Managing Investment Disputes: A Critical Analysis of Investor State Dispute Settlement Mechanism in Bilateral Investment Treaties

This paper reviews institutional and procedural aspects of the investor state dispute settlement (ISDS) mechanism in bilateral investment treaties (BITs). The problems of international arbitration system under ISDS are the main focus of the paper. ISDS was initially created to de-politicize the investment dispute settlement mechanism. However, in the actual practice, this system came under strong criticism for its flaws like confidentiality, inconsistency, non-transparency, expensive etc. Although, several alternate mechanisms at national and regional level were proposed, however, results are insufficient. Therefore a free and fair system for investment dispute settlement, based on the consent of all stakeholders (states, investors and development objectives) is need of the hour.