A number of recent investment treaties, as well as some long-standing agreements, provide for State–State Dispute Settlement (SSDS) as the sole binding dispute settlement option to resolve investment disputes. While some treaties include brief provisions on SSDS, others set out more detailed provisions. Borrowing, adaptations and modifications from long-standing SSDS practices in trade law and other international law can be factors in treaty design. This session will allow governments and others to describe SSDS provisions in both earlier and current agreements, and to outline some of the reasons for these policy choices.

This session will examine in more detail policy issues associated with dispute settlement choices. With intense world-wide competition for investment and concerns about low levels of investment in some domestic economies, SSDS may be preferred in some cases to avoid ISDS benefits for investment abroad creating unwanted incentives for the off-shoring of investment that is needed at home. Some free trade proponents couple these concerns about ISDS incentives with advocacy of SSDS for investment as a way to avoid possible effects of ISDS in undermining public and parliamentary support for broad free trade agreements. SSDS may also be chosen in some cases to achieve better protection of policy space and public finances, more government input into treaty interpretation or to reduce preferences for foreign over domestic investors. The traditional reasons for hesitancy with regard to SSDS include complaints that some aspects involve more political input than for ISDS, uncertainty about government willingness to claim or the effectiveness of remedies, or concerns that the investment promotion goals of investment treaties would suffer. The session will address these and other aspects as governments and others discuss imperfect alternatives and consider how they might be improved.

Drawing on national experience, this session will highlight recent reforms supporting investment facilitation for sustainable development in line with international commitments. It will present practical examples of institutional regulatory and digital governance tools that support effective implementation in both home and host countries. The session will also consider the distinctive nature of investment facilitation obligations and their broader benefits for host state investment climates, including potential positive effects for foreign and domestic investors beyond the parties to a specific agreement. It will conclude by examining how international organisations can support implementation through technical assistance, capacity building, diagnostic tools and guidance.

Governments and others working on investment policy have shown growing interest in the role of contracts and their relationship with investment treaties. Contracts can raise a range of policy issues. For example, in democratic systems, governments are generally not permitted to bind future governments. This helps each government to be democratically responsive to its own electorate and avoids it being bound by the preferences of the past. Contract commitments with regard to public law applicable over time to an investment, however, may “fetter the discretion” of a successor government (or “entrench” the policies of the predecessor government). At the same time, stability and predictability are important elements for investment and for some contracts, such clauses may be valuable. Consideration of the validity, the appropriate scope of use and the design of such clauses requires careful analysis of multiple aspects. Contracts can also interact with treaty-based investment protections. For example, in current practice, their co-existence frequently gives rise to multiple claims. As the domain of application of investment treaties to investment evolves, the potential for contract commitments to provide for protection from “hold-up” or other risks or to substitute for investment treaties is also an emerging issue.