International investment law (IIL) is at a crossroads. An obscure legal domain virtually unknown for most of its hitherto existence, it came to prominence only after the surge of investor-State disputes filed by foreign investments against their host states from the late 1990s onwards. After twenty years, it is easily one of the fastest-changing and most topical international legal-political domains. Throughout the 80s and 90s, states have entered into (very vaguely worded) bilateral and plurilateral international investment agreements (IIAs) with one another, promising to extend ‘fair and equitable’ treatment to foreigners; to refrain from expropriating investments without prompt, adequate and effective compensation; as well as to treat foreign investments no less favorable than national and ‘the most favored’ third country investors. As research shows, many states did not exactly understand the broader consequences and the international obligations that these IIAs have created. It was only after hundreds of arbitration cases that the legal and economic consequences of these treaties became apparent: host states, now respondents in a variety of different investor claims, were ordered to pay millions (if not billions) of dollars in compensation and settlements, often due to IIA violations through regulatory acts that they would allege to be within their sovereign prerogatives.

In light of the (now) three-decade old criticisms against the investor-State dispute settlement system, this article discusses the reform options voiced by academics and practitioners, reflecting on the discussion in the UNCITRAL Working Group III meetings.