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Controversy - Update
editShort Description lacking in a number of areas, including clarity, neutrality, and recentness.
Clarity
Issues included misstating how ISDS claims are brought, confusing structure of introducing IIAs, BITs, Investment chapters in Trade Agreements, etc.
Neutrality
Issues included flat statement of the purpose and benefits of ISDS. Previous version stated "The purpose of the ISDS is to benefit the countries that voluntarily adhere to it; these countries benefit because foreign investors are motivated to invest under the protection that ISDS affords." This is highly controversial at the moment (2022), and is not the dominant view of current scholarship OR countries. The purpose statement seems neutral, but it is not, because many small and developing nations now view BITs as forced on them by capital exporting countries and previous colonial powers (whether or not that claim is true, the issue of the purpose of ISDS is not settled).
The benefits statement is controversial, biased, and (at any rate) inaccurate. The economic function of ISDS provisions in treaties is fundamentally a form of government subsidy for the political risk insurance premium of foreign investors. All investments come with a number of risks (political risk is only one), and investment protections (particularly ISDS) function to reduce the political risk specifically (the treaties often also address other related risks, such as currency risks). The direct function of this is entirely to the benefit of the investor (subsidized insurance), not the host state. Whether ISDS benefits the host state at all, if those benefits are substantial, and (most importantly for nations) whether the benefits outweigh the costs ALL depend on second and third order impacts (increased FDI, tech spillover from FDI, etc). Further, it is precisely the downstream effects of ISDS that are currently being hotly debated in and between countries.
Thus, it would be accurate to say that ISDS generally benefits foreign investors by subsidizing their political risk insurance premium, but it is a non sequitur to then claim that this benefits host nations (as the calculus for returns on subsidies is not that simple, and varies widely by host state and investor).
06:55, 1 June 2022 (UTC) — Preceding unsigned comment added by Volke6428 (talk • contribs)