Introduction
This post addresses issues being considered in the UNCITRAL Working Group III process in relation to the design of a multilateral instrument on investor–State dispute settlement (ISDS) reform (hereinafter an ‘MIIR’). An MIIR is envisioned as the legal mechanism for applying the various reform options being developed by UNCITRAL Working Group III to the extensive network of existing investment treaties. A first draft of an MIIR was published by the UNCITRAL secretariat in July 2024 (A/CN.9/WG.III/WP.246) and this was discussed by Working Group III in the first part of its Fifty-First session in February 2025 (A/CN.9/1196 paras 31–94) and in its Forty-Ninth session in September 2024 (A/CN.9/1194 paras 105–121). Ahead of the Working Group’s February 2025 session, some participants also made written submissions on the topic of an MIIR, including the European Union (EU) and the United States.
Although UNCITRAL Working Group III has advanced the most developed proposal for an MIIR, the concept also has broader relevance beyond dispute settlement reform. Rather, a plurilateral reform treaty may also serve as a legal instrument for implementing substantive reforms across existing investment treaties. In this regard the OECD’s Track 2 process on the future of investment treaties, which focuses on potential reforms to the substantive standards of treatment contained in older investment treaties, has in recent years also considered the issue of ‘[a] successive plurilateral agreement to change the rights and obligations contained in a potentially large stock of older treaties’ (OECD Track 2 website). The OECD secretariat recently published two notes addressing the issue of a subsequent plurilateral modifying treaty, which were discussed in Track 2’s November 2024 meeting (DAF/INV/TR2/WD(2024)8/REV2 and DAF/INV/TR2/WD(2024)9/REV2). As has been noted in the OECD Track 2 process, the discussions in UNCITRAL Working Group III regarding how to apply the reforms developed to existing investment treaties ‘may provide an opportunity to also apply adjustments of substantial provisions under the same process. Using the same procedural framework for procedural and substantial adjustments may bring significant efficiency gains’ (OECD secretariat research note, 27 June 2023, para 13).
Basic Structure of an MIIR
The proposed MIIR is structured as a framework convention accompanied by optional protocols corresponding to the different reform options (A/CN.9/WG.III/WP.246 arts 1–2 and paras 3, 7–11). (For prior analysis on this blog of the possible design of a framework instrument to bring together the different reforms being considered by Working Group III – written at an earlier stage of the process – see Roberts and St John 2019). States would need to decide whether to become a party to the MIIR and whether to become a party to its various protocols, with an additional opt-in required for each of the protocols (see A/CN.9/WG.III/WP.246 art 3(5)–(6) and paras 11, 19). After depositing an instrument of ratification or accession to the MIIR, a Party would be required to submit to the secretariat a list of its investment treaties to which each of the protocols that it has ratified or acceded to shall apply (A/CN.9/WG.III/WP.246 art 6(1)–(2) and paras 30–34).
While the United States in its written submission proposed an alternative procedure, which would require joint notifications ‘by all relevant parties to an underlying investment agreement’ (United States submission pp. 8–9), it appears from the UNCITRAL secretariat’s report of the Working Group’s February 2025 session that this position did not receive significant support. The report notes, in response to this suggestion:
it was generally felt that this would run contrary to the aim of the Convention, which was to provide a simple mechanism for its Parties to modify existing treaties by indicating the reforms that they wished to apply. It was noted that under the Convention, while Parties would be able to submit notifications unilaterally, such a notification would only take effect and modify the listed investment treaty when the other party to the treaty submitted a corresponding notification (art. 7, para. 2). It was mentioned that requiring joint notifications could pose practical difficulties and be burdensome as it would, in essence, require a renegotiation of existing treaties with multiple counterparts. It was mentioned that this could significantly delay the desired reforms and efforts should be made to provide an effective framework to amend old generation treaties, which were urgently in need of reform (A/CN.9/1196 para 40, emphasis added).
Enabling Multi-Speed Investment Treaty Reform
In my view it is significant that Working Group III has not adopted the Unted States’ proposal of requiring joint notifications by all parties to an investment treaty, as this would effectively amount to requiring States to engage in treaty-by-treaty renegotiation of investment treaties with each treaty partner and thus significantly slow down the speed at which the Working Group III reforms would be applied to existing investment treaties. As touched on in the above quote, while ‘a notification by a Party … indicates its intent to modify the investment treaties listed therein’, the relevant investment treaty would only be deemed to be modified where ‘all parties to an investment treaty include that treaty in their notification[s]’ (A/CN.9/WG.III/WP.246 art 7(1)–(2) and paras 40–42).
The last point raises interesting questions in relation to investment treaties with three or more parties, where a key question is whether notifications by some, but not all, of the treaty parties should enable treaty modification (via the MIIR’s protocols) among the subset of treaty parties that have listed the treaty in their notifications? Interestingly, in Working Group III’s February 2025 session, it was agreed to clarify article 7(2) to reflect that ‘in the case of a multilateral investment treaty, corresponding notifications by some of the parties to that treaty would constitute an agreement to modify the treaty among them’ (A/CN.9/1196 para 58, emphasis added). This is significant as it would enable inter se modification of multilateral investment treaties by two or more parties to the treaty, the permissibility of which has often been debated as a matter of treaty law, mainly in relation to the Energy Charter Treaty (see eg Schaugg and Nikièma 2024; Huremagić and Tropper 2021). The approach adopted in Working Group III effectively allows multi-speed investment treaty reform to move ahead where only some of the parties to a multilateral investment treaty are in favour of applying the relevant reforms to the multilateral investment treaty.
The EU’s Proposed Provision on Joint Interpretations
The EU in its written submission of February 2025 proposed a provision on joint interpretation of investment treaties to be included in the body of the MIIR that is noteworthy in several respects. While I’ll unpack the EU submission in the following paragraphs, in a nutshell the proposal is significant as it would create a multilateral structure (under the MIIR) in which Parties to the MIIR (and even perhaps non-parties to the MIIR) could discuss requests for a joint interpretation of an investment treaty and through which Parties to the MIIR (and relevant entities not Party to the MIIR) could also indicate their acceptance of a joint interpretation and their agreement to apply the interpretation to their own investment treaties.
The EU’s proposed provision on joint interpretations uses as a basis the draft provision on joint interpretations that was previously published by the UNCITRAL secretariat as part of the Working Group’s work on procedural and cross-cutting issues (A/CN.9/WG.III/WP.248 p. 2 Draft Provision 21). However, the EU’s submission essentially leverages the multilateral nature of the MIIR to create opportunities for actors other than the parties to the relevant investment treaty, in relation to which a joint interpretation is requested or adopted, to be involved in considering a proposed joint interpretation and in accepting a joint interpretation as binding for their own investment treaties.
A first respect in which the EU’s proposed provision on joint interpretations is noteworthy is that it suggests that where there is a request for a joint interpretation of an investment treaty the Parties to the MIIR may decide ‘to establish a sub-group to examine such a request and to open such a group to entities which are not party to this Convention’ (EU draft provision para 2). This is significant because it ‘would have the benefit of providing a multilateral structure for such discussions’ and because it is likely that other Parties to the MIIR, besides those which are party to the treaty in relation to which a joint interpretation is requested, could ‘also [be] interested in the joint interpretation, for example because they have similar provisions in their treaties’ (EU submission, commentary paras 7 and 10).
A second respect in which the EU’s proposed provision on joint interpretations is important is that it creates a multilateral structure whereby a party agreeing to a joint interpretation of an investment treaty could request the secretariat to the MIIR to circulate the joint interpretation to all Parties to the MIIR and also to ‘relevant entities not party to’ the MIIR (EU draft provision para 6). Significantly, under the draft provision, any Party to the MIIR, or other entity not party to the MIIR, that wishes to accept and apply such a joint interpretation to its own investment treaties could submit a notification to that effect to the secretariat (EU draft provision para 6). The secretariat would be responsible for maintaining ‘a list of joint interpretations including which Parties to the’ MIIR have accepted them, and this list would be kept up to date and publicly available (EU draft provision para 7). As the EU’s submission notes, this would create ‘a central repository of’ joint interpretations (EU submission, commentary para 7).
The above aspects of the EU’s draft provision on joint interpretations are significant because they respond to the reality that, due to the similarity in language across many investment treaties, joint interpretations developed in relation to one investment treaty may often have wider implications for numerous other investment treaties. For this reason, it is justifiable to open the sub-group under the MIIR, responsible for considering a request for a joint interpretation, to other Parties to the MIIR (eg who may have identical language in their own treaties), and to allow other Parties to the MIIR (and even relevant entities not party to the MIIR) to indicate their acceptance of any joint interpretation adopted. While the EU’s draft provision allows Parties to the MIIR (and relevant entities not party to the MIIR) to indicate unilaterally their acceptance of a joint interpretation circulated and their intention to apply the interpretation to their own investment treaties, nevertheless a joint interpretation would only become binding where the other party (or parties) to the relevant investment treaty had also indicated their acceptance of the joint interpretation (EU submission, commentary para 14).
In Working Group III’s February 2025 session the EU’s proposed provision was briefly discussed and a concern was raised that ‘such an article on joint interpretation could set a precedent for allowing non-parties to influence treaty interpretations and impose unintended interpretations’ (A/CN.9/1196 para 91). ‘In response, it was said that the participation of non-treaty parties needed to be carefully considered (including the legal basis for their participation) and that they should be allowed to participate only when so intended by the treaty parties’ (ibid, emphasis added). This suggests that further thinking may be needed regarding the threshold/requirements for establishing a sub-group under the MIIR to consider a request for a joint interpretation – eg perhaps whether such a sub-group could only be opened to other Parties to the MIIR (and even relevant entities not party to the MIIR) with the agreement of the parties to the investment treaty in relation to which a joint interpretation was requested.
Requirements for Adding Additional Protocols to the MIIR
Another significant design question concerns what the requirements should be for amending the MIIR, including adding additional protocols. This is because it is foreseeable that there may a need for further reforms beyond those developed by the UNCITRAL Working Group III process, which is due to conclude in 2027 (A/CN.9/WG.III/WP.248 para 36), and an MIIR may be a useful mechanism for applying such reforms to existing investment treaties.
The initial secretariat draft suggested, albeit in square brackets, a requirement for the adoption of additional protocols of a simple majority of Parties to the MIIR present and voting (A/CN.9/WG.III/WP.246 art 10(3)). In contrast, the United States, in its written submission, proposed a requirement of consensus of the Parties to the MIIR for amending the MIIR, including adding additional protocols (United States submission p. 11). The UNCITRAL secretariat report of the Working Group’s February 2025 meeting notes ‘[v]iews diverged on how amendments or additional Protocols should be adopted’ with a competing suggestion that ‘rather than requiring consensus of the Parties to the Convention, a more flexible approach should be taken for the adoption of additional Protocols, so as to facilitate further reforms’ (A/CN.9/1196 para 82, emphasis added). Ultimately, the agreement arrived at on this issue was that the threshold for the adoption of additional protocols to the MIIR could be lower than that for amending the body of the MIIR or for amending existing protocols, given that any additional protocols would only apply on an opt-in basis (A/CN.9/1196 para 85). In contrast, the adoption of amendments to existing protocols would require consensus of the Parties to the relevant protocol (ibid).
In my view this opening for subsequently adopting additional protocols to the MIIR, with a lower threshold than a requirement of consensus of all Parties to the MIIR, is significant because it increases the likelihood that the MIIR could be used as a mechanism to implement ‘multi-speed’ investment treaty reform. In such a ‘multi-speed’ approach to investment treaty reform, additional protocols (containing further reforms) could be added to the MIIR, with something more flexible than a requirement of consensus of all Parties to the MIIR, and thus further reforms could move ahead among a subset of parties to the MIIR willing to accept them. While in my view this multi-speed approach is preferable, further thought may be needed regarding whether adding additional protocols to the MIIR, even if only applying on an opt-in basis, may nevertheless have implications for all Parties to the MIIR, eg in terms of resourcing the secretariat. On the last point, while the draft of an MIIR envisages the Convention having a secretariat (A/CN.9/WG.III/WP.246 art 6 and para 38), various significant issues remain to be settled, such as the precise functions of the secretariat, how the secretariat would be resourced, whether the role ‘could be undertaken by existing bodies or institutions’, and how the secretariat to the MIIR would relate to secretariats envisaged by certain Protocols to the MIIR (A/CN.9/1196 para 56; A/CN.9/1194 para 108).
Conclusion
While UNCITRAL Working Group III arguably currently serves ‘as a common hub where states discuss the [investment treaty] system as a whole’, there is a question of how States can create mechanisms that will facilitate their ongoing monitoring of, and adjustments to, the investment treaty regime, particularly once the UNCITRAL process is over (see Roberts and St John 2022, pp. 127–128; Roberts and St John 2019). The drafting of an MIIR is highly relevant to such questions. The MIIR should, at a minimum, provide an effective means for applying the UNCITRAL Working Group III reforms to the large body of existing investment treaties without requiring treaty-by-treaty renegotiation. Within the design of an MIIR, I’ve suggested room should be made for a ‘multi-speed’ approach to investment treaty reform, whereby reforms can move ahead among a subset of States willing to accept them.
This post draws on the author’s presentation in a webinar on ‘Emerging Trends in International Investment Arbitration’ hosted by the University of Leicester on 2 April 2025.
