Investor-State Dispute Settlement: Back to the Basics

22 Wake Forest J. Bus. & Intell. Prop. L. 399

Investor-state dispute settlement (“ISDS”) clauses are a current staple of many international investment treaties between states. ISDS clause are a “procedural mechanism that allows an investor from one country to bring arbitral proceedings directly against the country in which it has invested.” The initial purpose of these clauses was to provide protections to foreign investors from discrimination or expropriation by host state governments. Ideally, such protections would incentivize capital investment in foreign states, especially in developing nations or economies that want to attract foreign investment. But in recent years, ISDS provisions have become controversial because corporations are arguably misusing them for unjustifiable multimillion-dollar government payouts.