nvestor-State Dispute Settlement (ISDS): To Be or Not to Be? Which Position Should Be Adopted by Smaller EU Member Countries? The investment dispute settlement mechanism in international investment agreements (IIA) and the scope of protection for foreign investments included in said agreements have been a hot topic of debate for several recent years, both in the EU and all over the world. This does not come as a surprise, since the number of investment cases is constantly increasing and the investors are increasingly trying to challenge very sensitive political decisions of both developing and developed countries. For example, in 2012 investors initiated 54 investment cases, in 2013 – 59 cases, and in 2014 – 42 cases, while in 2001 there were less than 20 cases brought against the states under the international investment agreements.1
The main concerns expressed by the states in regard to investment cases are as follows: the costs of investment are very high and unaffordable for many states; the dispute settlement mechanism lacks transparency and legitimacy; the decisions are often contradictory and the possibilities to correct erroneous decisions are very limited; the protection standards in investment treaties are too broad and vague, therefore raising the risk of abusing rights. Moreover, many states express worries in respect of the investors’ possibility to challenge very sensitive political decisions of the states regarding important reforms that concern their public policy issues such as energetic independence, environment and health protection (for example, well known Vattenfall v. Germany case that challenged the German decision to decommission the nuclear power stations after the Fukushima Daiichi nuclear disaster, Philip Morris v Australia case concerning restrictive requirements on cigarette packaging under the reason of health protection, etc.). It is argued that the possibility for investors to challenge measures adopted by states in the public interest (for example, policies to promote environmental protection or protect public health) is unduly restricting the sovereign power of any state to implement the necessary reforms. Read more.