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Allen & Overy publishes empirical study on Costs, Damages and Duration in Investor-State Arbitration

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Hodgson Matthew
Matthew Hodgson

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Madhu Mirpuri

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03 June 2021

We are delighted to announce the publication of the latest iteration of the study on “Costs, Damages and Duration in Investor-State Arbitration” authored by Allen & Overy partner Matthew Hodgson and Yarik Kryvoi of the British Institute of International and Comparative Law (BIICL). 

The study examines over 400 investor-State dispute settlement (ISDS) cases conducted under ICSID, UNCITRAL and other arbitration rules and over 70 ICSID annulment decisions. It provides a comprehensive analysis of how long ISDS proceedings last, how much they cost, how tribunals allocate those costs and the amount of damages awarded.

Adopting a quantitative focus, the authors consider factors of potential relevance to costs of ISDS proceedings, including the choice of arbitration rules and the length of proceedings.

The report has identified some significant trends in ISDS proceedings, including the following:

  1. Party costs have decreased over the past three years
  2. Investor costs remain higher than respondent States’ costs
  3. The prospects of recovering costs have improved
  4. Investors are claiming, and are being awarded, larger amounts
  5. There is a steady increase in the length of proceedings
  6. The choice of arbitration rules does not significantly impact tribunal costs, costs allocation or the duration of proceedings

Matthew Hodgson, partner in Allen & Overy’s International Arbitration practice and co-author of the report commented: “This study builds on two earlier studies conducted by Allen & Overy in 2012 and 2017. It is in the interests of both investors and States to see greater certainty on how long ISDS proceedings last, what they cost and how tribunals approach allocation of costs. Tackling high costs and the extended duration of ISDS proceedings remains on the agenda for policymakers looking to reform the ISDS system, and this study provides empirical data to inform stakeholders considering these issues.”

Anna Joubin-Bret, Secretary of UNCITRAL and Director of the Division on International Trade Law in the Office of Legal Affairs of the United Nations, commented: “The value of this report to the work that UNCITRAL is currently carrying out in the context of ISDS reform is significant and cannot be overestimated. In order to carry out a systematic and thorough review of the ISDS system, it is essential that we have empirical data on which we can rely. This study highlights some significant trends in investor-State arbitrations which need to be addressed at the policy level.”

Yarik Kryvoi of BIICL also commented: “We are delighted to launch this study conducted with Allen & Overy, a result of fruitful cooperation between academia and private sector. Although comprehensive empirical studies such as this one take a significant amount of time and resources, they portray an accurate picture of investor-State dispute settlement, not dictated by a political agenda or partisan opinions. This study allows not only practitioners but also policymakers to make evidence-based decisions shaping investor-State arbitration practice and reform.”

The full report can be downloaded here.

The study was formally launched during an online event on 14 May 2021, a recording of which is available here.

Tackling high costs and the extended duration of ISDS proceedings remains on the agenda for policymakers looking to reform the ISDS system, and this study provides empirical data to inform stakeholders considering these issues.

Matthew Hodgson, partner in Allen & Overy’s International Arbitration practice

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