Global Dispute Settlement Mechanisms
About:
- Because the United States has prohibited the appointment of appellate body members, the WTO’s dispute settlement system—which was designed as a two-tier panel cum appellate body structure—has been inoperable since 2019.
- The dispute settlement system, which has been hailed as the WTO’s crown jewel and includes tools for enforcement and appellate review, has issued over 493 judgements since its formation in 1995.
- To put this in perspective, since 1947, the International Court of Justice has only handled about 190 cases.
- In order to maintain trust in the WTO dispute resolution process, the appellate body has played a critical role in guaranteeing consistency and predictability in decisions.
- Though Washington’s ongoing resistance to an appellate review process is encouraging, it is unclear if the G-20 Declaration will include an appellate procedure or merely a one-stage panel process.
Using the ISDS:
- A different area of international law where an appellate procedure is in the early stages of development is international investment law through investor-state dispute resolution (ISDS), a widely used feature of bilateral investment treaties (BITs). The future of the WTO’s appellate process is questionable.
- Today, the primary method for resolving issues pertaining to international investment law is the ISDS.
- India’s experience with ISDS has been erratic, with five unfavourable awards—four of which were in the country’s favor—and other outstanding claims.
The advantages of an appeals court:
- The ISDS mechanism’s use of ad hoc or one-off arbitration tribunals without any kind of appellate review is a crucial structural feature.
- Divergent interpretations of the same treaty clause have been provided on several occasions by hundreds of ISDS tribunals functioning under various arbitral institutions in the field of international investment law.
- Similarly, various tribunals have interpreted and applied the same treaty to the same facts, yet they have come to different decisions.
- The field of international investment law is dotted with contradictory and illogical rulings and legal reasoning due to the lack of an appellate review process.
- States and foreign investors have experienced instability and improbability as a result, resulting in chaos inside the government.
- Legal errors can be corrected and conflicting interpretations can be harmonised with the use of an appellate review procedure.
- It will have the authority to confirm, amend, or overturn a first-tier tribunal’s ruling, bringing uniformity and coherence to the system and giving the ISDS system more predictability and certainty.
- Additionally, an appeal process will be preferable to currently in place procedures like annulment proceedings, which are limited to arbitrations conducted by the International Centre for Settlement of Investment Disputes.
India’s position:
- India has not officially spoken on this matter, but as Article 29 of the Indian model BIT mentions it, it is likely that India is in favour of the concept of an appellate review in the ISDS.
- It will be in India’s best interest to support the establishment of an appellate review mechanism, given its reservations regarding the inconsistent and non-coherent nature of the ISDS system.
Way ahead:
- India should be in favour of an appellate review because its goal has always been to create a rule-based global order. This will increase states’ and investors’ trust in international investment law.
