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Underutilization of ADR in ISDS: Resolving Treaty Interpretation Issues


Since the adoption of the International Centre for Settlement of Investment Disputes (ICSID) and the United Nations Commission on International Trade Law Conciliation Rules, only a small number of investor-state disputes have been referred to conciliation. The common formulation of investor-state dispute settlement (ISDS) clauses, that carry advance consent to conciliation and arbitration in investment treaties, suggests that the choice between these two dispute resolution mechanisms may have conflicting interpretations. Under one interpretation, disputants have an option to choose conciliation and then proceed with arbitration; the other interpretation suggests that selection of conciliation is to the exclusion of arbitration. Incentives, such as the recent adoption of the Singapore Convention on Mediation and proposed amendments by ICSID, have been put forward to promote alternative dispute resolution mechanisms in ISDS. This Article, however, argues that recourse to investor-state conciliation will not increase unless mediation/conciliation are made mandatory before arbitration,and the source of conflicting interpretations of the choice between conciliation and arbitration is eliminated.

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