‘The Greatest Victory’? Challenges and Opportunities for Mediation in Investor-State Dispute Settlement

Abstract This article identifies the rise of mediation as a reaction to the ‘public legitimacy crisis’ experienced by arbitration in investor-State dispute settlement (ISDS) and, more broadly, as a general symptom of the contemporary backlash against international adjudication. It offers an analysis of the nine main challenges that mediation has traditionally faced in ISDS, together with a notice of how recent developments have been contributing to unlocking its underutilized potential. It illustrates the support of numerous States, and in particular of Asian States led by China for dispute prevention and mediation, and provides a critical analysis of some of the limitations of the mediation-related reform options in the agenda of UNCITRAL’s Working Group III including the development of model clauses, a multilateral international investment law advisory centre and a multilateral investment court. The article also examines the recent UNCITRAL secretariat’s guidelines addressing some of the other obstacles faced by mediation in ISDS, including, but not limited to, governance, legislative and policy impediments and the tension between confidentiality in mediation and transparency as a structural goal. The conclusion recaps the main findings of the article and stresses the minimum common denominator quality of mediation as a means to restore balance in a reformed ISDS ‘ecosystem’.