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Research and Policy Analysis
 

By the end of 2012, the IIA universe consisted of more than 3,196 agreements, including 2,857 BITs and 339 "other IIAs", such as free trade agreements or economic partnership agreements with investment provisions. (Data and information available from World Investment Report 2013)

Trend of BITs and other IIAs - 1983-2012
Trend of BITs

Although bilateral agreements still dominate international investment policymaking, the balance is gradually shifting from bilateral to regional treaty making, thereby increasing the impact of regions in IIA rulemaking. Regionalism can lead to simplification and growing consistency of the IIA regime. However, where new treaties do not entail the phase-out of old ones, the result can be the opposite: a multiplication of treaty layers, making the IIA network even more complex and prone to overlaps and inconsistencies.

In parallel with unease about the increased complexity of the IIA network are growing concerns about the investor-State dispute settlement system. Most IIAs reinforce their investment protection provisions by allowing investors to directly pursue relief through investor-State dispute settlement (ISDS). The power IIAs grant foreign investors seeking protection has become increasingly evident through the number of ISDS cases brought over the last decade, most of which have been directed at developing countries.

In 2012 58 new international investor-State disputes were initiated, bringing the total number of known cases to 514 to date.

Known ISDS cases - 1987-2012
ISDS cases

Host countries have faced claims of up to $114 billion and last year saw the highest award made against a State ($1.77bn) in Occidental v. Ecuador. Added to the financial liabilities are the costs of procedures, which collectively put a significant burden on defending countries and exacerbate the concerns related to lack of policy space. UNCTAD proposes in chapter III of the World Investment Report 2013 five paths for reform of the ISDS mechanism, mapped out in pages 111-117 of the report.

Host countries - both developed and developing - have experienced that ISDS claims can be used by foreign investors in unanticipated ways. A number of recent cases have challenged measures adopted to act in the public interest, and policymakers in some countries have found that IIAs can unduly constrain their domestic regulatory prerogatives.

Finally, there is the growing recognition that sustainable development needs to be part and parcel of international investment policymaking.

Against this background, the IIA Section undertakes a wide range of activities related to research and policy analysis that provide cutting-edge information about international investment rulemaking from a sustainable development perspective.

Among other activities, the IIA Section:

  • Collects data on IIAs and investor-State dispute settlement cases (IIA Databases)
  • Monitors trends in international investment policymaking
  • Identifies and highlights key emerging issues

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