A. Introduction
The United Nations Commission on International Trade Law (“UNCITRAL” or the “Commission”) was established by the UN General Assembly in 1966 to promote the harmonization and modernization of international trade law. Its main tasks include the preparation of legal instruments aimed at facilitating international trade, as well as fostering the uniform application of these texts across different legal systems.
Within this framework, and since 2017, Working Group III (“WG III”) has been entrusted with the study of a possible reform of the investor State dispute settlement system (“ISDS”). Its most recent work has been structured around three main lines of activity: (i) the Draft Provisions on Procedural and Cross Cutting Issues, which propose procedural rules applicable to future ISDS proceedings; (ii) the Draft Statute of a Standing Mechanism for the Resolution of International Investment Disputes, which contemplates the creation of a permanent body tasked with resolving this type of dispute; and (iii) the establishment of an Advisory Centre on International Investment Dispute Resolution, intended to train, support, and provide assistance to States in order to enhance their capacity to manage investment disputes.
B. Recent Developments of Working Group III
The first initiative, consisting of the Draft Provisions on Procedural and Cross Cutting Issues, proposes rules applicable to future ISDS proceedings and addresses matters that are not usually expressly regulated in other arbitration rules (such as ICC, LCIA, ICSID, among others).
Among the novel issues introduced in the 2025 draft is the express inclusion of several procedural matters, including in particular: (i) a potential bifurcation phase (Provision 2); (ii) mechanisms for the early dismissal of manifestly unfounded claims (Provision 4); (iii) security for costs (Provision 5); (iv) coordination of parallel proceedings, limitation periods, and the independence of shareholders’ claims (Provision 18); and (v) criteria for the calculation of damages, including an express proposal to prohibit the award of punitive damages (Provision 20.5).
The draft also adds provisions aimed to ensure the efficient administration of proceedings, addressing issues such as general time limits for different phases of the procedure, references to technological tools for document management, and guidelines to ensure transparency where required by the applicable treaty.
The second project concerns the Statute of a Standing Mechanism for the resolution of investment related disputes. This text proposes the creation of a permanent body, composed of members appointed for defined terms, with uniform procedural rules and an institutional structure, in contrast to the current investor State dispute settlement system, under which tribunals are constituted on a case-by-case basis.
The project also contemplates the creation of an Appellate Tribunal with the authority to review awards rendered at first instance, based on the grounds set out in Article 29 (primarily manifest errors in the application or interpretation of the law, or manifest errors in the assessment of facts). It further provides that any party wishing to file an appeal must expressly waive the right to initiate annulment, setting aside, or similar proceedings, pursuant to Article 28 of the draft statute.
With respect to the Advisory Centre for States, a preliminary draft statute was finalized in 2024. Current discussions have focused on determining the thresholds and conditions required for its entry into force, as well as defining the initial scope of its services, which include technical assistance to advise States on how to prevent disputes, the organization of seminars and conferences, functioning as a forum for the exchange of information, and promoting best practices, among others.
C. Next Steps and Implications
The progress discussed during the most recent sessions of Working Group III shows that both the project on procedural and cross-cutting issues and the statute of the standing mechanism have reached a considerable level of technical development within the ISDS reform process.
According to the provisional program of Working Group III, the next sessions, scheduled to take place from 12 to 16 January 2026 in New York, will continue to focus on (i) the draft statute of the standing mechanism at first instance and the standing appellate mechanism, as well as (ii) the draft provisions on procedural and cross cutting issues.
D. Conclusion
The most recent developments of Working Group III show that the reform process of the ISDS system continues to advance steadily. These projects contemplate substantial changes to ISDS and reflect a clear trend in response to current concerns. If approved and implemented by States, they will require practitioners to adapt to this new dispute resolution framework, which will likely coexist with the current system.
E. Sources and References
- Draft provisions on procedural and cross-cutting issues (UNCITRAL, A/CN.9/WG.III/WP.231).
https://docs.un.org/es/A/CN.9/WG.III/WP.253
- Draft statute of a standing mechanism for the resolution of international investment disputes (UNCITRAL, A/CN.9/WG.III/WP.239).
https://docs.un.org/es/A/CN.9/WG.III/WP.239
- Statute of the Advisory Centre on International Investment Dispute Resolution (adopted in principle) (UNCITRAL, 2024).
https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/2413025e.pdf
- Thresholds for entry into force of the Statute of the Advisory Centre.