Reforming investor-state dispute settlement: what about third-party rights?

The international investment regime is facing sustained calls for reform. Most debate centres on disputes between investors and states. But foreign investment projects can also affect third parties — including local residents and indigenous peoples. Existing arrangements for third parties to participate in investor-state dispute settlement (ISDS) are not designed to protect people whose rights and interests are directly at stake. This can undermine their rights and the ability of tribunals to consider all relevant facts and laws. A working group of the United Nations Commission on International Trade Law (UNCITRAL) is now considering reforming ISDS. Meaningful reform requires addressing fundamental asymmetries in the international investment regime and exploring how to strengthen the procedural rights of third parties. This policy brief discusses the issues and outlines possible ways forward. This publication has been produced under IIED’s Legal tools for citizen empowerment project.