Substantive treaty clauses – those that set out obligations of the parties – used to be unspecific and broadly framed, until experience with treaty use and interpretation ushered in a broad change of treaty drafting that is now almost consistently used in newer treaties across the globe. Hundreds of older treaties with unspecific designs, in particular of obligations to grant “fair and equitable treatment” and that offer compensation for “indirect expropriation” and are unspecific about the application of most-favoured nation treatment, remain in force. Even if all treaties that were recently concluded came into force, around 80% of the stock of treaties in force would continue to feature designs of key clauses that are no longer used today. The discussions under Track 2 contribute to a collective understanding of the currently used treaty designs.
Modernising investment treaties (formerly "Track 2")
Around 2000 of the investment treaties currently in force were concluded decades ago under different economic circumstances and with different objectives in mind. Experience with these treaties’ use and interpretation has since the early 2000s led to a broad change in how substantive provisions are designed. These newer designs are not replicated in older treaties, however. Under the OECD work programme on Modernising Investment Treaties, governments from 143 jurisdictions consider whether it would be better if substantive provisions featured in older generation treaties were more similar to recent designs and how a transition could be achieved in a pragmatic way. This work complements ongoing work on ISDS reform at UNCITRAL
Key messages
Renegotiating around 2,000 individual treaties to make their content more similar to today’s designs is prohibitively costly and slow. Plurilateral solutions have shown their potential in similar scenarios, for instance with respect to transparency of investor-State dispute settlement or the update of bilateral tax-agreements. The relative similarity of current designs across jurisdictions, driven by a shared intention to frame treaty obligations more clearly and specifically, may make an agreement among interested jurisdictions possible. Different options available under international law are currently being considered.
Modernising Investment Treaties
Reflections on whether and how to modernise existing investment treaties
The process on Modernising Investment Treaties addresses two aspects: the evolution of substantive treaty clauses and opportunities resulting from the homogeneity of this evolution, and the procedural means that would be available for a transition of older clauses to newer designs. The process runs under the governance framework and work programme launched by governments in 2021 and expanded in 2023. Current activities are being carried out in accordance with the work programme defined for the 2026-2027 biennium. There are currently 143 jurisdictions involved in the process.
Governments have so far considered five substantive clauses and their evolution in investment treaties:
Indirect expropriation [Secretariat research note; Summaries of discussions – October 2021 and April 2022];
Fair and equitable treatment (FET): main specifications [Secretariat research note; Summary of discussions – April-June 2023] and additional clarifications in recent treaties [Secretariat research note; Summary of discussions – March 2024];
Full protection and security (FPS) [Secretariat research note; Summary of discussions – February 2025];
Most-favoured-nation (MFN) treatment with respect to dispute settlement arrangements [Secretariat research note; Summary of discussions – November 2022]; MFN clauses more generally were subject to a preliminary consideration [Summary of discussions – February 2024].
National treatment: preliminary exploration [Summary of discussions – June 2025].
Exceptions and reaffirmations of the “right to regulate” [Secretariat research note; Summary of discussions – October 2025]
Participants are also discussing the means that interested governments could use to transition earlier treaties to designs that they now broadly and consistently use. The FET clause was used to spearhead these reflections [Secretariat research note; Expert contribution of Prof. Dumberry; Summary of discussions – November 2023].
Governments have considered two different procedural means for transitioning earlier treaties towards newer designs:
Joint Interpretations as a means to clarify governments’ intentions in older treaties [Secretariat research note on the legal framework for joint interpretations; Summary of discussions – March 2024]. Reflections trialled the opportunities and possible content of an interpretation of older FET provisions [Summary of discussions – November 2024], MFN clauses with respect to dispute settlement arrangements and FPS obligations [Summary of discussions – February 2025], and ‘indirect expropriation’ obligations [Summaries of discussions – June 2025, October 2025 and March 2026. Since early 2026, participants are further exploring the feasibility, potential features and operationalisation of a joint interpretative agreement [Summary of discussions – March 2026].
A successive plurilateral agreement to change the rights and obligations contained in a potentially large stock of older treaties. Participants considered the legal framework applicable to successive treaties and how such an instrument could work for investment treaties [Secretariat research notes: (1) legal framework for treaty modifications; and (2) illustrations of design options for a plurilateral modifying agreement on FET; Summary of discussions – November 2024].
