In the last several years there has been a trajectory of negotiating more and more comprehensive trade and investment agreements—the Canada-EU Comprehensive Economic and Trade Agreement (CETA), the Transatlantic Trade and Investment Partnership (TTIP), and perhaps the most comprehensive, the Trans-Pacific Partnership (TPP). But that trend may have come to a halt with the difficulties over CETA ratification, the apparent end of the TTIP, and the uncertain future of the TPP.

Alongside this there has been a public outcry, particularly in Europe, about investment agreements and ISDS. The 2011 report from the European Parliament's Committee on International Trade focused on both substantive reform of investment agreements and reform of the ISDS process.Footnote ¹ The 2015 European Commission Concept Paper focused more on procedural reform of the dispute settlement process and this led to last-minute changes to dispute settlement in CETA to incorporate provisions for a standing investment tribunal and an appellate tribunal.Footnote ² As well there were provisions about who is to be appointed to tribunals and conflict of interest rules. It all played well in the public perception because it was an attempt to rein in what has become a kind of “pariah” class of international lawyers—investment arbitrators. But those who are familiar with the World Trade Organization (WTO) would have recognized the proposal as a replication of the WTO Appellate Body and of the long-standing European Commission proposals for a standing panel body, which has never found sufficient support in WTO circles.Footnote ³

CETA is often referred to as having set a new standard for investment protection. But, are provisions that look good on their face real or cosmetic changes? Defining fair and equitable treatment is a good thing, but what is included in CETA Article 8.10(2) seems like a listing with some embellishment of what is already found in the Waste Management dictum.Footnote ⁴ Does that really provide a basis for a new approach to fair and equitable treatment or even a clarification of the existing law?

Affirming a right to regulate is an important achievement, but placing it in a preamble seems to diminish it. Are the parties encouraging tribunals to give more weight to the preamble? A criticism of investment tribunals is that, although they purport to apply the Vienna Convention on the Law of Treaties (VCLT), they already place more weight on preambles than is contemplated in the VCLT. Is CETA intending to encourage such reliance? And limiting multiple claims, increasing transparency, and allowing for authoritative interpretations are all useful, but they are incremental changes to the past rather than new and innovative changes.

Focusing on reform of the process of dispute settlement—who are the arbitrators, what qualifications should they have, what rules of conduct should apply to them, what appeal processes should exist—are responsive to public concern and in a sense relatively easy to propose. After all, who can object in principle to having an appellate tribunal? Of course the mechanics of establishing a common appellate tribunal in a universe of bilateral agreements are daunting. And equally there would be problems with a proliferation of investment appellate tribunals re-creating the problems of inconsistency in decision making that they are supposed to solve.

My concern, however, is that focusing on process reforms has the potential for diverting from substantive reform to the obligations under investment agreements. But if one is concerned about balancing the rights of investors and governments and imposing obligations on investors, one has to consider changes to the substantive obligations in investment agreements.

However, one cannot completely separate the substantive from the procedural. How effective substantive reforms will be depends on how they are interpreted by arbitrators when disputes arise. And this does bring us back to the question of who the arbitrators are and what powers should be given to them. But it is not just a question of whether to have judges rather than commercial arbitrators, or whether the people Joost Pauwelyn has referred to as “elite private lawyers” and “legal academics” who are arbitrators in investment disputes are preferable to what he calls the “low-key diplomats” deciding WTO disputes,Footnote ⁵ and it is not about whether arbitrators are independent or whether they follow a code of conduct. It is about whether arbitrators can conceive of or give appropriate weight to values other than those traditionally taken into account when determining issues that arise in investment disputes such as deciding what the “legitimate expectations” of an investor might be.

For example, are the often inchoately expressed rights of indigenous peoples and their relationship to land relevant to a dispute between a state and investors that concerns that land? The Tribunal in the Pezold case denied nondisputing party status to indigenous groups because the matters they wanted to speak about were not perceived by the Tribunal to be the subject of the dispute between the parties.Footnote ⁶ Is that a too narrow view of the “dispute” or of the relevance of human rights issues to investment disputes?

And the same question arises regarding whether environmental values and public health concerns will be given appropriate weight, even under new agreements that refer to them. Again, all of this will depend on the extent to which arbitrators are able to conceive of investment protections along somewhat different lines.

This may pose a challenge, but tribunals have shown that they can adapt through processes of interpretation—environmental considerations were introduced into WTO law less by agreement of the parties and more by the actions of WTO panels and the WTO Appellate Body—famously in the Shrimp case but also in Asbestos and Brazil-Tyres.Footnote ⁷ But, nonetheless, for many these changes have been only incremental and do not go far enough. And so, leaving matters of human rights, environmental concern, and public health to the vagaries of panel or investment tribunal decision is unlikely to be regarded as a satisfactory solution.

Further, notwithstanding the rhetoric and the modifications that have been made in new agreements or in model bilateral investment treaties, it is not clear that states are really committed to rethinking substantive obligations in investment agreements. Simply taking the language of General Agreement on Tariffs and Trade Article XXIV and inserting it into investment agreements as if what works for trade agreements must work for investment agreements, or dusting off old proposals on dispute settlement made to the WTO and presenting them as new innovative proposals for investment agreements, or taking the language that exists in investment case law and presenting it as a new approach to substantive provisions in investment agreements, is hardly rethinking approaches to investment agreements at either the substantive or the procedural level. And they all give rise to difficulties of interpretation that they were meant to displace. Nor do I think these problems will be miraculously solved by appointing to dispute settlement tribunals individuals with judicial rather than arbitral experience, particularly if they have no background or expertise in international investment law.

What has to be done, then, not just by scholars, nongovernmental organizations, and other commentators, but by states themselves, is to engage in serious thinking about existing substantive obligations, about how new obligations are to be worded and what effect they will be given through interpretation in dispute settlement. Only in this way will issues such as human rights, environment, and public health be able to find a significant place in investment agreements.