Investor State Dispute Settlement: A Flawed International Legal System

Abstract

International trade is an essential aspect of the global economy. Due to the lack of a standard international law or enforcement mechanism, this commerce operates in a legal grey area. The system called investor-state dispute settlement (ISDS) is the arbitration process that decides who is at fault in an international trade issue, and then mostly importantly, how much compensation is to be paid out. This archaic system is compromised of three appointed arbitrators and engaging in a claim alone will cost both investor and state around four million dollars, this is before the settlement is awarded by the tribunal. Investor state dispute settlement is riddled with corruption: incredibly high costs, biased arbitrators, and a power dynamic that perpetuates equality in both the monetary and political world. It is a system that is in desperate need of modernization and change. The vague and arbitrary system that was created during the colonial era no longer serves as the fair, accessible legal battleground that it was intended to.