What is investor-state mediation?

Investor State Dispute Settlement (ISDS) has to date been dominated by arbitration. However, stakeholders have called for new mechanisms, such as mediation, to settle investor-state disputes. This article is designed to be an introduction to mediation in this context, highlighting the advantages of mediation, and the ways in which it can be creatively combined with other mechanisms such as arbitration to provide satisfactory conclusions for parties.

Investment mediation, at its core, is a dispute resolution mechanism that emphasises harmony and achieving mutually satisfying results for the disputing parties. A professional mediator is used to facilitate negotiations (see also the IMI ‘investor-state mediator competency criteria‘; ‘what is mediation‘). The host States and foreign investors have a high degree of autonomy, flexibility, and choice. Mediation can help the disputing parties to reach creative, forward-facing settlement arrangements that are based on the common interests and needs of the parties in dispute.

Importantly, mediation in ISDS can co-exist with arbitration. It serves as a complementary tool to adjudication processes and not as their counterpart, since both aim for mutually acceptable, long-lasting solutions.

Why Investor-State mediation?

Parties can save significant money and time.

recent study shows that, on average, parties spend four years in an investment arbitration; investors and States spend at least US$6 million and US$4.8 millio