The Investor‐​State Dispute Settlement Mechanism: An Examination of Benefits and Costs

Conference
May 20, 2014 9:00 AM to 1:00 PM EDT

Hayek Auditorium

Featuring James Politi, U.S. Economics and Trade Correspondent, Financial Times; Simon Lester, Trade Policy Analyst, Herbert A. Stiefel Center for Trade Policy Studies, Cato Institute; Ted Posner, Litigation Partner, Weil, Gotshal and Manges; Lori Wallach, Director, Public Citizen's Global Trade Watch; Todd Weiler, Counsel, Expert Consultant and Arbitrator, Investment Treaty Law and Arbitration; Susan Aaronson, Research Professor, Elliott School of International Affairs, George Washington University; Shaun Donnelly, Vice President of Investment and Financial Services, United States Council for International Business; Dan Ikenson, Director, Herbert A. Stiefel Center for Trade Policy Studies, Cato Institute; Chris Sands, Senior Fellow, Hudson Institute; moderated by Edward Alden, Bernard L. Schwartz Senior Fellow, Council on Foreign Relations; and Kimberly Elliot, Senior Fellow, Center for Global Development.

What is the Investor-State Dispute Settlement (ISDS) mechanism and why has it emerged as one of the more controversial topics on the U.S. trade agenda? The ostensible purpose of ISDS is to protect foreign investors from economic harm caused by host-government actions or policies that fail to meet certain minimum standards of treatment — up to and including asset expropriation. It confers special legal privileges on foreign-invested companies, including the right to sue host governments in third-party arbitration tribunals for failing to meet those standards.

Proponents argue that ISDS strengthens the rule of law and helps bring otherwise reluctant investors to capital-hungry jurisdictions. Skeptics argue that ISDS weakens the rule of law by bestowing special rights exclusively on foreign investors — typically multinational corporations — to circumvent domestic legal systems and win judgments against democratically elected governments, which effectively socializes the risk of international investment.

Who is right? What are the parameters of the debate? What should be the official U.S. position on ISDS in trade agreements and bilateral investment treaties? This half-day conference will facilitate a public discussion of the pros and cons of ISDS, showcase the diversity of opinion, and reveal whether there are any areas of consensus. Participants will explore the legal, political, economic, and developmental dimensions of the investor-state dispute settlement mechanism.

9:00 a.m. – 9:15 a.m.

Introduction

James Politi
U.S. Economics and Trade Correspondent, Financial Times

9:15 a.m. – 10:55 a.m.

Panel I: Does ISDS Strengthen or Weaken the Rule of Law?

Panelists will discuss various historical and political aspects of ISDS, debate pertinent questions of international law, discuss the pros and cons of requiring ISDS provisions in bilateral investment treaties and trade agreements, and address other prominent ISDS-related legal and political concerns.

Susan Aaronson
Research Professor, Elliott School of International Affairs, George Washington University

Simon Lester
Trade Policy Analyst, Herbert A. Stiefel Center for Trade Policy Studies, Cato Institute

Ted Posner
Litigation Partner, Weil, Gotshal and Manges

Todd Weiler
Counsel, Expert Consultant and Arbitrator, Investment Treaty Law and Arbitration

Moderator: Edward Alden
Bernard L. Schwartz Senior Fellow, Council on Foreign Relations

10:55 a.m. – 11:20 a.m.

Break

11:20 a.m. – 1:00 p.m.

Panel II: Does ISDS Protect or Subsidize Foreign Direct Investment, and What Are its Economic Consequences?

This panel will discuss various economic and developmental aspects of ISDS, debate whether ISDS is a necessary inducement for foreign investors, examine the costs and benefits of ISDS rules to various U.S. entities, and consider whether and how ISDS provisions may be impacting the trade agenda.

Shaun Donnelly
Vice President of Investment and Financial Services, United States Council for International Business

Dan Ikenson
Director, Herbert A. Stiefel Center for Trade Policy Studies, Cato Institute

Chris Sands
Senior Fellow, Hudson Institute

Lori Wallach
Director, Public Citizen’s Global Trade Watch

Moderator: Kimberly Elliot
Senior Fellow, Center for Global Development
1:00 p.m.

Lunch