Abstract:

 

The Investor–State Dispute Settlement (ISDS) system has long served as a cornerstone of international investment protection, yet its legitimacy has come under increasing scrutiny due to concerns regarding transparency, consistency, impartiality, and cost. This article examines the historical evolution of the ISDS framework and analyzes its structural deficiencies through doctrinal and case-based inquiry. It advances two complementary reform strategies. The first – the targeted approach – focuses on incremental treaty-level improvements such as exhaustion of local remedies, statutes of limitation, anti-treaty-shopping provisions, and case consolidation mechanisms. The second – the institutional approach – advocates for systemic reform through the creation of an appellate body or a permanent multilateral investment court under the auspices of UNCITRAL or the European Union. Drawing upon recent jurisprudence and policy developments, the paper argues that both approaches are indispensable for restoring the credibility, coherence, and sustainability of the ISDS regime. Ultimately, it contends that a balanced and rules-based reform process can reconcile investor protection with states’ regulatory sovereignty and public accountability.

 

 

Keywords:

Investment Court, Arbitration Reform, Local Remedies, Regulatory Sovereignty

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