The article discusses the need for appellate review mechanisms in the World Trade Organization (WTO) and InvestorState Dispute Settlement (ISDS) under international law. It highlights the dysfunction in the WTO's dispute settlement system since 2019, mainly due to the United States' reluctance to appoint appellate body members. The piece also delves into the formative stages for an appellate review process in ISDS. Finally, it outlines India's likely stance on these issues, which appears to favor the establishment of an appellate review mechanism.
WTO's Dysfunctional Appellate Body
The WTO's dispute settlement mechanism has been impaired since 2019 because the U.S. has obstructed the appointment of appellate body members. The appellate review system in WTO was crucial for maintaining coherence and predictability in rulings.
The WTO's dispute settlement system has given over 493 rulings since its inception in 1995, indicating its importance and effectiveness, which far exceeds the International Court of Justice's 190 cases since 1947.
ISDS and the Need for Appellate Review
The InvestorState Dispute Settlement (ISDS) currently operates through ad hoc or oneoff arbitration tribunals without any appellate review. This has led to inconsistent rulings and legal interpretations, making the regime unstable and unpredictable.
India itself has faced five adverse ISDS awards and several pending claims, indicating the volatility of the current ISDS mechanism without an appellate review.
Benefits of Appellate Review
The introduction of an appellate review mechanism will bring coherence, consistency, and predictability to the ISDS system. Unlike annulment proceedings or courtbased setasides, appellate review can rectify errors in legal interpretations.
An appellate review mechanism can address the diverging interpretations of the same treaty provision that exist in the current system.
India's Stand on Appellate Review
Though India has not formally declared its position, it presumably supports an appellate review system, particularly in ISDS, as evidenced by Article 29 of the Indian model Bilateral Investment Treaty (BIT).
The ongoing investment treaty negotiations with the European Union, a strong proponent of appellate review, will likely necessitate India to clarify its stance.
Recommendations for India
India should support the implementation of an appellate review in both WTO and ISDS to bring stability and predictability to these systems, which will be beneficial for its international trade and investment relations.
India's support for appellate review aligns with its broader foreign policy goals of establishing a rulebased global order.