OECD Working Papers on International Investment

Selected studies on international investment and investment policy prepared for use within the OECD. They address such issues as investment agreements, dispute settlement, fair and equitable treatment, most favored nation treatment, and corruption.


Adjudicator Compensation Systems and Investor-State Dispute Settlement

Compensation for adjudicators is generally considered as a core issue for judicial independence and for attracting good judges in the institutional design for courts. This paper examines compensation systems for adjudicators and dispute settlement administrators in investor-state dispute settlement (ISDS). The paper uses in part a comparative perspective based on approaches in domestic courts in advanced economies, an approach rarely taken in analysing investor-state arbitration.

The first section of the paper provides historical context and examines the reform of remuneration of judges to replace private litigant fees with salaries in colonial America and the United States, France and England in the 18th and early 19th centuries. Subsequent sections address debates over the impact of compensation systems on adjudicators; contemporary approaches to the compensation of judges in advanced economies; the co-existence in advanced economies of national courts with salaried judges since the early 19th century with generally strong support for commercial arbitration based on ad hoc fee-based remuneration; and similarities and differences between commercial arbitration and investment arbitration, focusing how the largely similar compensation systems may have different effects and be differently perceived by the public.

Annexes to the paper report on discussions about adjudicator compensation at the 2016 OECD Investment Treaty Conference and gather some preliminary facts about adjudicator and dispute administrator compensation in investor-state arbitration as well as the investment court system included in the recent EU-Canada CETA trade and investment agreement.


Keywords: court fees, investment arbitration, arbitrator compensation, investment treaties, Jeremy Bentham, international economic law, bilateral investment treaties, ISDS, litigant fees, foreign investment, dispute settlement, Voltaire, investment treaty policy, international investment, judicial compensation, international investment law, domestic courts, legal history, economic incentives, international investment agreements, international commercial arbitration, Alexander Hamilton, investor-state dispute settlement, comparative law, conflicts of interest, investor protection
JEL: J44: Labor and Demographic Economics / Particular Labor Markets / Professional Labor Markets; Occupational Licensing; J3: Labor and Demographic Economics / Wages, Compensation, and Labor Costs; L33: Industrial Organization / Nonprofit Organizations and Public Enterprise / Comparison of Public and Private Enterprises and Nonprofit Institutions; Privatization; Contracting Out; K23: Law and Economics / Regulation and Business Law / Regulated Industries and Administrative Law; N20: Economic History / Financial Markets and Institutions / Economic History: Financial Markets and Institutions: General, International, or Comparative; K33: Law and Economics / Other Substantive Areas of Law / International Law; J33: Labor and Demographic Economics / Wages, Compensation, and Labor Costs / Compensation Packages; Payment Methods; K41: Law and Economics / Legal Procedure, the Legal System, and Illegal Behavior / Litigation Process; N4: Economic History / Government, War, Law, International Relations, and Regulation; H4: Public Economics / Publicly Provided Goods
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