Navigating Investor-state Dispute Settlement: The Dynamics Between Investment Protection and Sovereign Control

Abstract

An emerging key issue in international investment law is the interaction between investor protection and sovereign immunity. This study examines how Investor-State Dispute Settlement (ISDS) has developed recently and considers whether it achieves an equitable equilibrium between maintaining state sovereignty and safeguarding investors. Three main areas of disagreement regarding how ISDS affects State sovereignty are the validity of the ISDS mechanism; the scope of obligations subject to enforcement under ISDS; and the occurrence of a "Regulatory Chill." The paper analyses ISDS provisions over three important treaties that balance the needs of investors for a dependable dispute resolution process with state immunity. Recent modifications and court orders shed light on ISDS's difficulties and detractors, including worries about the policy's goals being undermined. The study finds that while the most current treaty offers a far better balance between investor protection and State sovereignty than previous ones, there remains scope for betterment, especially regarding the alleged credibility of the ISDS system. Four significant reforms are proposed to solve long-standing issues: Updating International Investment Agreements (IIAs); Endorsing Regulatory Impact Evaluations (RIE); Establishment of a permanent international investment court; and Creation of appellate body to examine rulings.