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Australia’s Engagement in ISDS Reform

Australia’s Engagement in ISDS Reform

Australia is actively engaged in both bilateral and multilateral reform efforts in relation to investor-State dispute settlement (ISDS).

Bilateral reform

In December 2019, the Government announced funding from 1 July 2020 for international investment treaty reform. The funding will support reviewing and updating, where possible, Australia’s network of broadly drafted older-style bilateral investment treaties (BITs). This BIT review project will include reviewing the ISDS provisions in our BITs, and is aimed at bringing our BITs into alignment with Australia’s modern investment treaty practice, as reflected in our recent free trade agreements. The project will build on experience gained from the recent successful negotiation of an updated Uruguay BIT. DFAT has called for public submissions in relation to this project.

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Multilateral reform

Two of the key multilateral fora for ISDS reform are the International Centre for the Settlement of Investment Disputes (ICSID) and the United Nations Commission on International Trade Law (UNCITRAL).

ICSID is currently undertaking an extensive review of its 2006 Arbitration Rules in order to modernise, simplify and streamline them. These procedural rules are used in the majority of ISDS cases so any amendments will have a material impact on the way such arbitrations are conducted.

UNCITRAL’s Working Group III is developing a range of possible reform options to address some of the concerns expressed regarding ISDS with a view to allowing each state the choice of whether and to what extent it wishes to adopt the relevant options. These reform options seem likely to include a multilateral instrument on ISDS procedural reform, which states can opt into depending on their particular circumstances.

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United Nations Convention on Transparency in Treaty-based Investor-State Arbitration

Australia ratified the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration on 17 September 2020. The Convention is an instrument by which the Parties consent to the application of the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration to investment treaties concluded prior to 1 April 2014. The Rules on Transparency are a set of procedural rules for making certain information in ISDS proceedings publicly available. This provides greater transparency in ISDS proceedings and reflects the approach in Australia’s more recent FTAs. The Convention will enter into force for Australia on 17 March 2021.

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