The furore over the use of ISDS (Investor/State Dispute Settlement) in the United States/European Union Transatlantic Trade and Investment Partnership (TTIP) negotiations has illustrated the increasing distrust by some Governments and Non-governmental organisations (NGOs) of the use of arbitration in resolving Investor/State disputes. Jean-Claude Junker, the President of the European Commission, has likened arbitral tribunals to “secret courts”. This criticism has also spilled over into domestic arbitration. The New York Times published two critical articles this year accusing arbitration of “stacking the deck of justice” and calling it a “privatisation of the justice system”. The articles went on to level the following complaints against the arbitral process: lack of transparency; private judges; no appeal, no accountability; and opting out of the legal system. This unprecedented attack, whether founded in fact or not, has damaged the public perception of arbitration, not helped by recent high profile corruption allegations involving arbitral tribunals notably in France and Bulgaria.
This uncertain situation has increasingly left the door open to mediation, not necessarily as an alternative, but as an adjunct to arbitration or the Courts. There is a newfound interest shown by governments, corporations and institutions in using mediation to resolve disputes earlier in the cycle. Clearly, this has been a growing trend in civil disputes for some time, but is now finding its way into the arena of bilateral investment treaties (BITS) and Investor/State disputes themselves.
A good example of how the use of mediation in Investor/State disputes is being employed and challenges overcome is the work being carried out by the Energy Charter Secretariat under the Energy Charter Treaty.