Mediation as a Mandatory Precondition to Investor-State Arbitration

This thesis challenges the arguments against the concept of mandatory investor-state mediation as a precondition to arbitration through doctrinal and quantitative empirical analysis. The thesis first points out that some of the general objections to mediation in investor-state dispute settlement (ISDS) parallel those initially raised against mediation to resolve domestic and international commercial disputes. Yet users have come around to successfully using mediation quite extensively in those settings. Secondly the thesis challenges the view that better procedural rules and enforcement mechanisms will be enough to increase recourse to voluntary opt-in mediation; and that there is no need to promote mandatory mediation for ISDS. The doctrinal analysis shows that usual treaty wording creates a sort of ‘fork in the road’ when it comes to the choice between conciliation and arbitration in ISDS clauses. Therefore, it is not surprising that investors and their legal advisors almost always choose arbitration over conciliation or mediation. Relatedly, we should question the assumption that improving the enforceability of settlement agreements will result in significantly increased use of voluntary alternative dispute resolution mechanisms. Thirdly, the thesis debunks major common arguments against the compatibility of mandatory mediation with ISDS through a pioneering statistical analysis and an econometric study. This is achieved by quantitatively analysing 656 concluded, treaty-based ISA cases through to the end of 2019. Through this dataset, the thesis examines four corresponding research questions regarding mandatory mediation. Each research question is examined separately, first through a descriptive analysis of the relevant data, then using a more elaborate econometric regression method. From this basis, the thesis concludes with recommendations on three main ways forward to integrate mandatory mediation, before arbitration, into the current ISDS regime