The role of precedent in ISDS: from informal practice to institutional design

This article examines the role and authority of precedent in investor–state dispute settlement (ISDS). It situates the debate within broader theoretical discussions about precedent in adjudication and explores how investment tribunals have engaged with prior decisions in practice. The analysis highlights the advantages and disadvantages of formalizing a rule of precedent as well as the options of such formalization in the context of the various institutional proposals suggested in the UNCITRAL Working Group III on ISDS reforms. The article argues that, while ISDS already relies extensively on precedent in practice, it does so without a clear legal framework governing how precedent should operate. Accordingly, the central challenge for ISDS reform is not simply whether precedent should play a role, but more fundamentally how to structure and discipline its use so as to balance consistency and predictability with flexibility and state control.