The Ministry of Economy and Finance of Peru (MEFP) manages the State Coordination and Response System for International Investment Disputes. The Response System supports and manages Investor-State Dispute Settlement (ISDS) cases and proceedings, as well as creating guidelines for arbitration provisions.

The last decade has seen a considerable increase in the flows of foreign direct investment, generally recognized to have significant potential to contribute to economic growth and development. In order to enhance investor protection and attract more investment, countries have concluded an ever-growing number of international investment agreements (IIA) that provide for arbitration in cases of disputes between investors and host States. Additionally, Peru includes clauses for arbitration in contracts they sign directly with individual foreign investors for specific projects. This has been the background behind a sharp rise in the number of cases of investor-State arbitration in the last decade.

The increase in IIA has generated concerns with regard to the ability of the government to detect and prevent disputes in a timely manner as well as the State’s capacity to appropriately manage IIA and prevent frivolous claims. In response, Peru drafted a dispute prevention policy and designed a dispute prevention mechanism, which is still being implemented.

The objective of this project is to undertake an assessment of the dispute prevention mechanism being implemented. The team will identify factors that contribute to the occurrence of ISDS cases, carry out stakeholder assessments, and present recommendations for improved design and function of the system. The project may also provide a proposal for a training curriculum.

Our Work

• Review the laws and documents related to the system
• Interview stakeholders, including all members of the commission
• Observing negotiations over one or more live investor-state disputes
• Create a conflict map of investor-state disputes, providing diagnosis and assessing any patterns of escalation
• Identify and prioritize gaps in the current system, as well as the proposed system design
• Identify core elements of the system to serve as a basis for dissemination material for relevant stakeholders

Deliverables envisioned

• A report on the current dispute prevention and management system, focusing on the stakeholders, the structural weaknesses and strengths, and opportunities for improvement
• A custom-tailored proposal to improve the system in both the dispute prevention and dispute management aspects
• Proposal for what resources would be required to implement the recommendations.
• Development of recommendations for training