Investor-State Dispute
Settlement (ISDS) mechanisms face a legitimacy crisis marked by concerns over
fairness, independence, and state regulatory autonomy. This article examines
three major reform initiatives: United Nations Commission on International
Trade Law (UNCITRAL) Working Group III’s multilateral dialogue process, the
European Union’s Multilateral Investment Court (MIC) proposal, and
International Centre for Settlement of Investment Disputes (ICSID’s) 2022
institutional reforms. Through comparative analysis, it evaluates how each
approach reconciles investor protection with state sovereignty. While ICSID’s
incremental reforms strengthen procedural legitimacy within the arbitral model,
the MIC represents a deeper shift toward judicialization, offering greater
coherence but facing political resistance. The article argues that meaningful
reform requires recalibrating the balance between investor rights and
democratic governance, transparency and efficiency, and legal predictability and
policy space. The future of investment dispute settlement will likely be
pluralistic, with multiple institutional models coexisting as states navigate
competing priorities in global economic governance.