Investment Mediation and Regional Economic Integration Organizations: The European Union and the Central American Integration System in Comparative Perspective

• Published date: 01 December 2016
• Author: Belen Olmos Giupponi
• DOI: http://doi.org/10.1002/crq.21171
• Date: 01 December 2016

C R Q, vol. 34, no. 2, Winter 2016 119

© 2016 Association for Confl ict Resolution and Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com) • DOI: 10.1002/crq.21171

ARTICLES

Investment Mediation and Regional Economic

Integration Organizations: The European Union

and the Central American Integration System in

Comparative Perspective

Belen Olmos Giupponi

International investment agreements ( IIAs ) often provide for arbitra-

tion as the main dispute settlement method, but they rarely regulate

mediation. However, this legal landscape is changing rapidly due to

the inclusion of clauses contemplating mediation and the adoption of

specifi c rules by international bodies. Investment mediation is presented

as a complementary tool that avoids the escalation of confl icts and is

more eff ective and less time consuming and causes less disruption to the

investment environment. Against this backdrop, the main aim of this

article is to explore recent developments in investment mediation in

regional economic integration organizations ( REIOs ), focusing on the

European Union ’ s experience.

T raditionally, investment mediation, which is understood as the des-

ignation by the disputing parties of a neutral third party to provide

a negotiated solution to investment disputes, has been considered a mar-

ginal mechanism or tool for the resolution of international investment

disputes.  is is mainly due to the fact that international arbitration has

been the preferred mechanism to resolve investment disputes. Indeed, sev-

eral international investment agreements (IIAs) provide for the constitu-

tion of an arbitral tribunal under diff erent sets of international arbitration

rules and procedures, frequently under the norms adopted in the frame-

work of the International Centre for Settlement of Investment Disputes

(ICSID) and the United Nations Commission on International Trade

Law (UNCITRAL).

120 GIUPPONI

C R Q • DOI: 10.1002/crq

Nevertheless, the interest in mediation and other alternative dispute

resolution (ADR) tools, such as conciliation, has grown over the years

in international investment law (Coe 2005). To avoid the escalation of

confl icts, IIAs have encompassed various prevention provisions, includ-

ing diff erent techniques such as negotiation, conciliation, and mediation

(Reisman 2010). In addition, dispute prevention policies (DPPs) would

prevent or effi ciently resolve potential investment disputes.

Recent trends in mediation in international investment law demon-

strate fast-moving modifi cations.  e reasons behind this trend are varied

and complex. One main factor has been the proactive role played by inter-

national arbitral institutions that have developed new rules that enhance

mediation as an ADR method. A clear example are new rules on media-

tion adopted by the International Chamber of Commerce (ICC), in force

since 2014. Another signifi cant element in this evolution is the inclusion

by the European Union (EU) of several clauses on mediation in the area

of common commercial and investment policy. In addition, the recent

questioning of international arbitration, due perhaps to misinformation,

has produced as a positive side eff ect (Morek 2012 ) a renewed interest in

investment mediation. Finally, costs are often considered another advan-

tage that investment mediation would off er over arbitration (Alibekova

and Carrow 2007).

 is main aim of this article is to scrutinize the development of these

trends regarding mediation in international investment law.  e article looks

into the diff erent dispute prevention mechanisms that are being promoted

and adopted in the fi eld of the settlement of investment-related disputes.

In analyzing current trends, the article identifi es the main advantages and

drawbacks of including mediation clauses in IIAs and other international

agreements, such as new free trade agreements (FTAs), which also com-

prise investment protection clauses. Against this background, the article

underlines the role played by regional economic integration organizations

(REIOs), primarily the EU. Based on the EU ’ s experience, confl ict preven-

tion and mediation clauses in IIAs, including state-to-state consultations,

are examined.  e article then observes predominant developments in other

REIOs, namely, the Central American System of Integration (SICA), to

assess the impact of REIOs in the diff usion of ADR mechanisms. Analyses

that include this regional comparative perspective are rare. Hence, this article

attempts to fi ll this gap in the literature. Finally, the article presents a critical

refl ection on the state of the art, considering factors that underpin the evolu-

tion and the limitations experienced in the implementation of norms.