Notes from UNCITRAL: Progress on ISDS Reform and the Shape of Future Digital Projects

ICLRC representatives Sofia Sarenkova, Olga Melnichenko, and Nikolai Dmitrik attended the fifty-ninth session of the United Nations Commission on International Trade Law (UNCITRAL), held in New York from 29 June to 10 July 2026, as observers.

During the session, the Commission reviewed the work of UNCITRAL working groups over the past year, adopted documents on selected elements of investor-State dispute settlement (ISDS) reform, and outlined plans for future work on the digitalization of international trade.

Nearly half of the Commission’s shortened two-week session this year was devoted to ISDS reform, which is being pursued by Working Group III through the following two products: the Statute of the Advisory Centre on International Investment Dispute Resolution and a supplement to the UNCITRAL Arbitration Rules.

The first task was to settle the issues that had remained unresolved two years earlier, when the text of the Statute of the Advisory Centre on International Investment Dispute Resolution was approved in principle (A/79/17, annex III). Following three meetings held since then on the launch of the Centre (A/CN.9/1265), agreement was reached on an approach to determining the scale of contributions to the Centre’s budget and on a number of other issues. However, no agreement was reached on the location of the Centre’s headquarters. While many candidate States have effectively withdrawn their bids to host the headquarters (although some remain interested in hosting regional offices), Thailand (Bangkok) and Morocco (Rabat) continue to seek the opportunity. It was therefore decided not to delay approval of the final draft of the Statute any further and to omit the Centre’s location from the text. The draft will be submitted to the General Assembly for adoption. If endorsed by the UN General Assembly, the Commission will continue consultations with a view to recommending a final headquarters location to the General Assembly in 2027.

Accordingly, the Statute of the Advisory Centre is expected to be adopted by the General Assembly in the near future and opened to participation by States and regional economic integration organizations. In time, an institution of a type new to this field will join the bodies active in foreign investment protection and dispute settlement: the Advisory Centre, whose task will be to provide training and assistance — primarily to developing and least developed countries — in preventing and resolving investment disputes, both generally and in relation to specific cases (members of the Laboratory previously wrote about the development of the Advisory Centre’s Statute (in Russian)). This should strengthen the capacity of the most vulnerable States to participate in dispute settlement and increase confidence in the ISDS system by improving preparedness and awareness of how it operates.

Another important area of ISDS reform in which the Commission recorded progress concerns dispute settlement procedures. The Commission adopted procedural provisions developed by Working Group III as a supplement to the UNCITRAL Arbitration Rules (A/CN.9/1246), reflecting the specific features of investment dispute proceedings. This will enable the widely used UNCITRAL rules, which were designed primarily for commercial arbitration, to be applied in an adapted form to investor-State disputes. The supplement may be particularly useful for States that are not parties to the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Washington Convention) and that traditionally include clauses referring disputes to arbitration under the UNCITRAL Arbitration Rules in their investment treaties (see, for example, the practice of the Russian Federation).

The adopted supplement comprises 11 provisions covering evidence, bifurcation, interim measures, security for costs and the allocation of costs, suspension and termination of proceedings, third-party funding, and other matters.

Some of these provisions effectively codify established or prevailing practice in investment arbitration, while others reflect a desired direction for the development of that practice. In drafting the provisions, members of Working Group III also took into account, among other things, the procedural rules applied by the International Centre for Settlement of Investment Disputes (ICSID). Most of the provisions are largely aimed at strengthening the position of States in proceedings.

Although it adopted the supplement, the Commission did not complete its work in this area. By the Commission’s next session, Working Group III is expected to determine the modalities for applying the adopted provisions in relation to other procedural and cross-cutting provisions still under development by the Working Group and intended for inclusion in investment treaties. It will also be necessary to address possible inconsistencies with provisions on the same subject contained in applicable investment treaties and to determine how the new provisions should apply when the disputing parties select the rules of other arbitral institutions, such as the SCC Arbitration Rules.

During the development of the procedural provisions in Working Group III, ICLRC experts submitted comments and proposals. We intend to continue following ISDS reform and contributing to the work ahead. In the coming year, Working Group III plans to focus primarily on agreeing the statutes of new standing judicial mechanisms for resolving investment disputes — a first-instance tribunal and an appellate tribunal — as well as procedural provisions not included in the supplement to the UNCITRAL Arbitration Rules. The agreed reform elements will then be brought together through a multilateral treaty – so called MIIR (Multilateral instrument on ISDS Reform).

In discussing the current agenda on alternative mechanisms for resolving commercial disputes (A/CN.9/1271), the Commission decided to continue research into monitoring and analysing the use of artificial intelligence tools in arbitration, mediation, and dispute resolution on online platforms, in cooperation with the Inclusive Global Legal Innovation Platform (iGLIP) (A/CN.9/1272). It also announced the launch of work, within Working Group II, on procedural guidance for remote hearings in arbitration and remote mediation.

State delegations supported continued work to systematize and update the UNCITRAL legal framework for digital trade under an initiative of the Russian Federation and the UNCITRAL Secretariat. The draft consolidated text brings together provisions from existing UNCITRAL instruments on electronic commerce. During the discussion, it was also proposed that, for the purposes of consolidation, the text should take account of provisions in other UNCITRAL instruments dealing with the electronic aspects of international trade, including the UNCITRAL Model Law on International Commercial Arbitration, the Model Law on Warehouse Receipts, and the Convention on Negotiable Cargo Documents (A/CN.9/1263). A “modular” approach was proposed for the systematization exercise, allowing future work in the field of digital trade to be incorporated, in particular possible work on end-to-end trade digitalization and paperless trade (A/CN.9/1264 – Preparatory work on enabling end-to-end trade digitalisation and transition to paperless trade).

The ICLRC supported combining efforts on paperless trade and consolidating UNCITRAL texts on electronic commerce within Working Group IV, which is completing its work on contracts for the provision of data. Both projects should be viewed as timely initiatives aimed at developing a comprehensive set of rules that States and private parties can rely on in structuring and governing specific trade chains, whether domestic or cross-border. Digital trade has already outgrown the confines of national e-commerce legislation and requires a dedicated yet comprehensive regulatory framework.

At the same time, it is still premature to determine the form and final scope of the future instrument. The transition to paperless trade is a process rather than a one-time achievement. At this stage, it is important to identify the key issues to be discussed. Many of them are already known, including through ICLRC’s research on States’ implementation of UNCITRAL instruments (see End-to-End Trade Digitalisation: Comparative Regulatory Analysis), the work of the Secretariat, and projects being implemented in the Eurasian region. Drawing on these materials, ICLRC emphasized the need to develop an updated and coherent legal framework for modern digital trade. Other delegations and observers undoubtedly have similar lists of key issues. It is therefore essential to involve all interested stakeholders in discussing and refining that list.

Participants expressed interest in further Commission work on regulation in the areas of digital platforms (A/CN.9/1259), digital payments (A/CN.9/1262), and the use of digital assets as collateral (A/CN.9/1260). Two considerations relevant to all these areas were highlighted. First, the work should remain within UNCITRAL’s mandate and should not, for example, extend to consumer transactions. Second, it should be carried out in close cooperation with other international organizations, particularly the Hague Conference on Private International Law (HCCH), taking into account its work on central bank digital currencies and digital tokens, and the International Institute for the Unification of Private Law (UNIDROIT), taking into account its projects on the UNIDROIT Principles on Digital Assets and Private Law and Best Practices for Effective Enforcement.

With regard to developing rules on the status and activities of decentralized autonomous organizations (DAOs) — digital platforms for interaction among participants based on distributed ledger technology (A/CN.9/1248) — Commission members agreed that, on the one hand, international dialogue is needed at an early stage of DAO use to promote global interoperability and prevent legal fragmentation. On the other hand, given the workload of the working groups, the Commission should return to this subject, including discussion of the proposed initial draft model law on DAOs (A/CN.9/1267), after completing other digital projects.

The Commission also instructed the Secretariat to cooperate with the European Law Institute and other expert organizations in developing model contractual terms for automated contracting.

Finally, the Commission approved the schedule of working group sessions for the second half of 2026 and for 2027. It also decided to hold a joint session with the HCCH in Vienna from 9 to 13 November 2026 to discuss digital platforms, digital payments, and the use of digital assets as collateral. As a follow-up, the HCCH Permanent Bureau is expected to hold a meeting in The Hague from 18 to 22 January 2027. The specific dates, detailed programme, and format of both joint sessions, including the possibility of remote participation, will be determined in due course.