The EU’s proposal to establish a new Investment Court System during the TTIP negotiations has well represented the cumulative resentment of the public, governments, civil societies as well as academics in regard to the existing ISDS mechanism. Such issues as the lack of legitimacy, transparency, consistency, the absence of a review mechanism, and the high burden to public finance in the existing system have been criticized as undermining the sovereignty of the State and its right to regulate for legitimate policy objectives such as the environment, health, and safety. Despite the merits of the existing ISDS mechanism, the increasing demand for improved safeguards against abusive claims and discretionary power of private adjudicators should be adequately addressed in consideration of the democratic principles and the objectives of sustainable development goals. It is also noteworthy that the function of the traditional ISDS system, devised as a preferential instrument for foreign investors, has evolved over time as the distinction between capital-exporting and capital-importing countries became blurred and more attention is focused on the equality and balance of power among domestic and foreign businesses as well as between investors and the host States.
In this vein, the establishment of a permanent tribunal and the public appointment of tribunal members with a fixed-term, as proposed by the EU in the new ICS, are indicative of the shifting paradigm in the discourse of treaty-based investor to State arbitration systems. Despite the fact that the system of ICS can hardly solve all of the problems, it may possibly improve the level of legitimacy by incorporating public features of the procedure. At the same time, it is noteworthy that the objective of improving the legitimacy and consistency of the dispute settlement system cannot be achieved without the prospect of establishing a multilateral dispute settlement mechanism with consolidated and harmonized standards of investment rules. Considering the difficulties of reaching a multilateral agreement on investment as witnessed in the past decades, the approach of the Mauritius Convention, which adopted an opt-in mechanism, would be useful as it reduces the risk of failure in negotiations while building a consensus among participants and allowing them to decide when to ratify the Convention in consideration of their domestic circumstances.
Considering the extensive network of trade and investment agreements that Korea has concluded in the past decade, it is more than necessary for the Korean government to pay close attention to the recent development in this process and actively participate in discussions on the possibility of establishing a multilateral investment court and the key principles of investment protection and facilitation in international fora.[by executive summary]