International Investment and ADR: Preventing and Managing Investment Treaty Conflict

Andrea K. SchneiderProfessor of Law

Marquette University Law Schoolandrea.schneider@marquette.edu

Regimes/Factors

Direct Effect

Standing for Private Actors

Supremacy Transparency Enforcement

Negotiation No No None Optional Negotiation

Investment Arbitration

Yes Yes Only as to that award

Generally Likely

International Adjudication

No No Supreme,but not integrated into domestic law

Yes Varying—None (NAFTA) to Retaliation (WTO)

Supranational Court

Yes Yes, Directly and indirectly

Supreme and Integrated

Yes Fines & Damages; Domestic Remedies Also

International Systems

Investment Arbitration

Supranational Court

Negotiation Regime

International Adjudication

Continuum of Constitutionalization

Weakest Strongest

International Systems

--Schneider, 1999

Dispute Resolution Process Spectrum

DirectNegotiation

Trial

CompleteOutcomeControl

MaximumProcessControl

NoOutcomeControl

MinimumProcessControl

FacilitativeMediation

EvaluativeMediation

Early NeutralEvaluation (ENE)

Mini-Trial

Med-Arb

BracketedArbitration

Final OfferArbitration

Arbitration

Private Judging

Mediative (Non-Binding)ADR Processes

Adjudicative (Binding)ADR Processes

Bordone, 2008

Procedural Justice

• Explains why international system moved toward courts

• Explains why domestic alternative dispute resolution took hold

Dispute System Design Contexts

Bordone, 2008

Organizational

International institutionsNation-StatesCompaniesUniversitiesGovernment AgenciesNGOsNon-profits

“Transactional”

Mass TortsClass ActionsComplex disputesNatural disastersTerrorismRepatriationOthers?

Process Design Principles

• Participation• Suitability• Process Accountability• Results Accountability• Fluidity• Sustainability• Permeability

Process Design—Participation• Key stakeholders around the table• Stakeholders help design and

troubleshoot• Funding and support• Technical & legal training

Process Design—Suitability• Is mediation the correct process?• Use of legal defenses• Political/domestic constraints• Cultural understanding

Process Design—Process Accountability

• Need education & representation• Need group of skilled mediators• Transparency of process• Follow-up to see how operates

Process Design—Results Accountability

• Outcomes—transparency issues• Repeat players—countries &

municipalities• Repeat sectors

Process Design—Fluidity• Timing—settlement opportunities

throughout• Adjust process and administration

as needed

Process Design—Sustainability

• Embedded into treaty?• New kinds of training and assumptions

needed• New delegation of settlement

responsibilities needed

Process Design—Permeability• Part of dispute prevention and

management system (Ombuds offices?)• Facilitate information exchange• Facilitate administrative review

Where Do We Go From Here?

• Need—and want—shadow of investment arbitration

• Better structure time between problem arising and arbitration result

• Can offer process choices between binding arbitration & negotiation

• DSD is up to the challenge

International Investment and ADR: Preventing and Managing Investment Treaty Conflict

Andrea K. SchneiderProfessor of Law

Marquette University Law Schoolandrea.schneider@marquette.edu