The Proliferation of Investment Dispute Settlement Mechanisms - The Threat of Fragmentation or a Promise of a More Effective System?

The current boom of investment arbitration under NAFTA as well as ICSID and other arbitral regimes has demonstrated that the enforcement of treaty obligations has become a standard feature of international law in this particular field of international economic law. The increased probability of actual enforcement of international standards of investment protection is generally welcomed in a system, such as the international legal order, which normally suffers from rather weak enforcement structures. At the same time, the proliferation of investment dispute settlement mechanisms bears its own risks. The concurrent availability of different investment dispute settlement mechanisms may lead to parallel proceedings or to the re-litigation of already decided cases. The CME/Lauder v. Czech Republic arbitrations where the same dispute was arbitrated under two different bilateral investment agreements and the CMS v. Argentina and the LG&E v. Argentina cases where similar issues were addressed demonstrate the inherent danger of a multiplication of procedures if the answers found by different tribunals are contradictory. The proliferation of investment disputes has broader structural implications which need to be addressed in order to secure the viability of this system of international arbitration.

August Reinisch is professor of public international law and European law at the University of Vienna. From 2004 to 2006 he served as Dean for International Relations of the Law School of the University of Vienna. He is also a professional lecturer at the Bologna Center/SAIS of Johns Hopkins University. He currently serves as arbitrator on the In Rem Restitution Panel according to the Austrian General Settlement Fund Law 2001 and as president of an UNCITRAL investment arbitration.

He holds Master's degrees in philosophy (1990) and in law (1988) as well as a doctorate in law (1991) from the University of Vienna and an LL.M. (1989) from NYU Law School. He is admitted to the Bar of New York and Connecticut (since 1990).