Resumen de Practical and Procedural Obstacles to a Functional Investor-State Dispute Settlement Mechanism in the Andean Community: why Secondary Legislation Is not Enough?

Iván Vargas Chaves, Joaquín Emilio Acosta Rodríguez

• This article analyzes the legal and institutional barriers to establishing a functional Investor-State Dispute Settlement mechanism within the Court of Justice of the Andean Community. Using a comparative regional integration law methodology—with reference to the European Union, EFTA, and Mercosur—the article evaluates the structural requirements for this institutional reform. We found that successful operationalization is hindered by a “treaty tarrier” that requires a formal amendment to the constituent treaty, as secondary legislation is insufficient to expand jurisdiction. Furthermore, the analysis identifies critical needs for a specialized roster of independent arbitrators, robust transparency standards, and a standing appellate mechanism. It also highlights severe budgetary deficits and proposes judicial fees and trust funds to ensure financial sustainability. Finally, the article underscores the urgency of modernizing outdated substantive investment standards to align them with contemporary international law. It is concluded that a legitimate Andean arbitral forum requires a comprehensive, rather than superficial, normative and institutional overhaul to resolve contemporary disputes effectively.