Policy Article

Investor-state dispute settlement: are arbitrators biased in favor of claimants?

Kiel Policy Briefs, 105

Self-interested and biased arbitrators are often held responsible for the legitimacy crisis of investor-state dispute settlement (ISDS). Based on UNCTAD’s database on ISDS since the late 1990s, the author Peter Nunnenkamp finds no compelling evidence that arbitrators are systematically biased. Many disputes are handled by unbiased tribunals, and state-appointed arbitrators are no less pro-state than investor-appointed arbitrators are pro-claimant. Furthermore, even biased tribunals decide more often in favour of respondent states that in favour of private investors. However, it is harder for developing countries, compared to high-income countries, to fend off claims for compensation, in particular when the presidents of arbitration tribunals are biased in favour of private investors.

Author

Peter Nunnenkamp