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Cost allocation in investment arbitration: Forward toward incentivization

Nicholson, James; Gaffney, John

Vasani and Ugale suggested that, from a claimant’s perspective, “the traditional approach encourages arbitration” while “CFtE is largely a deterrent” to investment treaty arbitration and “makes arbitration less appealing to claimants (and would-be third-party funders), more risky and/or outright economically unviable.” 2 They concluded that “a default CFtE custom in the context of ICSID seems inapposite just at a time when [CFtE] appears to be gaining popularity”3 and argue that a harmonized approach to cost allocation between ICSID and commercial forums is likely inappropriate. While we welcome that the authors have initiated a renewed debate on this issue, and note that they raise a range of other objections to CFtE in the context of ICSID, we disagree with their criticism of CFtE as a deterrent to claimants. We suggest that CFtE incentivises meritorious claims while discouraging frivolous or weak claims.4


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More About This Work

Academic Units
Columbia Center on Sustainable Investment
Columbia Center on Sustainable Investment
Columbia FDI Perspectives, 123
Published Here
April 6, 2015
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