Ending the Era of Investor-State Dispute Settlement

Abstract

Governments need policy space to effectively address concerns about competitiveness, ensure economic security and increase investment in low-carbon industries. International investment agreements (IIAs) enforced through investor-state dispute settlement (ISDS) constrain policy space. A growing number of ISDS cases concern energy policy and the threat of further cases could deter governments, particularly but not only in the Global South, from regulating many strategic and carbon-intensive sectors. G7 countries, many of whom have already expressed concerns about ISDS, should initiate the negotiation of a plurilateral agreement aimed at removing ISDS from IIAs. The G7 countries, as significant participants in the IIA regime, are well positioned to demonstrate leadership on this issue, and in so doing can modernize investment rules, reduce distortions and establish a new basis for global investment governance.