Michael Cover completes Investor State Mediator Training

IPOS Panel member, Michael Cover, has recently completed Investor State Mediator Training with ICSID/ the World Bank and CEDR and IMI, at the World Bank’s offices in Paris.

Investor State disputes mostly occur in the context of bilateral and multilateral treaties between nation states, which have as their objective the encouragement and protection of foreign direct investments. The protection accorded to foreign investors is against, amongst other things, political risk, such as regime change, revocation of permissions or licences, nationalisation, prevention of repatriation of capital or restrictions on transfers of shareholdings, in each case involving a breach of the fundamental obligations to investors of fair and equal treatment, full protections and security and repatriation of capital.

Confidence is given to foreign direct investors by the option of resolving disputes with nation states by Investor State Arbitration, which avoids the need for litigation in local courts. However, investor state arbitration has come under criticism of late, some of which may be justified. This results from some arbitrators “double hatting”, that is acting both as arbitrators and counsel in different cases, a perceived lack of transparency, which probably applies to any international arbitration, and soaring cost.

Perhaps counter-intuitively, it is the nation states that have begun to see the advantages of mediation. They recognise the inherent flexibility of the process, the retention of confidentiality and, above all, the ability to retain control over the outcome. The lead on this has very much been taken by the participants in the Energy Charter Conference and the supporting Energy Charter Secretariat, which has launched a Guide on Investment Mediation, to which Michael Cover contributed. IMI or the International Mediation Institute has also promulgated its IMI Competency Criteria for Investor State Mediators and Michael was also involved in the development of this as a Member of the IMI Task Force on this topic.

Michael is looking forward to the opportunity to spread the word on this area and also to mediating disputes in the future. He notes that this is a further stage in the growing acceptance of mediation on an international basis, which has also been increased by the forthcoming promulgation by the UNCITRAL Working Group II of a convention and model law on the enforcement of settlement agreements reached through international conciliation or mediation.