Another ISD Follow Up

Since I seem to only blog about investor-state dispute related issues, I thought I pass along a recent UNCTAD policy note about reforming the ISD system.

UNCTAD's summary of the report's key findings:

Concerns with the current ISDS system relate, among others things, to a perceived deficit of legitimacy and transparency; contradictions between arbitral awards; difficulties in correcting erroneous arbitral decisions; questions about the independence and impartiality of arbitrators; and the length and the costs of arbitral procedures. These challenges have given rise to a broad discussion about the need to reform the current system of investment arbitration. To give shape to this debate, the Note puts forward five main reform paths:

1. Promoting alternative dispute resolution.
2. Tailoring the existing system through individual IIAs.
3. Limiting investor access to ISDS.
4. Introducing an appeals facility.
5. Creating a standing investment court.

Each of the five proposed reform options comes with its specific advantages and disadvantages and responds to the main concerns in a distinctive way. Some of the options can be implemented via actions by individual governments, while others require joint action by a larger group. The options that require collective action would go further in addressing the existing problems, but would also face more difficulties in implementation. The Note calls for a multilateral policy dialogue on ISDS to search for a consensus about the preferred course for reform and ways to put it into action.

New Investment Trend Data for 2012 Released

UNCTAD released new figures for 2012 FDI flows. Despite previous projections for a modest FDI increase, 2012 saw FDI flows decline by 18%. The aggregate numbers, however, conceal the fact that investment flow trends vary widely based on: investment source, investment destination, and investment type.

The EU and the US saw steep declines in FDI inflows; developed economies saw FDI decreases of 32%. Meanwhile, Investment flows to developing countries saw only modest declines of 3%. Africa and Latin America actually saw investment flow increases. Much of the decline in FDI is attributable to a stall in cross-boarder M&As, which were off 41%. Developed economies typically saw a divestment trend in their MNEs while MNEs headquartered in developing economies expanded through M&As. Greenfield investments are off 34%, but still accounted for over 66% of FDI flows for 2012.

You can read more here.