenda would not necessarily refer to all issues (because it would be improbable that all States would agree on every issue), but only to those which are important for some States and with no relevance for the others, and excluding the issues which face opposing voices. So when encountering at least some of the issues which could be put on that list, the new bloc of developing country States that are like-minded on some or many issues could advocate for and present them at the WGIII. This does not mean that those States should be oblivious to any discussion and compromise - on the contrary. But it could mean that States whose voice when speaking alone is not loud enough could be finally heard and push forward their own plans and ideas and take part in the negotiations on their own terms. This approach has often been employed by developing countries in other multilateral fora and it would be advisable to follow it.  

Also, a rise of a new bloc with a clear agenda could refresh and break a duopoly in the WGIII negotiations by bringing not only new issues but also new solutions to the table. The inception of a new strong group player in WGIII could restructure the axle of debate. Some could be afraid that this may result in a delay for a deliberation of the reform. And perhaps it is true that having three main proposals (instead of two) could affect the time frame in which the consensus is reached. However, it is still worth a chance, because in such a way, the debate would certainly be more productive and inclusive. The reform, even if reached later, would be a result of a truly inclusive process of deliberations, and could be perceived as being much more legitimate. The emergence of a third bloc could however also result in the speeding up of the process. Having a third option on the table, not only two, may speed up reaching an acceptable solution for all, because the proponents of the original two positions would simply need not to convince one another, but agree on an alternative proposal, or convince its proponents to support one of their positions. 

What is important is that the idea to unite developing countries at WGIII to the extent that they have shared collective interests and to promote those interests is by no means a goal of confrontation but rather of enhanced cooperation. The idea is not to fight with other proposals, but to advocate for its own interests, and when beneficial, support other positions. To make that happen, it is crucial for the developing countries to engage more in their own collective preparatory meetings and clarify and coordinate their collective agenda. Preparatory conferences or meetings among developing countries would present a splendid opportunity to see if any joint position among the developing countries is possible. The South should not wait to be cherry picked one by one, but should form its own alliance.

However, there is not only a great chance, but also a great responsibility on the shoulders of countries from the South. To act effectively for its proposals two prerequisites have to be met. First, the bloc of developing country States should prepare and elaborate on its proposals very well.  Second, the position of the new block should be flexible enough and open for debate. The agenda and tactics adopted by a new bloc of developing countries should not affect significantly the pace of the work. The reform delayed is reform denied. And by having that in mind, the developing countries should shape their agenda in such a way to facilitate consensus in the context of advancing their collective interests and perspectives.  If the work of the WGIII is prolonged and consensus seems impossible to reach, there would be increasing temptation to refer the decision making process to voting. There are 60 elected member States of the WGIII which are entitled to vote – among them 12 EU States. In such case the likely bloc vote of the EU States would automatically provide it with a strong voting base, but this can be counteracted if developing countries also vote together as a bloc. However, a recourse to voting would destroy the spirit of an ample deliberation process which is fundamental to democratize any system and once again would put the reform under severe critique of lack of legitimacy and transparency. 


(1) Official Records of the General Assembly, Seventy-second Session, Supplement No. 17 (A/72/17), Para. 264.
(2) Report of Working Group III (Investor-State Dispute Settlement Reform) on the work of its thirty-seventh session, A/CN.9/970 (hereinafter: Report), para. 16.
(3) Report, paras. 6, 7 and 8. This total number also included observers from the Holy See, the State of Palestine and the European Union.
(4) Report, para. 9.
(5) Anthea Roberts, “Incremental, Systemic, and Paradigmatic Reform of Investor-State Arbitration”, 112 American Journal of International Law (2018), pp. 410-432. Available also from SSRN: or
(6) See in general: Developing countries and the WTO: Policy approaches, edited by Gary P. Sampson and W. Bradnee Chambers, United Nations University, 2008. This recalls what happened with the promises that were made to the less developed economies with the World Trade Organization (WTO) Doha Round for development, where the aim was to discuss less developed countries' priorities, so the needs of the developing countries were the core reasons for the meeting. After 14 years of discussion, it failed to achieve its goals. Failure to achieve this ambitious agenda has undermined the credibility of the multilateral trading system and hurt the least-developed countries, which need to export more of their goods to richer countries. See also
(7) See Anthea Roberts, Incremental, Systemic, and Paradigmatic Reform of Investor-State Arbitration, 112 American Journal of International Law (2018), p. 410. See also Anthea Roberts, The Shifting Landscape of Investor-State Arbitration: Loyalists, Reformists, Revolutionaries and Undecideds, EJIL: Talk! (June 15, 2017), available at:  
(8) See Working Group III: Investor-State Dispute Settlement Reform, 37th session, 1-5 April 2019, New York, Audio recordings of meeting: 4/04/2019, afternoon session, available at: See also: Malcolm Langford and Anthea Roberts, UNCITRAL and ISDS Reforms: Hastening slowly, EJIL: Talk! (April 29, 2019) available at:
(9) Report, para. 81.
(10) Report, para. 84.
(11) Report, para. 83.
(12) See: José M. Alvarez-Zárate, Legitimacy Concerns of the Proposed Multilateral Investment Court: Is Democracy Possible?, 59 B.C.L. Rev. 2765 (2018), available at:
(13) See e.g. position of delegate of Chile presented in this article.
(14) See debate during the first day, especially statements of the delegate of Mauritius: Working Group III: Investor-State Dispute Settlement Reform, 37th session, 1-5 April 2019, New York, Audio recordings of meeting: 1/04/2019, morning and afternoon session, available at:;
(15) See statement of the delegate of Mauritius made during the first day: Working Group III: Investor-State Dispute Settlement Reform, 37th session, 1-5 April 2019, New York, Audio recordings of meeting: 2/04/2019, available at: and at: See also Anthea Roberts and Taylor St. John, UNCITRAL and ISDS Reforms: Battles over Naming and Framing, EJIL Talk! (April 30, 2019), available at:
(16) See for e.g. statement of delegate of Mauritius made during the first day: Working Group III: Investor-State Dispute Settlement Reform, 37th session, 1-5 April 2019, New York, Audio recordings of meeting: 2/04/2019, available at: and at:
(17) See statement of delegate of Chile, Working Group III: Investor-State Dispute Settlement Reform, 37th session, 1-5 April 2019, New York, Audio recordings of meeting: 3/04/2019, afternoon session, available at: See also Anthea Roberts and Taylor St. John, UNCITRAL and ISDS Reforms: Battles over Naming and Framing, EJIL Talk! (April 30, 2019), available at:
(18) See statement of delegate of Russia:  Working Group III: Investor-State Dispute Settlement Reform, 37th session, 1-5 April 2019, New York, Audio recordings of meeting: 3/04/2019, morning session, available at:
(19) Report, para. 80.
(20) Among the States that participated in the informal small group negotiations were Argentina, Australia, Bahrain, Chile, China, the EU Commission, Israel, Japan, Mauritius, Russia, Singapore, South Korea, Switzerland, Thailand, and the United States.
(21) Report, para. 82 and 83.
(22) See Report, paras. 26-27.
(23) See Malcolm Langford and Anthea Roberts, UNCITRAL and ISDS Reforms: Hastening slowly, EJIL Talk! (April 29, 2019) available at:
(24) Canada - EU Comprehensive Economic and Trade Agreement, signed 30 October 2016.
(25) EU-Vietnam Trade Agreement, adopted 17 October 2018; see (last visited 28.5.2019).
(26) See information about negotiations provided by the European Commission available at: [last visited 28.5.2019], especially article 12 of the chapter XX of the proposal.
(27) In this paper the authors do not discuss neither have any preferences regarding an adequate forum. Such alliance could be forged and negotiated under existing forums (such as the Group 77 and China), or under the auspices of one leading delegation (such as e.g. China), or by any other effective form. 

Authors: Jose Manuel Alvarez Zarate is International Economic Law Director and professor of the same subject at Externado University of Colombia. He is very grateful for the opportunity given by the South Centre to participate as an observer at the 37th UNCITRAL WGIII session. Maciej Żenkiewicz is Visiting Research Professor, Externado University of Colombia.

* The views contained in this article are attributable to the author and do not represent the institutional views of the South Centre or its Member States.

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