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European Yearbook
of International
Economic Law
Marc Bungenberg
August Reinisch
Special Issue:
From Bilateral Arbitral
Tribunals and Investment
Courts to a Multilateral
Investment Court
Options Regarding the Institutionalization
of Investor-State Dispute Settlement
123
European Yearbook of International
Economic Law
Series Editors
Marc Bungenberg, Saarbrücken, Germany
Markus Krajewski, Erlangen, Germany
Christian Tams, Glasgow, United Kingdom
Jörg Philipp Terhechte, Lüneburg, Germany
Andreas R. Ziegler, Lausanne, Switzerland
Advisory Editors
Armin Von Bogdandy, Heidelberg, Germany
Thomas Cottier, Bern, Switzerland
Stefan Griller, Salzburg, Austria
Armin Hatje, Hamburg, Germany
Christoph Herrmann, Passau, Germany
Meinhard Hilf, Hamburg, Germany
John H. Jackson{
William E. Kovacic, Washington, USA
Gabrielle Marceau, Geneva, Switzerland
Ernst-Ulrich Petersmann, Firenze, Italy
Hélène Ruiz Fabri, Luxembourg
Bruno Simma, München, Germany
Rudolf Streinz, München, Germany
More information about this series at http://www.springer.com/series/8165
Marc Bungenberg • August Reinisch
From Bilateral Arbitral

Tribunals and Investment
Courts to a Multilateral
Investment Court
Options Regarding the Institutionalization
of Investor-State Dispute Settlement
Marc Bungenberg August Reinisch
Faculty of Law University of Vienna
Saarland University Wien, Austria
Saarbrücken, Germany
ISSN 2364-8392 ISSN 2364-8406 (electronic)

European Yearbook of International Economic Law
Special Issue
ISBN 978-3-030-01188-8 ISBN 978-3-030-01189-5 (eBook)
https://doi.org/10.1007/978-3-030-01189-5
© Springer Nature Switzerland AG 2018

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Preface
On 20 March 2018, the Council of the EU gave the EU Commission a mandate to

negotiate the creation of a new multilateral court for investment disputes. Already in
2017, the United Nations Commission on International Trade Law (UNCITRAL)
decided to discuss a reform of investment arbitration, including the possible estab-
lishment of a Multilateral Investment Court (MIC). This new development is
intended to provide a response to the strong criticism of international investment
law, in general, and of ad hoc arbitration between investors and states, in particular,
which has been expressed in recent years.
Comprehensive studies on how such a dispute resolution system could be put into
action, however, do not exist so far. This “feasibility study” was launched in the
course of 2017 and is intended to contribute to a broader discussion on the options of
establishing a new international special court for investment protection. Although
based on the debate about a reform of investment arbitration, it does not discuss the
advantages and disadvantages of replacing the current system of investor-state
arbitration. Rather, it presents options for a potential institutionalised form of
investor-state dispute settlement and for the design of an MIC.
The “cornerstones” of such a new permanent court are its strict rule of law
orientation, which includes the highest demands on the judicial appointment proce-
dure as well as on the personal integrity, independence, and qualification of the
judges. Second, the costs should be significantly lower compared to the status quo.
Third, transparency considerations and aspects of consistency of case law should
receive particular attention. Fourth, decisions of an MIC would have to be effectively
enforceable.
This study was originally written in German with the support of Dr. Anja
Trautmann, LL.M.; Mag. Céline Braumann, LL.M.; and Mag. Sara Mansour Fallah.
We are thankful for the good cooperation with Springer and the European Yearbook
of International Economic Law for accepting this publication as a Special Issue.
Saarbrücken, Germany Marc Bungenberg

Wien, Austria August Reinisch
August 2018
v
Contents
1 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Preliminary Considerations Regarding the Establishment
of the MIC/MIAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Organisational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Procedure of the MIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 Applicable Law of the MIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5 Legal Remedies and Enforcement of MIC Decisions . . . . . . . . . . . 6
1.6 Establishment of a Standalone Multilateral Investment Appellate
Mechanism (MIAM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3 Targets for the Reorganisation of the Investment Protection
Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Positive Effects of a New Approach . . . . . . . . . . . . . . . . . . . . . . . 15
3.1.1 Consistency of Decisions . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.1.2 Greater Legitimacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1.3 Independence and Neutrality of Judges . . . . . . . . . . . . . . . 17
3.1.4 Lack of a Control Mechanism . . . . . . . . . . . . . . . . . . . . . . 18
3.1.5 Cost Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1.6 Access for SMEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1.7 Transparency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1.8 Time Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Advantages of the Two-Tiered MIC Option . . . . . . . . . . . . . . . . . 20
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
vii
viii Contents
4 Design and Implementation of a Two-Tiered MIC . . . . . . . . . . . . . . 25

4.1 Institutional and Procedural Design . . . . . . . . . . . . . . . . . . . . . . . 26
4.1.1 Members of an MIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1.2 Plenary Body . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1.2.1 Appointment of Judges Through the Plenary
Body . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.1.2.2 Adoption of Specific Secondary Rules . . . . . . . . 36
4.1.2.3 Requirement of Majority for Decision Making . . . 37
4.1.2.4 Transparency in Proceedings of the Plenary
Body . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.1.2.5 Seat of the Plenary Body and Frequency
of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.1.3 Judges at the MIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.1.3.1 Full- or Part-Time Judges . . . . . . . . . . . . . . . . . 39
4.1.3.2 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.1.3.3 Independence . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.1.3.4 Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.1.3.5 Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.1.3.6 Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.1.3.7 Oath of Office . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.1.3.8 Immunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.1.3.9 Parallel Engagements . . . . . . . . . . . . . . . . . . . . 47
4.1.3.10 Appointment/Election by the Parties
to the Agreement . . . . . . . . . . . . . . . . . . . . . . . 49
4.1.3.11 Duration of Appointment and Rotating
Reappointment . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.1.3.12 Decisions on Instances of Bias by Judges . . . . . . 50
4.1.3.13 Termination of the Appointment . . . . . . . . . . . . 51
4.1.3.14 Removal from Office . . . . . . . . . . . . . . . . . . . . 51
4.1.4 President of the Court and Vice President of the Court . . . . 52
4.1.5 Plenary Decisions, Chambers and Single Judges . . . . . . . . 52
4.1.6 Appellate Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.1.7 Secretariat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.1.8 Advisory Centre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.2 The Appeals Procedure Before the Two-Tiered MIC . . . . . . . . . . . 57
4.2.1 Jurisdiction of the MIC . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.2.1.1 Membership of the Respondent State
and of the Home State of the Investor
in the MIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.2.1.2 (Written) Consent to the Jurisdiction
of the MIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.2.1.3 Jurisdiction Ratione Personae . . . . . . . . . . . . . . 62
4.2.1.4 Jurisdiction Ratione Materiae . . . . . . . . . . . . . . 63
4.2.1.5 Jurisdiction Ratione Temporis . . . . . . . . . . . . . . 64
4.2.1.6 Avoidance of Abuse of Process and Negative
Admissibility Requirements . . . . . . . . . . . . . . . 64
Contents ix
4.2.2 Relationship of the MIC to Other Courts and Arbitral

Tribunals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.2.3 The Relationship with Domestic Courts . . . . . . . . . . . . . . . 71
4.2.4 The Relationship with Inter-State (Arbitration) Dispute
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
4.2.5 General Procedure before the MIC . . . . . . . . . . . . . . . . . . 73
4.2.5.1 Compulsory Consultations? . . . . . . . . . . . . . . . 74
4.2.5.2 First Instance Procedure . . . . . . . . . . . . . . . . . . 76
4.2.5.3 Second Instance Procedure/Appeal . . . . . . . . . . 95
4.2.6 Consolidation of Pending Procedures at the MIC . . . . . . . . 102
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
5 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
5.1 Applicable Substantive Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
5.1.1 EU Law as Applicable Substantive Law? . . . . . . . . . . . . . 113
5.1.2 Uniform Interpretation of Standards of Protection . . . . . . . 115
5.1.2.1 Permanency of the Treaty Interpreters
at the MIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
5.1.2.2 Harmonising Interpretation Mandate . . . . . . . . . 118
5.1.3 Ensuring a Neutral and Objective Interpretation
of Standards of Protection . . . . . . . . . . . . . . . . . . . . . . . . 119
5.1.3.1 Clarification and Limitation of Investment
Protection Standards in Investment
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
5.1.3.2 Limiting the Mandate for Interpretation . . . . . . . 122
5.1.3.3 Authentic Interpretation by the Parties . . . . . . . . 123
5.1.3.4 Composition of the MIC: Impartial
and Independent Judges . . . . . . . . . . . . . . . . . . 124
5.2 Applicable Procedural Law and Procedural Principles . . . . . . . . . . 126
5.2.1 Transparency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
5.2.2 Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
5.2.3 Practice of Judicial Investigation and Limitation
of the Subject Matter of the Dispute . . . . . . . . . . . . . . . . . 134
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
6 The Pronouncement of Decisions and Its Consequences . . . . . . . . . . 141
6.1 Legal Effects of Decisions of International Dispute Settlement
Bodies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
6.2 Effects of Decisions of Investment Arbitral Tribunals . . . . . . . . . . 143
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
7 Recognition and Enforcement of Decisions . . . . . . . . . . . . . . . . . . . . 147
7.1 Decisions of the MIC as Arbitral Awards Within the Meaning
of the ICSID Convention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
7.2 Decisions of the MIC as Arbitral Awards Within the Meaning
of the New York Convention . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
x Contents
7.2.1 Voluntary Submission by the Parties . . . . . . . . . . . . . . . . . 154

7.2.2 Final and Binding Dispute Resolution . . . . . . . . . . . . . . . . 156
7.2.3 Non-State Decision-Makers . . . . . . . . . . . . . . . . . . . . . . . 157
7.2.4 Arbitrator Selection by the Parties . . . . . . . . . . . . . . . . . . . 158
7.2.5 Foreign, Non-Domestic and Anational Awards . . . . . . . . . 158
7.2.6 Litigation Between Natural or Legal Persons . . . . . . . . . . . 161
7.2.7 MIC as a “Permanent Arbitral Body” Under Article I
Para. 2 NYC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
7.2.8 Reservation on “Commercial Matters” Under Article I
Para. 3 NYC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
7.3 Recognition and Enforcement of Decisions of the MIC . . . . . . . . . 163
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
8 Possibilities for the Establishment of an MIC and a Possible
Connection to Existing Institutions and System Conformity . . . . . . . 167
8.1 Practical Implementation of the Establishment of an MIC . . . . . . 167
8.2 Structuring the MIC as an International Organisation . . . . . . . . . . 169
8.3 Connection to Existing Institutions . . . . . . . . . . . . . . . . . . . . . . . 171
8.4 Entry Into Force of the MIC Statute Only with a Minimum
Number of Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
8.5 Establishment of MIC Jurisdiction by Explicit Modification
of Existing and Future IIAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
8.5.1 Conclusion of New IIAs and FTAs with Investment
Chapters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
8.5.2 Renegotiation and Reform of Existing EU Economic
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
8.5.3 Inclusion of “IIA Networks” of the Member States
in the Establishment of MIC Jurisdiction . . . . . . . . . . . . . 176
8.6 The MIC Statute as Opt-In Convention for the Modification
of Existing IIAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
8.6.1 The Standard Case: Consensus on the Establishment
of MIC Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
8.6.2 Exceptional Cases: Jurisdiction of the MIC Even
if the Home State of the Investor Is Not an MIC
Member? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
8.6.3 Jurisdiction of the MIC in Case of Multilateral IIAs . . . . . 181
8.6.4 Summary of the Establishment of MIC Jurisdiction . . . . . 181
8.7 Transitional Provisions and System Conformity of the MIC . . . . . 182
8.8 Working Language and Language of Proceedings at the MIC . . . 183
8.9 Cost Distribution in the New System . . . . . . . . . . . . . . . . . . . . . 184
8.10 Overview of the Necessary Agreements and Secondary
Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
Contents xi
9 Standalone Appeal Mechanism: “Multilateral Investment Appeals

Mechanism” (MIAM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
9.1 Organisational Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
9.2 General Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
9.3 Specific Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
9.3.1 Duration of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 193
9.3.2 Scope of Examination and Investigative Jurisdiction . . . . . 193
9.3.3 Chamber and Plenary Decisions . . . . . . . . . . . . . . . . . . . 195
9.3.4 Decision on the Bias of Arbitrators in the Initial Arbitral
Proceedings and MIAM . . . . . . . . . . . . . . . . . . . . . . . . . 195
9.3.5 Precedence Created by Second-Instance Judgments? . . . . 196
9.4 Decisions Rendered Made by the MIAM . . . . . . . . . . . . . . . . . . 196
9.5 Enforcement of MIAM Decisions . . . . . . . . . . . . . . . . . . . . . . . 197
9.6 Possibilities for Setting up a MIAM . . . . . . . . . . . . . . . . . . . . . . 198
9.6.1 Establishment as a Self-Governing International
Organisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
9.6.2 Necessity of a Minimum Number of Members . . . . . . . . . 199
9.6.3 Establishment of MIAM Jurisdiction . . . . . . . . . . . . . . . . 200
9.6.3.1 Establishment of MIAM Jurisdiction
by Explicit Amendment of Existing Treaties
and Through IIAs Concluded in the Future . . . . 200
9.6.3.2 MIAM Statute as an Opt-In Convention
to Amend Existing IIAs . . . . . . . . . . . . . . . . . 201
9.7 Transitional Provisions and System Conformity of a MIAM . . . . 203
9.8 Working and Procedural Language of the MIAM . . . . . . . . . . . . 204
9.9 Costs of the New System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
9.10 Overview of Necessary Agreements Etc. . . . . . . . . . . . . . . . . . . 205
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
List of Abbreviations
AB Appellate Body
ACtHPR Protocol Protocol to the African Charter on Human and Peoples’
Rights on the Establishment of the African Court on
Human and Peoples’ Rights
ASEAN Association of Southeast Asian Nations
ADR Alternative Dispute Resolution
BIT Bilateral Investment Treaty
BIPA Bilateral Investment Promotion and Protection
Agreement
CCJ Agreement Agreement establishing the Caribbean Court of Justice
CEPA Comprehensive Economic Partnership Agreement
CECA Comprehensive Economic Cooperation Agreement
CETA Comprehensive Economic and Trade Agreement
DSU Dispute Settlement Understanding
ECT Energy Charter Treaty
EP European Parliament
EU European Union
FTA Free Trade Agreement
IACtHR Inter-American Court of Human Rights
ICC International Chamber of Commerce
ICS Investment Court System
ICSID International Centre for Settlement of Investment
Disputes
ICSID Convention Convention on the Settlement of Investment Disputes
Between States and Nationals of Other States, 1965
IIA International Investment Agreement
ISDS Investor-State Dispute Settlement
IUSCT Iran-United States Claims Tribunal
SME Small and Medium-Sized Enterprises
MFN Most Favored Nation
MIAM Multilateral Investment Appellate Mechanism
xiii
xiv List of Abbreviations
MIC Multilateral Investment Court

MNE Multinational Enterprises
New York Convention Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, 1958
OAS Organization of American States
OECD Organisation of Economic Co-operation and
Development
PCA Permanent Court of Arbitration
SCC Stockholm Chamber of Commerce
SOEs State-Owned Enterprises
TPP Trans-Pacific Partnership
Transparency Rules UNCITRAL Rules on Transparency in Treaty-based
Investor-State Arbitration
Transparency Convention United Nations Convention on Transparency in Treaty-
based Investor-State Arbitration
TTIP Transatlantic Trade and Investment Partnership
UN United Nations
UNCITRAL United Nations Commission on International Trade
Law
UNCTAD United Nations Conference on Trade and Development
VCLT Vienna Convention on the Law of Treaties
WTO World Trade Organization
Chapter 1
Executive Summary
In March 2018 the Council of the European Union (EU Council or Council) gave 1
the Commission of the EU (EU Commission or Commission) a mandate to negotiate
a Multilateral Investment Court (MIC). Furthermore, since 2017 the United Nations
Commission on International Trade Law (UNCITRAL) Working Group III is
discussing different options for a reform of Investor State Dispute Settlement
(ISDS). This report assesses both the option of a two-tiered MIC and of a Multilat-
eral Investment Appellate Mechanism (MIAM). Both models provide for a perma-
nent, pre-appointed judiciary according to rule of law standards.
As yet, there are no in-depth analysis in academic literature regarding the models 2
being put forward in this report1 which have been deemed visionary or even revolu-
tionary. This report is one of the first feasibility studies considering both models.
The starting point of this analysis is to take a look at the announcements of the EU 3
Commission and the respective plans in the Comprehensive Economic and Trade
Agreement (CETA) and the EU-Vietnam FTA to establish an MIC. The United
Nations Conference on Trade and Development (UNCTAD) made the following
observation2:
A standing investment court would be an institutional public good serving the interests of
investors, States and stakeholders. The court would address most of the problems outlined
above; it would go a long way to ensure the legitimacy and transparency of the system,
facilitate consistency and accuracy of decisions and ensure independence and impartiality of
investors. However, this solution would also be the most difficult to implement as it would
require a complete overhaul of the current regime through a coordinated action by a large
number of states. [. . .]
1
Kaufmann-Kohler and Potestà (2016, 2017), Howse (2017), Happ and Wuschka (2017), Brown
(2017), Calamita (2017), and Hoffmeister (2017).
2
UNCTAD (2013), p. 9; see also Howse (2017): “A multilateral court system is best suited to
offering standing or intervention to a wide range of actors who have concerns of international justice
that relate to foreign investment.”
© Springer Nature Switzerland AG 2018 1

M. Bungenberg, A. Reinisch, From Bilateral Arbitral Tribunals and Investment
Courts to a Multilateral Investment Court, European Yearbook of International
Economic Law, https://doi.org/10.1007/978-3-030-01189-5_1
2 1 Executive Summary
4 A multilateral solution, whatever the form it might take, could result in increased
substantive coherence and predictability as well as legal certainty for all concerned
and thus lead to increased acceptance of decisions. However, the existing network of
mostly Bilateral Investment Treaties (BIT(s)), which contain the substantive stan-
dards of protection, would remain applicable.
5 Should a multilateral consolidation of these standards appear necessary and
feasible at some point in the future, it could be attained by a separate opt-in
convention. It would probably be easier to combine such an opt-in convention on
standards of protection with an MIC than with a standalone appellate mechanism.
6 Establishing an MIC or a MIAM entails challenging negotiations and significant
financial costs. Compared to other international courts, it could be run with a budget
amount within the low double-digit millions. By sharing the premises and staff/
secretariat of institutions like the International Centre for Settlement of Investment
Disputes (ICSID), the International Tribunal for the Law of the Sea (ITLOS) or the
Permanent Court of Arbitration (PCA), costs could be reduced even further. Under
the assumption that investment arbitration costs approximately EUR 800,000 per
case (excluding the costs for legal counsel), even shifting only a small fraction of the
currently initiated cases to the MIC could lead to cost neutrality if the losing party
had to pay for those costs based on appropriate rules on fees.
7 An MIC/MIAM requires a new approach in contrast to the current bilateral
Investment Court System (ICS) as stipulated in CETA or the EU-Vietnam FTA.
Although the ICS offers a good approach for reform in many aspects, a multilateral
mechanism for dispute settlement calls for additional, institutionally reinforced
methods. A system of legal redressal for investment disputes that is functioning,
efficient, broadly legitimized and that follows the principles of rule of law can only
be created with considerable commitment.
8 A two-tiered court offers certain advantages compared to a mere appellate
mechanism in terms of the implementation of rule of law considerations and
systemic coherence, as there would be no shift from investment arbitration to
international adjudication between the first and second instance. A two-tiered MIC
is also preferable to a MIAM as an MIC would reform the current system of
investment arbitration more holistically and coherently. Nevertheless, the MIAM
would still be a significant improvement; however, it is advisable to pursue the
creation of an MIC if this proves to be realistic.
1.1 Preliminary Considerations Regarding

the Establishment of the MIC/MIAM
9 The MIC as well as the MIAM could take the form of an independent international
organisation on the basis of a treaty, with its own organs and with separate legal
personality.
1.2 Organisational Structure 3
From an economic perspective, an MIC might only make sense with a minimum 10
of approximately 40 members—thus, in addition to the EU with its 28 members, an
extra 10 or so member states—as only then could there be certain savings on
payments made to the judges in comparison to the payments made to the arbitrators
and the judges in bilateral bodies such as ICS under the current system. The Statute
for an MIC should only enter into force once it has a certain number of ratifications
in order to prevent the mere addition of another dispute settlement institution.
1.2 Organisational Structure
Incorporating the MIC or the MIAM into another organisation does not appear to be 11
advisable as other organisations are either completely different in their structure or
it may require certain procedures to amend their statutes which might be too difficult
to achieve in practice. This is not to suggest that the MIC could not share the
infrastructure of other institutions.
A statute for the establishment of an MIC or a MIAM would constitute an 12
international treaty that should allow the accession of all states, independent customs
unions or Regional Economic Integration Organisations (REIOs) as well as depen-
dent territories with independent powers (Hong Kong, Macao, Taiwan).
The members of the new international organisation, the MIC/MIAM, would be 13
represented in a plenary organ. This plenary organ would be responsible for the
appointment of judges and would set the budget. It could also adopt necessary
secondary law, in particular procedural rules, the remuneration of judges and the
rules for increasing the number of judges.
The new judges would have to be highly qualified, particularly in international 14
law, economic law and public/constitutional law, as well as independent and, as full-
time judges, be available on a permanent basis. Appropriate procedures for the
election and appointment of judges must reflect these qualifications. The MIC/
MIAM Statute should contain a code of conduct for the judges.
The MIC/MIAM should have a president and a vice-president who represent the 15
court externally. Additionally, for the purposes of decision making, chambers should
be established in advance and for an extended period of time. A party should only be
able to apply for a decision by the plenary (or grand chamber) under special
circumstances. The criteria for the formation of the chambers should be stipulated
in the rules of procedure.
There should also be a Secretariat. Among other tasks, the Secretariat would 16
support the judges, administer the procedures and would be in charge of the public
relations work of the court. The Secretariat is crucial to the transparency of the MIC
or MIAM.
Furthermore, an Investment Advisory Centre (IAC) could be established as an 17
independent organ. The IAC could support small and medium-sized enterprises and
developing countries by preventing and settling disputes and offering legal advice
during arbitration.
18 It is recommended that the working language of the MIC/MIAM be English. In

addition to establishing a legal seat in the treaty, a headquarters agreement with the
host state covering privileges and immunities should be concluded.
19 The members will fund the MIC/MIAM and the concrete share of the budget paid
by each member could be determined by reference to the respective member’s share
of global foreign direct investment.
1.3 Procedure of the MIC
20 The procedure of the MIC should be two-tiered and similar to the procedure of
administrative courts. There should be the requirement of an application procedure
and the parties should have a right to an efficient and expedient procedure and it
should be conducted in an inquisitorial manner. The requirements of the United
Nations Convention on Transparency in Treaty-Based Investor-State Arbitration
(Mauritius Convention) regarding transparency should be fully incorporated in the
procedural rules. Thus, procedural documents should generally be published as long
as this does not prejudice essential interests like business secrets or the security
interests of the parties. Hearings should be open to the public and third parties should
have the opportunity to deliver statements.
21 There should be a maximum duration for the proceedings of both the first and the
second instance. Only in exceptional cases should a prolonged duration be permis-
sible—as full-time judges hear the cases, the maximum duration of proceedings
should be shorter than in ad hoc cases.
22 The MIC determines its own jurisdiction. The personal and subject-matter juris-
diction of the MIC should for the most part derive from International Investment
Agreements (IIAs) that have allegedly been violated. The claimant and the respon-
dent must both have agreed to the jurisdiction of the MIC. In the case of the investor,
this agreement can be inferred from the submission of the claim itself. As for the
respondents, their agreement can derive from IIAs which explicitly provide for the
MIC’s jurisdiction; the MIC Statute may also stipulate its jurisdiction over already
existing investment treaties. Furthermore, the drafters of the MIC must decide
whether its jurisdiction extends to claimants who are not from MIC member states
and whether parties can establish the MIC’s jurisdiction ad hoc if neither the investor
nor the respondent is (from) an MIC member state. However, this should be rejected
if the rules on court fees are not adapted accordingly.
23 The MIC Statute could also stipulate rules excluding jurisdiction to prevent abuse
of process or treaty shopping.
24 The costs of proceedings shall be allocated to the parties depending on the
outcome of the case; however, MIC members should cover the permanent costs of
the court, as it would be difficult to allocate the costs to specific proceedings. Fixed
MIC fees could be increased to shift part of the financial burden to the parties. Small
and medium-sized enterprises and individual investors should not be deterred from
initiating justified cases before the MIC as a result of court fees.
1.4 Applicable Law of the MIC 5
Decisions should be in writing and fully reasoned to make them comprehensible 25

for future reviewers. If none of the parties appeal the decision, it can become binding
and enforceable.
An appeal should suspend the binding effect of a decision of a chamber of first 26
instance. The appeals chamber could review the facts as well as the legal reasoning
of decisions. Moreover, appeals chambers should have further competences in
addition to being able to annul decisions, for example on the grounds contained in
Article 52 of the ICSID Convention. It is generally preferable for the appeals
chamber to possess extensive investigative powers as opposed to remanding deci-
sions back to the chamber of first instance to decide again.
The judges of the second instance should also sit in chambers and an application 27
to have the proceedings before a plenary of judges should remain the exception.
The Statute should provide for the financing of procedural costs and legal aid. The 28
plenary organ or its members could later decide on details through secondary laws.
This secondary law could also regulate the admissibility of counterclaims, prelim-
inary injunctions and other interim relief as well as mass actions.
1.4 Applicable Law of the MIC
The substantive law of the MIC should be the applicable investment treaties and their 29
respective standards of protection. The presence of permanent judges will lead to
increased consistency in the application of these standards of protection and the MIC
Statute could also include pertinent provisions that require the judges to apply the
protection standards consistently. Additionally, the MIC Statute could contain an
instruction to take general principles of international law into account. An explicit
reference to the right to regulate could also be included in the MIC Statute.
Due to the special role of the Court of Justice of the European Union (CJEU) in 30
the union’s system of legal protection, EU law—with the exception of the MIC
statute and specific free trade and investment agreements and investment treaties of
the EU3—should not qualify as applicable substantive law of the MIC.
Through its plenary organ, the MIC could adopt its own procedural law. The MIC 31
statute may already provide for core procedural principles, such as the principles of
transparency, accelerated proceedings, public disclosure and efficiency, an inquisi-
torial model, rules on procedural costs and rules against abuse of process.
3
From an EU perspective, these investment treaties are an integral part of EU law.
1.5 Legal Remedies and Enforcement of MIC Decisions
32 The decisions of the MIC should be limited to declaratory findings of violations of

applicable IIAs and the award of damages or compensation.
33 As the MIC procedure is not a procedure covered by the ICSID Convention, the
enforcement mechanism of the ICSID Convention will not apply to MIC decisions.
34 Enforcement pursuant to the New York Convention would require that MIC
decisions embody arbitral awards as defined by this Convention. Although this
could be stipulated in the Statute (similar to Article 8.41(5) CETA), it is currently
unclear whether such a provision would be accepted as binding by the domestic
courts of the enforcement state, especially with respect to enforcement in
non-member states of the MIC. In light of the desire for legal certainty, the MIC
should have its own enforcement mechanism, which would be more effective with a
greater number of MIC member states.
35 One could also consider the establishment of a fund (enforcement fund) to which
all MIC members have to contribute and which could serve to expeditiously satisfy
final claims. Claims against the losing party arising from an MIC decision would be
subrogated to the fund. The fund or the MIC could then enforce these subrogated
claims against the party in arrears.
1.6 Establishment of a Standalone Multilateral Investment

Appellate Mechanism (MIAM)
36 Another, “smaller” solution would be the establishment of a MIAM. This would

entail a single-tier court system within a new independent international organisation.
37 The organs of the MIAM would be identical to those of the MIC. This is
particularly true for the judiciary and the plenary organ. The Secretariat might turn
out to be smaller than that of an MIC.
38 The applicable administrative and procedural law and the enforcement of MIAM
decisions could be designed similarly to what has been suggested for the MIC.
References
Brown CM (2017) A multilateral mechanism for the settlement of investment disputes. ICSID
Rev – FILJ 32:673–690
Calamita NJ (2017) The challenge of establishing a Multilateral Investment Tribunal at ICSID.
ICSID Rev – FILJ 32:611–624
Happ R, Wuschka S (2017) From the Jay Treaty Commissions towards a Multilateral Investment
Court: addressing the enforcement dilemma. Indian J Abbr Law 6:113–132
Hoffmeister F (2017) The EU contribution to the progressive development of institutional aspects in
international investment law. Revue Belge de Droit International 2:566–590
References 7
Howse R (2017) International investment law and arbitration: a conceptual framework. IILJ
Working Paper 2017/1
Kaufmann-Kohler G, Potestà M (2016) Can the Mauritius Convention serve as a model for the
reform of investor-state arbitration in connection with the introduction of a permanent invest-
ment tribunal or an appeal mechanism?
Kaufmann-Kohler G, Potestà M (2017) The composition of a Multilateral Investment Court and of
an appeal mechanism for investment awards
UNCTAD (2013) Reform of investor-state dispute settlement: in search of a roadmap. IIA Issues
Note No. 2, June 2013
Chapter 2
Introduction
In March 2018 the Council of the European Union (EU Council or Council) gave the 39
Commission of the EU (EU Commission or Commission) a mandate to negotiate a
Multilateral Investment Court (MIC). Furthermore, since 2017 the United Nations
Commission on International Trade Law (UNCITRAL) Working Group III is
discussing different options for the reform of Investor State Dispute Settlement
(ISDS). This report assesses both the option of a two-tiered MIC and of a Multilat-
eral Investment Appellate Mechanism (MIAM). Both models provide for a perma-
nent, pre-appointed judiciary according to rule of law standards. The structure of the
new dispute settlement mechanism should pursue the following objectives:
– procedures adhering to the rule of law,
– independence and neutrality of judges,
– publicly appointed judges,
– uniform interpretation of the law,
– efficient and expedient procedures,
– protecting states’ right to regulate,
– transparency,
– an appeal mechanism.
Fulfilling these objectives would satisfy both the rule of law requirements which
must be taken into account when formulating international legal protection and the
legitimacy criteria.1
The Commission is currently investigating the feasibility of an MIC due to the 40
modernisation of investment protection and the ISDS mechanism in the EU- Canada
Comprehensive Economic and Trade Agreement (CETA) and the EU Free Trade
Agreement with Vietnam (EU-Vietnam FTA).
1
Cf. for instance, Kastler (2017), p. 265.

10 2 Introduction
41 EU Commissioner Malmström mentioned the “Multilateral Court” for the first

time on 18 March 2015 in the Committee on International Trade (INTA Committee)
and at an informal meeting of the Council (Foreign Affairs) on 25 March 2015.2
Finally, UNCITRAL decided on 10 July 2017 to work on a reform of the investment
dispute settlement mechanism, including the possible establishment of an MIC.3
42 Since the first proposals in spring 2015, the discussion about an Investment Court
System (ICS) and multilateralisation has sparked an enormous debate.4 The Com-
mission presented the first basic structures of a bilateral investment court system in a
position paper in May 20155 and proposed this system to the United States of
America (US) in autumn 2015 in the context of the Transatlantic Trade and Invest-
ment Partnership (TTIP) negotiations.6 At the same time, the EU Commission
managed to successfully introduce this dispute settlement system into the CETA
negotiations with Canada as well as into the EU Free Trade Agreement with Vietnam
at a relatively late stage. This bilateral approach chosen by the Commission is also
seen as a test or pilot phase for a future multilateral system.7
43 In addition to the bilateral investment court systems introduced in CETA and the
EU-Vietnam FTA, it was stated in each case in the same wording that the parties to
the agreement intend to transfer the respective bilateral investment court system to a
multilateral system:
The Parties shall pursue with other trading partners the establishment of a multilateral
investment tribunal and appellate mechanism for the resolution of investment disputes.
Upon establishment of such a multilateral mechanism, the CETA Joint Committee shall
adopt a decision providing that investment disputes under this Section will be decided
pursuant to the multilateral mechanism and make appropriate transitional arrangements.8
44 A number of procedural elements have also been included in the relevant

agreements and in the Free Trade Agreement between the EU and the Republic of
Singapore (EU-Singapore FTA) in order to achieve greater transparency and to reject
clearly inadmissible or unjustified complaints at an early stage. The rule on cost
distribution states that the losing party has to bear the costs. These provisions already
constitute a number of innovative elements in investment protection in comparison
2
Malmström (2015): “However, I believe that we should aim for a court that goes beyond TTIP. A
multilateral court would be a more efficient use of resources and have more legitimacy. That makes
it a medium-term objective to be achieved in parallel to our negotiations with the United States. I
hope for Parliament’s support and advice as we try to achieve it.” Cf. in connection also European
Commission (2015), pp. 3 and 13; cf. previously already the proposals of Krajewski (2015) and the
French proposal, Vers un nouveau moyen de régler les différends entre États et investisseurs, May
2015; thereto Fouchard Papaefstratiou (2015).
3
Cf. http://trade.ec.europa.eu/doclib/docs/2017/july/tradoc_155744.pdf.
4
Cf. European Commission (2016a), Ghahremani and Prandzhev (2017), Blair (2017), Ambrose
and Naish (2017), Kaufmann-Kohler and Potestà (2016, 2017), Howse (2017), Happ and Wuschka
(2017), Hoffmeister (2017), Brown (2017) and Calamita (2017).
5
European Commission (2015).
6
Cf. under http://trade.ec.europa.eu/doclib/docs/2015/september/tradoc_153807.pdf.
7
Pauwelyn (2015).
8
Article 8.29 CETA, Establishment of a multilateral investment tribunal and appellate mechanism;
Article 15 Section 3 Trade in Services, Investment and E-Commerce EU-Vietnam FTA.
2 Introduction 11
to the existing agreements of the EU Member States, as well as to almost all other
existing agreements.
The European Parliament “shares the ambition of establishing, in the medium 45
term, a multilateral solution to investment disputes.”9 Thus, in its resolution on the
TTIP negotiations in 2015, the Parliament recommended the following:
to ensure [. . .] to replace the ISDS system with a new system for resolving disputes between
investors and states which is subject to democratic principles and scrutiny, where potential
cases are treated in a transparent manner by publicly appointed, independent professional
judges in public hearings and which includes an appellate mechanism, where consistency of
judicial decisions is ensured, the jurisdiction of courts of the EU and of the Member States is
respected, and where private interests cannot undermine public policy objectives10
This feasibility study aims to illustrate options for the organizational and proce- 46
dural design of an MIC. For the specific design of this new system, the requirements
of Article 21 of the Treaty on European Union (TEU) are a decisive prerequisite
from the EU’s perspective.11 Accordingly, this provision already indicates that the
EU shall plead primarily for multilateral solutions. At the same time, it stresses the
particular importance of complying with the EU’s rule of law principle.12 In light of
these rule of law considerations, procedural equality of arms should be ensured.13
For example, the G20 Guiding Principles for Global Investment Policymaking also
provide that “dispute settlement procedures should be fair, open and transparent,
with appropriate safeguards to prevent abuse.”14 In various papers,15 the Council of
Europe has developed basic requirements concerning the rule of law for judicial
systems, which must be duly respected while designing the MIC.
9
European Parliament resolution (2016), para. 68.
10
European Parliament resolution (2015), para. 2.d)xv).
11
The significance and compulsory consideration of Article 21 TEU was last emphasised again by
the Court of Justice of the European Union (CJEU) in its Singapore opinion. Cf. CJEU, Opinion
2/15, Singapore FTA, ECLI:EU:C:2017:376, para. 142 et seq.: “One of the features of this
development is the rule laid down in the second sentence of Article 207(1) TFEU that ‘the common
commercial policy shall be conducted in the context of the principles and objectives of the Union’s
external action’. Those principles and objectives are specified in Article 21(1) and (2) TEU [. . .].
The obligation of the European Union to integrate those objectives and principles into the conduct
of its common commercial policy in apparent from the second sentence of Article 207(1) TFEU
read in conjunction with Article 21(3) TEU and Article 205 TFEU.”
12
Thereto in general, Schröder (2016) and Bungenberg and Hazarika (2018).
13
On the aspect of “equality of arms” as an aspect of the rule of law, cf. Fleiner and Basta Fleiner
(2004), p. 250; hereto also for example the jurisprudence on Article 6 European Convention on
Human Rights (ECHR), cf. European Court of Human Rights (ECtHR), No. 2689/65, Del-court
v. Belgium; ECtHR, No. 8562/79, Feldbrugge v. the Netherlands; ECtHR, No. 14448/88, Dombo
Beheer B.V. v. the Netherlands; ECtHR, No. 17358/90, Bulut v. Austria; ECtHR, No. 13645/05,
Ko-kelvisserij e.a. v. the Netherlands; thereto in the literature Safferling (2004), p. 181 et seqq.;
Grabenwarter and Struth (2015), Article 6, para. 46 et seqq.
14
G20 Guiding Principles for Global Investment Policymaking, July 2016, para. III: “Dispute
settlement procedures should be fair, open and transparent, with appropriate safeguards to prevent
abuse.”
15
Cf. for instance Council of Europe (2014, 2016).
12 2 Introduction
47 This study discusses the option of a two-tiered system as well as a multilateral

system of appeals. Both options bring ISDS in line with constitutional requirements
of the rule of law and the protection of fundamental rights.16 The views and positions
on these proposed systems of other entities with international legal personality as
well as of third countries are being taken into consideration. In the long term, setting
up an MIC may also require convincing ‘heavyweights’ in the area of protection of
foreign investment such as China or the US, in addition to the EU and its current
28 Member States including their respective International Investment Agreement
(IIA) networks, of the advantages of such a system. Canada has already committed
itself in this respect.
48 The two-tiered solution and the mere appellate mechanism discussed below are
both different models of a multilateral approach.
References
Ambrose H, Naish V (2017) An investment court system or an appeals mechanism? The EU’s 2017
consultation on multilateral reform of ISDS. Arbitration Blog of 15.2.2017
Blair C (2017) A global investment court for a changing era of trade. Financial Times of 24.1.2017
Brown CM (2017) A multilateral mechanism for the settlement of investment disputes. ICSID Rev –
FILJ 32:673–690
Bungenberg M, Hazarika A (2018) Rule of law in the EU legal order, forthcoming
Calamita NJ (2017) The challenge of establishing a Multilateral Investment Tribunal at ICSID.
ICSID Rev – FILJ 32:611–624
Council of Europe (2014) Consultative Council of European Judges (CCJE), the evaluation of
judges’ work, the quality of justice and respect for judicial independence. Opinion
No. 17 (2014) of 24.10.2014
Council of Europe (2016) Consultative Council of European Judges (CCJE), the role of court
presidents. Opinion No. 19 (2016) of 10.11.2016
European Commission (2015) Concept paper – investment in TTIP and beyond – the path for
reform, May 2015
European Commission (2016a) A future multilateral investment court. Factsheet of 13.12.2016
European Commission (2016b) The multilateral investment court project. News of 21.12.2016.
http://trade.ec.europa.eu/doclib/press/index.cfm?id¼1608
European Parliament (2015) Resolution of 8.7.2015 containing the European Parliament’s recom-
mendations to the European Commission on the negotiations for the Transatlantic Trade and
Investment Partnership (TTIP), 2014/2228(INI)), P8_TA(2015)0252
European Parliament (2016) A new forward-looking and innovative future strategy for trade and
investment, resolution of 5.7.2016, P8_TA-PROV(2016)0299
Fleiner T, Basta Fleiner L (2004) Allgemeine Staatslehre, Über die konstitutionelle Demokratie in
einer multikulturellen globalisierten Welt. Springer-Verlag, Heidelberg
Fouchard Papaefstratiou A (2015) TTIP: the French proposal for a permanent European Court for
investment arbitration. Kluwer Arbitration Blog of 22.7.2015
Ghahremani S, Prandzhev I (2017) Multilateral investment court: a realistic approach to achieve
coherence and consistency in international investment law? EFILA Blog of 14.3.2017
16
Schill (2015), p. 8.
References 13
Grabenwarter C, Struth K (2015) § 6 Justiz- und Verfahrensgrundrechte. In: Ehlers D

(ed) Europäische Grundrechte und Grundfreiheiten, 4th edn. De Gruyter, Berlin, pp 198–238
Happ R, Wuschka S (2017) From the Jay treaty Commissions towards a multilateral Investment
Court: addressing the enforcement dilemma. Indian J Abbr Law 6:113–132
Hoffmeister F (2017) The EU contribution to the progressive development of institutional aspects in
international investment law. Revue Belge de Droit International 2:566–590
Howse R (2017) International investment law and arbitration: a conceptual framework. IILJ
Working Paper 2017/1
Kastler HA (2017) Föderaler Rechtsschutz: Personenbezogene Daten in einem Raum der Freiheit.
Springer-Verlag, Heidelberg
Kaufmann-Kohler G, Potestà M (2016) Can the Mauritius Convention serve as a model for the
reform of investor-State arbitration in connection with the introduction of a permanent invest-
ment tribunal or an appeal mechanism?
Kaufmann-Kohler G, Potestà M (2017) The composition of a Multilateral Investment Court and of
an appeal mechanism for investment awards
Krajewski M (2015) Modell-Investitionsschutzvertrag mit Investor-Staat-Schiedsverfahren für
Industriestaaten unter Berücksichtigung der USA. Bundesministerium für Wirtschaft und
Energie
Malmström C (2015) Speech: remarks at the European Parliament on Investment in TTIP of
18.3.2015. http://trade.ec.europa.eu/doclib/docs/2015/march/tradoc_153258.pdf
Pauwelyn J (2015) Why the US should support the EU Proposal for an “Investment Court System”.
Georgetown Journal of International Law Online of 24.11.2015
Safferling C (2004) Audiatur et altera pars – die prozessuale Waffengleichheit als Prozessprinzip?
Neue Zeitschrift für Strafrecht 24(4):181–188
Schill S (2015) Reforming Investor-State Dispute Settlement (ISDS): conceptual framework and
options for the way forward, E15 Initiative. International Centre for Trade and Sustainable
Development, Geneva
Schröder W (ed) (2016) About strengthening the rule of law in Europe, from a common concept to
mechanisms of implementation. Hart Publishing, Oxford
Chapter 3
Targets for the Reorganisation
of the Investment Protection Regime
A reorganisation of the investment protection regime by introducing a two-tiered 49

court system or a multilateral appellate body could offer advantages in comparison to
the current system. In a first step, the expected positive effects of the new approach
are discussed. In a second step, the two options of a two-tiered MIC and a MIAM are
compared based on the outcomes of the previous discussion.
3.1 Positive Effects of a New Approach
Depending on the design of the system, it appears possible through enhanced 50

institutionalisation1 to achieve greater consistency of decisions, to reinforce the
independence and neutrality of adjudicators, to improve expedience of investment
disputes, to limit costs for the parties involved, to ensure more accessibility for Small
and Medium Enterprises (SMEs) and finally, to offer greater transparency than in
current ISDS. These aspects are also related to the increased emphasis on the rule of
law—according to Articles 2 and 21 TEU.
An international investment court system, in the sense of a permanent institu- 51
tional court, can facilitate streamlined procedures through its efficient organisation.
The organs of the court may deliver summons, execute the serving of documents and
offer its premises for negotiations and translation services, including simultaneous
interpretation. This can also reduce procedural problems which may occur if, for
example, the parties prefer not to make use of the services of the International Centre
for Settlement of Investment Disputes (ICSID) Secretariat, the International Crim-
inal Court or the Permanent Court of Arbitration (PCA). In addition, the MIC
proposed here can provide its own procedural rules, adapted to the specific needs
1
Hereto in particular Schill (2015).

16 3 Targets for the Reorganisation of the Investment Protection Regime
of the disputes, and can envisage its own mechanism for the implementation
(recognition and enforcement) of its decisions.
3.1.1 Consistency of Decisions
52 Nowadays, a large number of arbitral awards are publicly available and they
facilitate the interpretation of individual clauses of investment protection treaties in
future cases.2 These awards are often said to be inconsistent—even in cases with
identical facts.3 Even substantive protection standards with nearly identical wording
have been interpreted in a contradictory manner in individual cases,4 such as the
applicability of the most-favored nation clause to procedural provisions in other IIAs
of the host state,5 the scope of so-called umbrella clauses6 or the attribution of
umbrella clauses,7 but also rules of procedure, like the possibility of a waiver of
rights.8 At the same time, however, it is noteworthy that a consistent application of
many substantive as well as procedural investment law standards has evolved. This
is remarkable considering the lack of binding precedence of arbitral awards, the
absence of review through an appeal mechanism and the diverging compositions of
the benches of arbitral tribunals. What is clear is that a smaller group of judges, as
well as an appeals mechanism can help to prevent inconsistent decisions. In fact, a
standing court with a permanent pool of judges can lead to a higher degree of
jurisprudential consistency, even without binding precedence. In any event, binding
precedence could not be based on inconsistent interpretations of or diverging
substantive law.
53 Proper consistency of judicial decisions can only be achieved if a
multilateralisation of the substantive law, as the basis of the decisions, has also
been implemented. Nevertheless, the presence of permanent judges as well as a
2
Publications of decisions and the status of individual proceedings on the ICSID website, https://
icsid.worldbank.org/apps/ICSIDWEB/cases/Pages/AdvancedSearch.aspx.
3
Cf. for instance CME v. Czech Republic and Lauder v. Czech Republic; see thereto Carver (2004),
p. 23 et seqq.
4
Cf. thereto in detail Griebel and Kim (2007), p. 188 et seqq.
5
On the application of the most-favoured nation (MFN) clause to dispute settlement agreements,
cf. Maffezini-decision on the one hand and Plama v. Bulgaria on the other hand; thereto Schill
(2016), p. 251 et seqq.; Gaillard (2005); Douglas (2011), p. 97; Maupin (2011), p. 157; Paparinskis
(2011), p. 14 et seqq.
6
Cf. thereto SGS v. Pakistan, ICSID Case No. ARB/01/13 and SGS v. Philippines, ICSID Case
No. ARB/02/6; thereto also Alexandrov (2004), p. 555 et seqq.; Chung (2007), p. 961 et seqq.;
Schreuer (2004), p. 231 et seqq.; Sinclair (2004), p. 411 et seqq.; Wälde (2005), p. 183 et seqq.
7
See thereto in particular Noble Ventures v. Romania, ICSID Case No. ARB/01/11.
8
Cf. thereto for instance SGS v. Philippines, ICSID Case No. ARB/02/6 on the one hand and
LANCO v. Argentina, ICSID Case No. ARB/97/6 on the other hand.
3.1 Positive Effects of a New Approach 17
consultation mechanism between judges of different chambers can prevent contra-

dictory decisions (see para. 119 et seqq.).
3.1.2 Greater Legitimacy
The current discussion also invokes the question of sufficient legitimacy and control 54
of international dispute resolution. Without engaging in the discussion as to whether
this criticism is justified,9 it is said that judges can enjoy a high degree of legitimacy
at international courts if they have passed a predetermined selection process and
have ultimately been elected or confirmed by states.10 Therefore, guidelines, in
particular those of the Council of Europe, should play a special role when designing
a new institution.11 This would add to the legitimacy of the judges through the
selection process in addition to the legitimacy derived from the international treaty
on which the dispute settlement is based.
3.1.3 Independence and Neutrality of Judges
Arbitrators have recently been repeatedly accused of a lack of independence and 55

neutrality12 since they are at least partly appointed by private claimants and some-
times act as legal counsel in other proceedings.13 In addition, they are often accused
of showing an investor-friendly attitude.14 The validity of the latter point has not
been proven empirically.15 Furthermore, the generally applicable International Bar
Association (IBA) Guidelines on Conflicts of Interest in International Arbitration16
set relatively high standards for the independence and impartiality of arbitrators.
Notwithstanding these guidelines, these concerns could be further diminished by
reforms if judges are appointed by states in advance, independent of a specific
9
Cf. thereto inter alia Steinbach (2016), p. 1 et seqq.
10
See for instance von Bogdandy and Krenn (2015), p. 420; von Bogdandy and Venzke (2012),
p. 32 et seqq.
11
Parliamentary Assembly of the Council of Europe, Committee on the Election of Judges to the
European Court of Human Rights, Procedure for electing judges to the European Court of Human
Rights, Information document prepared by the Secretariat of 21.2.2017, AS/Cdh/Inf(2017)rev3.
12
Cf. UNCTAD (2013), p. 4; Eberhardt (2014), p. 3; Schill (2017), p. 2.
13
Cf. UNCTAD (2013), p. 4; Paulsson (2010), p. 339 et seqq.
14
Cf. van Harten (2010), pp. 441, 445; Brower and Schill (2009), p. 489: “arbitrators ‘will be
influence[d] by their self interest in reappointed in future cases’.”
15
Wuschka (2015); Franck (2009), p. 435 et seqq.
16
IBA Guidelines on Conflicts of Interest in International Arbitration, Resolution of the Interna-
tional Bar Association Council of 23.10.2014.
18 3 Targets for the Reorganisation of the Investment Protection Regime
dispute, and for a long period of time. It is generally acknowledged that a permanent
court with permanent judges would strengthen independence and neutrality.17
3.1.4 Lack of a Control Mechanism
56 In connection with the independence of the arbitrators, the problem of a non-existent

or very limited control mechanism is often mentioned,18 which can lead to the
above-mentioned inconsistent jurisprudence and lack of control by certain stake-
holders. Formally, an appellate body can review erroneous or questionable decisions
on procedural or substantive aspects of a case. The mere possibility of such a review
would presumably increase the legitimacy of decisions in ISDS.
3.1.5 Cost Efficiency
57 International arbitration proceedings may lead to considerable costs. According to

the Organisation for Economic Cooperation and Development (OECD), the average
total procedural costs (including legal counsel costs) are around USD 8 million per
case.19 Besides the procedural costs in the sense of the term defined in arbitration
law, such as costs for the arbitrators, interpreters and secretariats, legal fees and other
costs accrued for the representation of the parties, there are also other costs for legal
experts and other experts for the calculation of damages. In current arbitration
practice, tribunals are hesitant to order a full assumption of these costs by the losing
party.20
58 In spite of an increase in arbitration proceedings, investor-state arbitration is not
an everyday instrument for redressing violations of investment law due to the high
costs of the procedures. SMEs in particular have problems to cover the costs of
investor-state arbitration. In addition, they cannot rely on compensation of their
expenses for the arbitration even if they win the case.
59 Apart from financial risks for the plaintiffs, the high costs are also an enormous
burden for developing countries. Accordingly, it is argued that states have to bear
high costs for their defense, which can lead to a regulatory chill even in the event that
they win the case. Therefore as a starting point and in the interest of a more efficient
and cost-effective procedure, the establishment of an Advisory Center should be
considered. This could serve to curtail legal fees, lead to a limitation by the judges of
17
Cf. van Harten (2008), p. 21 et seqq.
18
Hueckel (2012), p. 611; Chung (2007), p. 967 et seqq.; UNCTAD (2013), p. 3 et seq.
19
Gaukrodger and Gordon (2012), p. 19.
20
Hodgson (2015), p. 749 et seqq.
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CHAPTER VIII.
HOW THE TRAGEDY BEGAN.
Most of the young people in this pretty and aristocratic

neighborhood of Leeholme were children together. Sir Ronald Alden
could not have remembered when he first saw Clarice Severn or
Lady Hermione, the two beautiful women with whom his life was to
be so strangely interwoven.
He had dim recollections of children’s balls and parties, of picnics
in the woods and rows on the river. At that time he loved Lady
Hermione best. Clarice was, perhaps, more beautiful, a little prouder,
and certainly wore the prettiest dresses.
Clarice, too, had a fashion of extorting homage; Hermione
laughed at it. There was perfect freedom in their intercourse in those
days.
“I shall not call you Lady Hermione,” Ronald would say; “that
would be nonsense, you know, because you are going to be my
wife.”
And the childish face raised to his would brighten with smiles and
dimples.
“You will have to go on your knees to ask me; I shall not marry
the first boy who chooses to say I am to be his wife.”
“But you have said you love me, Hermione, and I shall make you
remember those words when you have grown up. I shall be a big
man then, and I shall try and be so clever that you will be proud to
know me.”
“We shall see when the time comes,” replied Lady Hermione.
“Papa says boys are fond of boasting.”
“The Aldens have no need to boast,” said the boy, proudly;
“history boasts for them.”
She gave a little mocking smile and tripped away. He loved her
all the better for her pretty, piquant, teasing ways. When driven to
desperation by her coquetry, he sought refuge with Clarice, who
never, even then, child as she was, turned a deaf ear to him. But no
matter how assiduous were his attentions he could never succeed in
making his young ladylove jealous; in the course of half an hour he
usually repented of his infidelity and returned to Lady Hermione.
The time came when the childish warfare was ended; the young
ladies went to school, Ronald to college, and when he left Oxford his
uncle took him abroad.
Uncle and nephew seemed to enjoy their trip very much, for the
one year was prolonged into three, and Sir Leonard would not have
returned then but that his health failed. A few months after they
came back Sir Leonard died and his nephew succeeded him.
Owing to his uncle’s illness and death the young heir saw nothing
for some time of his neighbors. When the mourning was over and
Aldenmere was once more thrown open to visitors, he began to look
around him. It was some years since he had seen his little child-wife,
and he wondered often what she was like.
“Is she charming, as she was—as teasing, as loving, as piquant,
half woman, half fairy? I must go and see.”
So one May morning Sir Ronald rode off to Leeholme Park. It will
be one of the last dreams of his life, the sight he saw that morning.
He was ushered into the drawing-room at Leeholme where Lord and
Lady Lorriston welcomed him warmly. After some very pleasant
conversation with them he inquired after his old playfellows.
“Though,” he added, with a smile, “I should not apply such a title
to Lady Hermione.”
“I am afraid she had her own way too much in those days,” said
Lady Lorriston.
“She has it a thousand times more now,” said the earl. “Do not
believe anything you hear to the contrary.”
“I am sure you will like to see Hermione, Sir Ronald,” said Lady
Lorriston. “You knew Miss Severn, too; she is spending the day with
us. Will you come with me? They are in the garden.”
“Nothing,” said Sir Ronald, “would give me more pleasure.”
So they passed out of the long drawing-room windows and went
through the beautiful grove of flowering chestnuts that led to the
garden. The sun was shining so brightly and the birds singing, a
thousand flowers were in bloom, a lark sang overhead. Sir Ronald’s
heart beat high with happiness and expectation.
Suddenly he heard a clear, sweet voice say:
“You are mistaken, Clarice; I will see what the marguerite says—
He loves me, he loves me not. There, you see, he loves me not; if he
did, it would be utterly useless.”
Another voice interposed: “You are always willful, Hermione; I tell
you Kenelm Eyrle does.”
But here Lady Lorriston interposed.
“This is not fair,” she said, “we can hear them, they cannot see
us, and we shall hear all their secrets.”
Sir Ronald looked round and saw a thicket of roses, behind which
was a summer-house of green trellis work. The sun shone full upon it
and upon the loveliest picture that poet or painter ever dreamed.
Two young girls sat there; one was bending forward with an
anxious expression on her face; the other, with a smile, held the
ruined marguerite in her hand.
Both had fair hair, both were fair of face, and yet there was a
wonderful difference between them. Clarice Severn had a proud,
passionate beauty all her own. Lady Hermione’s face was arch,
piquant, spiritual, and everything else, by turns. They both started
when Lady Lorriston and Sir Ronald entered the arbor. Clarice
Severn’s face flushed hotly, then grew pale. Lady Hermione looked
very serious for one moment, then she held out her hand.
“I cannot pretend not to know you, Sir Ronald,” she said, “my old
opponent. I am glad to see you once again.”
“I will not be called your opponent,” he said, holding the little hand
in his. “I was always your devoted slave and adorer.”
“Then slaves must dispute a great deal, if you were a fair
specimen, Sir Ronald. You remember Clarice, I mean Miss Severn.
Mamma, you are going to remind me that we are all grown up, and
must be proper; I shall not forget.”
“You have changed, Miss Severn, more than Lady Hermione
has,” he said.
“That means, Clarice, that you have improved, and I have not.”
Yet, while she was speaking defiantly, she was looking earnestly at
him. How handsome he was—he was no curled and perfumed
darling—but with the beauty that descends from long generations.
She remembered the mouth that she had thought more beautiful
than that of a Greek god; and suddenly her face burned, as she
remembered how often he had kissed her and called her his little
wife.
Lady Lorriston was summoned to attend to some other visitors.
She went away, leaving the three in the summer-house among the
roses.
“How beautiful this is,” said Sir Ronald; “how happy I am to be at
home again. There is no land so fair and dear as old England. I can
hardly realize the change that has come over us all; we parted
children and we meet——”
“As children of a larger growth,” interposed Lady Hermione.
“I dared not have said so,” laughed Sir Ronald. “Miss Severn, I
am grieved that I have not been able to call upon your mother yet. I
shall try to do so to-morrow.”
The girl’s face flushed with pleasure when he spoke to her.
Suddenly there came a stronger breath of wind that shook the
chestnut trees and rustled in the limes. Lady Hermione looked up as
one who hears and loves a familiar sound.
“I wonder,” she said, “how I wonder what it is the trees are always
saying to each other! Look at those tall heads bent mysteriously
together, every leaf trembling with the importance of what it is
saying. Just outside Leeholme there are two tall oak trees that have
stood for centuries. They always seem to me to be talking of what
has passed in the village, and lamenting together that the world has
changed so terribly since they were young.”
Sir Ronald looked into the lovely, glowing face.
“You have as many sweet fancies as ever,” he said, eagerly. “I
always told you you had the gift of poetry.”
“The pity is,” said Clarice Severn, “that poetry and common
sense so often clash. What reason is there in talking trees?”
“Ah, Miss Severn,” said Sir Ronald, gayly, “some of the sweetest
things in life are those that have no reason in them.”
That was how and when the tragedy began.
CHAPTER IX.
KENELM EYRLE’S LOVE.
Sir Ronald sang those words to himself as he rode back home,

the face of Lady Hermione before him all the way, her voice in his
ears, the glad sunshine, the whispering leaves, the fragrant flowers,
all seemed part of her.
“The poet’s ideal woman, she is, indeed,” he said to himself; “she
has brought every charming quality of her childhood into her
beautiful womanhood. She is arch, dainty, piquant, tender, earnest;
there are grand qualities in her. Sure as her eyes are stars and her
lips roses, so sure has she a magnificent and noble nature but half
developed yet.”
The very glamor and madness of love was on him. It seemed to
him that every leaf on the trees muttered her sweet name as he
passed.
“Hermione,” he repeated it. “Perhaps her beautiful, varied, lovely
nature is owing to her name, of all Shakespeare’s heroines to my
mind fairest and best.”
He hardly remembered the existence of Clarice Severn; she was
but Hermione’s friend. He did not even remember her delight at
seeing him again. The proud, passionate beauty of her face had not
moved him.
“Strange that I should have loved Hermione best even as a child.
I wish she were a child now, that I could hold her in my arms and
kiss her and call her my own wife.”
It was love, not exactly at first sight, for he had cared for her even
when she was a child, but in the engrossing pursuits of traveling, in
the excitement caused by his uncle’s illness and death, the image of
the charming child had, in some measure, faded from his mind.
When he saw her again the old love revived, and took fresh shape. It
was no longer as a child, but as a woman, that he worshiped her.
When Sir Ronald reached home he found an old friend there
awaiting him, Kenelm Eyrle, of The Towers, with whom he had been
both at Eton and Oxford.
They had been almost like brothers together, coming from the
same neighborhood and knowing the same people, having the same
friends, and, in a great measure, the same tastes. One might have
traveled far on a summer’s day and not have found a fairer-looking,
more thoroughly admirable man than Kenelm Eyrle. He was three
years older than his friend, and had traveled much. He united in
himself the polish of a foreigner with the candor of an Englishman.
I do not know that he was so popular as Sir Ronald, for Kenelm
had a kind of half-haughty grace with him that produced great effect.
People at first sight considered him proud and haughty; they were
apt to take away with them a somewhat disagreeable and untruthful
impression of him; but if in the hour of distress you needed a friend,
if in adversity you needed help, if in trouble you wanted succor, then
the value of Kenelm Eyrle’s sterling character came to light. He was
always, as an old soldier expressed it, to the front. Others might fail;
he never did.
And now the two friends, who had parted youths, met as men,
with a hearty clasp of the hand, an Englishman’s only way of
expressing delight and emotion.
“I only returned from Egypt last week,” said Kenelm. “A sudden
fancy to see the pyramids took possession of me, and I went.”
Sir Ronald laughed.
“I hope such a fancy will never take possession of me,” he said. “I
shall not leave England again. I find no place like it.”
“The dark-eyed daughters of sunny Spain do not charm you,
then, Ronald?”
His face flushed slightly.
“No,” he replied; “I like the women of our own land best.”
“You have seen Miss Severn. What do you think of her?”
“She is very beautiful—wonderfully improved,” replied Sir Ronald;
and the great pity was that they did not there and then trust each
other. Sir Ronald took the idea that Kenelm was in love with Lady
Hermione; Kenelm believed his friend to be in love with Miss Severn.
One word more, and our story can resume its course. There was
yet another link in the chain.
Clarice Severn had always preferred Sir Ronald to every one else
in the wide world. In her girlhood she had mistaken his kindness for
love. Now that she was a woman she vowed to herself that that love
should by some means or other be hers. She was no tragedy queen,
no woman capable of poisoning or stabbing or drowning a rival,
should one appear; but in a world-scheming kind of way she was
ready to do anything that would secure his love for herself.
On the morning that she met him at Lord Lorriston’s, Clarice
admired him as much as he, in his turn, admired Lady Hermione.
She saw that Sir Ronald was inclined to admire the earl’s daughter,
and she laid many little plans in her own mind to keep them apart.
“I am more beautiful than Hermione,” she thought to herself, in all
probability; “richer, quite as well born. Why should he prefer her to
me?”
And why? How many thousands of girls have asked themselves
that question? Why, when Clarice loved him, should his whole heart,
soul, mind and fancy be concentrated upon another?
Clarice Severn had many admirers, but the man who loved her
with a life’s love was Kenelm Eyrle. He had made her an offer of
marriage and she refused him; he had told her that living or dead he
should be true to her and care for her alone. She had never flirted or
coquetted with him; she was fond of him from old associations,
because for years he had been kind to her, but she had never
deceived him in the least.
Now that Sir Ronald was coming home, she has begun to wonder
how she should best avoid Kenelm.
“I remember Ronald’s chivalrous sense of honor,” she said to
herself. “No matter how much he might care for me, if he thought
Kenelm loved me he would shun and avoid me.”
She did her best to bring Kenelm and Lady Hermione into each
other’s society. She arranged picnics, drives, walks; she
exaggerated and repeated every little complimentary speech they
ever made about each other, but it was all in vain. Kenelm Eyrle
used to laugh in her face.
“Oh, Clarice, you think I shall learn to care for Hermione,” he
would say. “As well try to make the needle false to the pole. I care for
one face only, and that is yours; for one love only, and that is you.”
Nor was she more successful with Lady Hermione, who
laughingly refused to believe that Kenelm cared for her at all, and
pulled marguerites apart, leaf by leaf, the last one always ending,
“He loves me not.”
“There was a man once who sold his shadow,” said Mr. Eyrle to
her one day. “That was a much easier feat, Clarice, than for you to
send me from you. You cannot, darling! Do not look at me and tell
me you may die. If you did I should always live where I could see
your grave, and I should love the grass upon it better than the fairest
color that ever bloomed on another face. Do you believe me?”
“Yes,” she replied, half sadly; “I do believe you, Kenelm. I—I wish
it were not so.”
And the beautiful girl had looked at him half regretfully.
“I almost wish I did; but you have explained the reason yourself. If
for every one there is what the Germans call an alter ego, another
soul—ah, Kenelm, I do not wish to hurt you—but you are not that to
me. It is not my fault.”
He looked long and earnestly at her.
“No,” he said; “God help me. It is not your fault, Clarice; but I shall
hope on until you tell me that you love some one else.”
CHAPTER X.
SIR RONALD’S ERROR.
Perhaps if any man or woman were asked if they were willing to

tell a lie they would most indignantly deny it. Perhaps most people,
even though they be guilty of some trifling act of deceit or insincerity
that can hardly merit a harsher name, would shrink with horror from
an actual lie.
Clarice Severn bore the reputation of being very truthful. It would
be right to say that she had never deliberately soiled her lips with a
willful lie. Little social deceits pass by another name; but there was
no doubt that she acted falsehoods. She did all in her power to lead
Sir Ronald to believe that Kenelm Eyrle and Lady Hermione were
attached to each other. She remembered of old Sir Ronald’s keen,
passionate sense of honor, how scrupulously he always avoided any
interference with what he believed belonged to another. She knew
that if he thought Kenelm loved Lady Hermione he would avoid her.
It was but a feeble chance, yet it was her only one, for she could
not disguise from herself that Sir Ronald began to show every sign of
deepest interest in Lord Lorriston’s daughter.
Like a mountain torrent her love grew in its force and vehemence;
that which opposed it only added to its strength. It was resistless,
hurrying her along, with its impulsive, irresistible current; yet do not
let her character be misunderstood. She was not capable of anything
that the world calls unladylike or wrong; she was not capable of
anything unwomanly or forward; that which she wished to win must
be won by most gentle means.
There was a picnic in the Lorriston Woods, a species of summer
entertainment in which Lady Lorriston took great delight. Near to the
keeper’s cottage there was a large, open space of smooth, green
grass. Lady Hermione had named it the Fairy Ring, and it never lost
the appellation.
All the young people in the neighborhood were there. Sir Ronald
thought he had never seen Lady Hermione look so lovely. She never
dressed in accordance with the dictates of fashion. “She always
looked like a picture.” Higher praise could not be given to any
woman.
On this, the day of the picnic, she wore a dress of white, shining
material, on which the sunbeams gleamed like gold, made full, so
that it fell in flowing folds, and gathered round the white neck. For all
ornament she wore a band of black velvet round her white throat, to
which was fastened a diamond cross. Her golden hair, in all its
waving, luxuriant abundance, lay in beautiful waves, and the graceful
head was crowned with a coquettish little hat with a white plume.
A perfect contrast to Clarice, though both were fair. Miss Severn
liked magnificence, and her favorite color was blue. On this day she
wore a dress of rich blue velvet and a white lace mantle. They
generally divided the honors fairly between them. Miss Severn was
more easily understood than Lady Hermione. It was not every one
who knew the tenderness, the heroism, the poetry hidden beneath
the gay, graceful manner. Sir Ronald did.
Lady Hermione could have led a forlorn hope. She would prove
to be a heroine, if ever occasion required it, easily as she now
dances and sings. Many women have their virtues on the surface;
hers were half hidden by lighter charms.
On this bright summer day, when the woods were all aglow with
beauty, and the birds filled the air with song, Sir Ronald had almost
determined to tell Lady Hermione how dearly he loved her.
“I must see if my queen be propitious,” he said. “In some moods
all wooing would be useless. I know how difficult it will be; she will be
like some beautiful, strange, bright forest bird that is difficult to
catch.”
He was not well versed in the lore of woman’s looks, or he would
have read the story told by those sweet, frank eyes, that never met
his own, and the fair face turned so coyly away.
When Lady Hermione talked to any one else she was not sparing
of her glances, she was not sparing of her bright, defiant words; but
with Sir Ronald it was different. She used only monosyllables, and
those only when it was necessary. A man better read in woman’s
ways would have understood; he did not.
He had looked forward to the picnic with great pleasure.
“We shall be free and easy in the woods,” he thought; “she will
not escape me there.”
He asked her for the first dance—she was engaged.
“I do not care about a quadrille,” he said, “but I should like a waltz
with you, Lady Hermione.”
She knew in her mind there was nothing she would like so much
as a waltz with him; but the natural perversity innate in women came
to her now. She looked up at the handsome face, so eloquent with
love, the eyes with a love-light shining in them, and she owned to
herself that it would be pleasant to have that strong arm thrown
around her, and to float with him through fairyland. He looked so tall,
so strong, so brave and handsome. Then, to punish herself for the
thought, and perhaps with the same delight a cat takes in torturing a
mouse, she cast down her eyes and said she was engaged, she
feared, for all the waltzes she should be able to dance.
He was forced to be content with the quadrille. Half an hour
afterward, lingering under the spreading shade of an oak tree, he
saw Miss Severn. Sir Ronald hastened to her. The music was
enchanting.
“How can you stand here so quietly, Miss Severn?” he asked.
“That music would put a soul even in the leaves of a tree.”
She looked at him with a bright smile.
“The truth is, Sir Ronald, I am forsaken; my partner has forgotten
me.”
She looked, still with smiling eyes, to a little group in the small
glade—Lady Hermione and Kenelm Eyrle. She would not have told
the lie; but her eyes said plainly Kenelm was her partner, and had
forgotten her in Lady Hermione’s smiles—a fact that was perfectly
untrue, for she was engaged to dance with Captain Langham, who
had not forgotten her, but had been suddenly summoned to another
part of the grounds.
The impression on Sir Ronald’s mind remained the same. He
believed Lady Hermione and Kenelm to be so deeply engrossed in
each other as to forget everything else; the consequence of which
belief was that he resolved to delay the question he had intended to
ask her.
“If Kenelm loves her I will not mar his happiness,” he said to
himself, “and yet it seemed to me he liked Miss Severn far the best.”
He remained with Clarice, who rejoiced in the success of her
small maneuver. After all, she thought, she had really done no
wrong; she had only looked at Mr. Eyrle, and if Sir Ronald chose to
misunderstand that look, he must do so—she could not help it.
So easily are misunderstandings brought about. The beauty of
that bright summer’s day was all marred for Sir Ronald, because he
thought his friend loved the girl whom he himself loved. He did not
go near her again until the day was almost ended; and then Lady
Hermione in her turn was piqued and would not give him one smile.
Before they parted Lady Lorriston had told Sir Ronald that her
daughter’s birthday was on the Wednesday following, and, as it was
always kept up with great festivity, she pressed him to spend three
days at least at Leeholme Park.
“If you are fond of charades,” she said, “you will be amused, for
we really get up some very good ones.”
Sir Ronald was only too delighted, and another act in the tragedy
began.
CHAPTER XI.
CHARADES.
The drawing-room at Leeholme was filled with a brilliant party of

guests. It was the eve of Lady Hermione’s birthday, and they were
invited to do her honor.
All the élite of the country were present, for though Clarice
Severn was perhaps more beautiful, no one was so dearly loved as
the charming, gifted daughter of Lord Lorriston.
Apart from the others was a group of young people, busily
engaged in discussing the morrow’s fête. It was the general wish that
charades should be the feature of the entertainment. Lord Lorriston,
who indulged his daughter in every caprice she chose to adopt, had
arranged one of the largest rooms in the house as a theatre. It was
one of the most perfect and complete little theatres ever seen. There
was a pretty stage with a row of foot-lights, a greenroom, scenes
painted by a celebrated artist, and Lady Hermione had no greater
pleasure than the arrangement and management of her favorite
plays.
The group holding this discussion had sought refuge in the deep
recess of a large bay window. The lamps were lighted in the
drawing-room, but the fairy nook seemed filled yet with the evening
gloaming. The long curtains were not drawn, the window was slightly
open, and the fragrance of the flowers floated in. Lady Hermione
was speaking, and Sir Ronald, who listened to every note of that
sweet, musical voice, thought how perfectly it harmonized with the
fragrance of the flowers.
“We must have everything arranged beforehand,” she was
saying; “nothing spoils tableaux so entirely as long waiting between
the pictures—the audience grows tired beforehand. Let us go to the
greenroom now and rehearse.”
An idea that was most warmly received. The other members of
the party were engaged with cards, chess, or in conversation. Miss
Salve, a beautiful Italian, visiting in the neighborhood, was singing,
and singing so delightfully that she was listened to with the most
profound attention. One by one the members of the little group stole
away unperceived, and met in the greenroom with a laugh. There
were Lady Hermione, Miss Severn, pretty Clara Seville, Isabel
Gordon, a beauty of Spanish type; Lilian Monteith, a calm, grand,
impassive blonde, whose share in the programme was simply to look
beautiful and say nothing.
There were Sir Ronald, Kenelm Eyrle, Captain Gordon and Sir
Harry Bellaire. It seemed to Lady Hermione that her assistants were
much disposed to waste their time in sentimental conversation. She
looked around with that pretty, willful impatience that was one of her
greatest charms.
“Do let us begin to work,” she said. “Clarice, you open the
tableaux with what is really the prettiest of all.”
“Your own design,” interrupted Sir Ronald.
“Ah, never mind; it is easy to design, but difficult to carry out.
Now, ‘Sunshine.’”
For the first tableau represented a picture called “Sunshine,” Miss
Severn standing in the middle of the stage, her golden hair falling
like a bright, gleaming veil around her. Her dress was of some
golden-hued fabric that resembled nothing so much as sunbeams.
Flowers of every hue were heaped on her white breast and arms,
and lay at her feet. The light, arranged so as to fall above, poured a
flood of radiance on the brightest picture that was ever seen.
“It is simply perfect,” said Kenelm. “I should like all the world to
see ‘Sunshine.’”
“But you must remember,” said Miss Severn, with a bright blush
and a smile, “that every one would not see it with your eyes.”
It pierced her to the heart, knowing that she had never looked
more beautiful, to see that Sir Ronald did not look at her, made no
remark upon the beauty of the picture, neither praised nor
suggested, but was simply indifferent. All Kenelm’s admiration was
wasted after that.
The next tableau was “Evening,” a picture almost as beautiful;
Isabel Gordon in a dark dress studded with stars, the light subdued
and silvery as moonlight, her dark hair crowned with a wreath of
stars, her dreamy, lovely Italian face inexpressibly tender and lovely
in the glittering starlight.
Clarice noticed that Sir Ronald did admire Isabel Gordon. She
overheard him say to Lady Hermione:
“If you had searched the world through, you could not have found
a lovelier ‘Evening.’”
“I think Clarice is the more beautiful of the two,” Lady Hermione
replied.
“I like the gleam of ‘starlight’ better than the glitter of ‘sunshine,’”
he said, and Clarice Severn overheard the words.
“It will not be always,” she said to herself; “the time will come
when he will love me best.”
“Those are two beautiful pictures,” said Kenelm; “but we must
have variety. The next should be full of figures. What is it? A scene
from ‘Henry VIII.’”
It was a simple little scene that Lady Hermione had read in some
historical novel: Queen Anne Boleyn, dressed for some grand court
ceremonial, was seated in an armchair waiting while a white ostrich
plume was fastened in her dress. Her beautiful maid of honor, Jane
Seymour, was standing behind the chair. The king, waiting half
impatiently, half admiringly, for the queen, stood watching the little
group. The attendant sewing on the plume let it fall. Jane Seymour
raised it from the ground. Bluff Henry said with a smile:
“Never mind; keep it for your own adornment, Lady Jane.”
It was then, and for the first time, that the unhappy Anne Boleyn
suspected the love of her false lord had left her. There was some
discussion as to how the different characters should be distributed.
Sir Ronald was to be King Henry.
“Clarice,” said Lady Hermione, “you will make a better queen
than I can. I will be Jane Seymour.”
She went away then to attend to some one who was seeking a
costume, and Clarice raised her eyes to Sir Ronald’s face.
“I would so much rather take the part of Jane Seymour myself.”
“Why?” he asked.
“Because I have been thinking over the scene and I am quite
sure the king loved Jane best.”
Then she suddenly remembered all that her words implied and
her beautiful face flushed crimson, her eyes drooped, her white
hands clasped each other nervously.
But Sir Ronald was too deeply in love to even draw the very
palpable inference.
“If you prefer the part, you must have it,” he said, and that picture
was, perhaps, more loudly applauded than any other. Sir Ronald,
dressed in the rich costume of King Henry, looked superbly
handsome. Lady Hermione, as Queen Anne, was beautiful, even
with that expression of sudden, keen, unutterable pain on her face.
Jane Seymour was more lovely still, for the king’s bold, admiring
glance caused a sudden flush of joy in her face, as she looked proud
to receive it, yet half afraid the queen might resent it.
“I know you do not care for tragedy, Lady Hermione,” said Sir
Ronald; “but I entreat you just for once to lay aside your prejudice.
There is a picture in our gallery at Aldenmere that would make a
splendid sequel to this—Anne Boleyn the night before her execution
—a queen no longer, but a despairing, unhappy woman. It is the very
sublimity of woe. Will you try it?”
She would have tried anything he asked her. Sir Ronald gave her
every detail of the picture, and many people pronounced it the gem
of the night.
Lady Hermione, as Anne Boleyn, wore a robe of plain black that
showed to full perfection the outline of her graceful figure. She was
represented as kneeling, praying in her cell alone. Her face was a
triumph of art; the color, the brightness, the light, the happiness had
died from out it; the eyes were filled with unutterable woe, the white
face with anguish deeper and stronger than death.
When he saw how faithfully Lady Hermione rendered the picture,
Sir Ronald repented of having asked her to undertake it. He went to
meet her as she came off the stage.
“Smile at me,” he said. “Was I mad, Hermione, to ask you to look
like that sorrowful queen? Smile at me, that I may forget it, or it will
haunt me all night.”
She smiled, but her lips quivered. How little he dreamed the time
was to come when he would see the face he loved in sadder guise
than that of the murdered queen.
“My king, when I find him,” she said, laughingly, “will not slay me.”
“Nor shall my queen die while I live,” he replied; and then Lady
Hermione hastened away. She could not listen to love words, even
from him, just then.
Then came a very beautiful tableau of Antony and Cleopatra,
followed by some taken from scenes in Lord Lytton’s novels.
Lady Hermione bore her part in all, but her heart and soul
trembled with the passion of anguish and sorrow into which she had
thrown herself so as to fully represent the murdered queen.
“If we succeed to-morrow night as well as we have done at
rehearsal,” said Mr. Eyrle, “the fête at Leeholme will be long
remembered.”
Yet the picture that haunted him was the bright-faced, golden-
haired girl, clasping rich flowers to her breast, and called “Sunshine.”
CHAPTER XII.
LADY HERMIONE’S BIRTHDAY.
It seemed as though the sun loved her, for it had never shone so
bright or so warm as when it peeped into her chamber to wake my
lady on her birthday. The flowers loved her, for they bloomed fresher,
sweeter, more fragrantly that morning than they had ever done
before. Surely the sweet songbirds knew it, for the music that rose
through the clear, sweet summer air was never so jubilant and clear.
The sunshine and the song of the birds awoke her, and her maid
was already standing there, her arms filled with fragrant bouquets,
roses with dewdrops gleaming on them, rich crimson leaves, lilies,
whose white cups were moist and fair; but the loveliest bouquet
there had been sent by Sir Ronald.
Talk of a floral love letter; every flower had its story. If they could
but have raised their beautiful heads and told her how he loved her,
this story had never been written.
Then when she was alone in the midst of her flowers and saw the
costly gifts spread out on every side, her heart swelled with
happiness. She raised her sweet eyes to the smiling heavens.
“If you were to ask a gift from there,” she said, “I know what it
would be—it would be that my love might love me.”
For she knew now that the highest boon life could offer her, the
richest prize earth held for her, was Sir Ronald’s love.
The fête was brilliant. Never had Leeholme Park been so gay.
Lord Lorriston spared neither expense nor trouble to do homage to
this, his beloved child.
With evening came the crowning glory of the entertainment—the
charades and the tableaux. The little theatre was most charmingly
decorated. The velvet hangings were drawn aside, and revealed a
beautiful little corridor, lighted by pearly lamps that were half hidden
among green trees; it led to the grounds, that were also illuminated,
so as to resemble fairyland.
“If any one finds the theatre warm, they can seek the refreshment
of cool air and moonlight,” said Lord Lorriston, when he planned this
little surprise.
The tableaux were a wonderful success; no one will ever forget
the bright, marvelous beauty of “Sunshine” or the starlike beauty of
“Evening.” The historical picture was greatly admired, but the star of
the evening was Anne Boleyn the night before her execution; a
picture that half-maddened Sir Ronald by its wondrous loveliness
and sorrow.
There was to be dancing after the tableaux, and he went to Lady
Hermione with an anxious look on his face.
“Lord Lorriston says that it is the universal wish that the ladies
who have taken such a brilliant part in the tableaux should appear in
the several costumes they wore. Lady Hermione, you will not wear
that black dress?”
“I could not dance in it,” she said, with a smile.
His face cleared.
“I am so glad you will wear the queen’s dress. I am so grieved
that I ever asked you to imitate that picture.”
“Tell me why?” she asked.
“I could not. I should have to unravel the whole science of
metaphysics. It has given me a shock; I cannot tell why. To remove
the unpleasant impression, you will promise me to be a brilliant
queen.”
“To forget that cruel Harry slew me?” she said. “Yes; I will forget
it. See, you have frightened me with your fears. My hands have
grown cold.”
He seized them and almost crushed them in his passionate
clasp. He bent over them and longed with passionate longing to

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From Bilateral Arbitral Tribunals and

Investment Courts to a Multilateral

The Participation of the EU in International Dispute

Permanent Investment Courts The European Experiment

State-to-state Arbitration based on International

Africa and the World: Bilateral and Multilateral

Technical Analysis Explained The Successful Investor s

Provisional Measures Issued by International Courts and

A Handbook on the WTO Dispute Settlement System Legal

China in Malaysia: State-Business Relations and the New

From Bilateral Arbitral

ISSN 2364-8392 ISSN 2364-8406 (electronic)

© Springer Nature Switzerland AG 2018

On 20 March 2018, the Council of the EU gave the EU Commission a mandate to

Saarbrücken, Germany Marc Bungenberg

4 Design and Implementation of a Two-Tiered MIC . . . . . . . . . . . . . . 25

4.2.2 Relationship of the MIC to Other Courts and Arbitral

7.2.1 Voluntary Submission by the Parties . . . . . . . . . . . . . . . . . 154

9 Standalone Appeal Mechanism: “Multilateral Investment Appeals

MIC Multilateral Investment Court

© Springer Nature Switzerland AG 2018 1

1.1 Preliminary Considerations Regarding

1.2 Organisational Structure

18 It is recommended that the working language of the MIC/MIAM be English. In

1.3 Procedure of the MIC

Decisions should be in writing and fully reasoned to make them comprehensible 25

1.4 Applicable Law of the MIC

1.5 Legal Remedies and Enforcement of MIC Decisions

32 The decisions of the MIC should be limited to declaratory ﬁndings of violations of

1.6 Establishment of a Standalone Multilateral Investment

36 Another, “smaller” solution would be the establishment of a MIAM. This would

© Springer Nature Switzerland AG 2018 9

41 EU Commissioner Malmström mentioned the “Multilateral Court” for the ﬁrst

44 A number of procedural elements have also been included in the relevant

47 This study discusses the option of a two-tiered system as well as a multilateral

Grabenwarter C, Struth K (2015) § 6 Justiz- und Verfahrensgrundrechte. In: Ehlers D

A reorganisation of the investment protection regime by introducing a two-tiered 49

3.1 Positive Effects of a New Approach

Depending on the design of the system, it appears possible through enhanced 50

© Springer Nature Switzerland AG 2018 15

3.1.1 Consistency of Decisions

consultation mechanism between judges of different chambers can prevent contra-

3.1.2 Greater Legitimacy

3.1.3 Independence and Neutrality of Judges

Arbitrators have recently been repeatedly accused of a lack of independence and 55

3.1.4 Lack of a Control Mechanism

56 In connection with the independence of the arbitrators, the problem of a non-existent

3.1.5 Cost Efﬁciency

57 International arbitration proceedings may lead to considerable costs. According to

Most of the young people in this pretty and aristocratic

Sir Ronald sang those words to himself as he rode back home,

Perhaps if any man or woman were asked if they were willing to

The drawing-room at Leeholme was filled with a brilliant party of

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