A/69/299 B. Investor-State dispute settlement 60. International investment agreements include an arbitration clause for investor State dispute settlements that can be invoked only by transnational corporations against host States for alleged violations of the corporation’s rights. The arbitration clause determines the place of arbitration, the applicable law and the procedure for appointing arbitrators. As at 2013, there were 568 known cases of arbitration under international investment agreements. Most were brought against developing States. A total of 85 per cent of the cases were brought by investors from developed countries. 51 The system is riddled with problems. 61. The number of arbitration cases filed against States is likely to rise in times of financial crisis. For example, since its financial crisis in 2001 and the introduction of economic reforms, Argentina has faced more than 50 arbitration cases. 51 Similarly, Spain and Greece saw a sharp increase in arbitration cases against them after their financial crises 52 and more than 10 arbitration cases were registered against Egypt after the Arab Spring. 53 In such crises, States may need to realign their economic and social policies within the changed climate. Although such changed policies may be in the public interest, the altered policies might threaten investments and prevent States from fulfilling their obligations under the international investment agreement. 62. The current system of investor-State dispute settlement also suffers from bias and conflicts of interest. The dispute settlement is controlled by a small clique of arbitrators and lawyers, and the same person may be counsel, arbitrator and adv iser to an investor or State at different times. 54 Many arbitrators share close links with business communities and may be inclined towards protecting investors’ profits. 55 This can affect the independence and neutrality of arbitrators, is contrary to the principle of fairness and further compromises the integrity of arbitration under international investment agreements. 63. Annulment applications by States on the ground of bias have in many instances been rejected. In one case, the State argued for the recu sal of an arbitrator on the ground that the award would be used to further the arbitrator’s argument as counsel in another case. 56 The State lost. An issue of bias also arises where an arbitrator has an interest in the investor’s business. In one such case, the State’s application to annul the award was rejected because there was “no material effect on the final decision of the Tribunal, which was in any event unanimous”. 57 __________________ 51 52 53 54 55 56 57 18/22 See http://unctad.org/en/Docs/webdiaeia20113_en.pdf. See Cecilia Olivet and Pia Eberhardt, Profiting from Crisis (Amsterdam/Brussels, Transnational Institute and Corporate Europe Observatory, March 2014). See www.brownrudnick.com/news-resources-detail/2013-10-beyond-the-realm-of-icsid-alkharafi-sons-co-vs-libya. See International Centre for Settlement of Investment Disputes, Azurix Corporation v. The Argentine Republic, case No. ARB/01/12, 14 July 2006. See Cecilia Olivet and Pia Eberhardt,, Profiting from injustice, ((Amsterdam/Brussels, Transnational Institute and Corporate Europe Observatory, November 2012). See Eureko v. Poland, judgement of 22 December 2006 of the court of first instance of Brussels. International Centre for Settlement of Investment Disputes, Compañía de Aguas del Aconquija S.A. and Vivendi Universal S.A. v. Argentine Republic, case No. ARB/97/3, annulment proceeding, paras. 234-235. 14-59014