Towards A Three-Tiered Ombuds System For Investment Dispute Prevention : Principles And Challenges

In the ongoing discourse of investor-State dispute settlement (ISDS) reform, dispute prevention mechanisms (DPMs) have attracted extensive attention among States. As a typical form of DPM, the investment ombuds mechanism not only serves as a decentralized and cost and time-efficient avenue to resolve disputes before they escalate into investment arbitration but also plays an irreplaceable role in the formation of a plural investment law regime. Despite the mechanism’s unequivocal potential to benefit both investors and States, scholarly research on the topic is scarce. Against this backdrop, this article – learning from relevant practice in areas such as human rights protection – aims to contribute to the literature by outlining the fundamental principles relating to the establishment and operation of investment ombuds institutions, namely independence, accessibility, and effectiveness. It further canvasses the potential challenges to the implementation of the mechanism arising from the unique characteristics of international investment law and dispute settlement procedures. Lastly, it calls for the creation of a three-tiered international ombuds system integrating local laws, treaty rules and multilateral guidance