I. Introduction

The legitimacy of Investor-State Dispute Settlement (‘ISDS’) has been under question for multiple reasons. One among these is the charge of inconsistency, i.e., the arbitral tribunals interpret similar treaty provisions differently, leading to uncertainty for investors and frustration for the host states. Such divergences undermine the predictability that investors rely on, while simultaneously increasing the host states’ concerns about exposure to unpredictable liabilities. However, the proposals for greater consistency are often criticised for compromising state sovereignty and regulatory autonomy, since the diverse language of investment treaties reflects context-specific negotiations and policy priorities.

The debate over how to address this tension frequently turns to the question of precedent. Unlike hierarchical domestic courts, investment tribunals are not bound by stare decisis. Instead, they rely on a looser practice of jurisprudence constante, citing and engaging with prior awards as persuasive authority, as this paper shall demonstrate. Recent reform proposals seek to institutionalise ISDS through standing adjudicatory mechanisms, such as the European Union’s Investment Court System under the Europe-Chile Bilateral Investment Treaty (EU-Chile Model), the European Union-Canada Comprehensive Economic and Trade Agreement Tribunal (‘CETA Tribunal’), or Multilateral Investment Court (‘MIC’).

These standing mechanisms, with their permanent judges and appellate review, are designed to deliver greater consistency. This paper examines whether standing mechanisms will strengthen jurisprudence constante or collapse into a system of binding precedent. To this end, Part-II situates the doctrine of jurisprudence constante within the role of consistency and flexibility in ISDS; Part-III compares the standing mechanisms and their implications for this; and Part-IV proposes a harmonised approach, arguing that balancing these interests would depend on aligning institutional frameworks with some doctrinal standard for engaging with prior cases. By doing so, it seeks to analyse whether such a synthesis can resolve or exacerbate ISDS’s legitimacy crisis. Part-V concludes.

II. Situating the Debate: Jurisprudence Constante in ISDS?

In ISDS, arbitral tribunals are not bound by a formal doctrine of precedent. Unlike domestic courts in common law systems, they do not follow stare decisis, where a prior decision is treated as legally binding and must be followed unless it is explicitly distinguished. Even the civil law practice of jurisprudence constante is not entirely followed. Instead, ISDS arbitral tribunals occupy a unique space; they frequently adopt a hybrid response to the treatment of previous decisions. They cite past decisions to demonstrate consistency, while retaining the freedom to depart from them in light of treaty text, context, or policy considerations.

This hybrid practice reflects the normative value of jurisprudence constante, i.e., it mediates between two competing values contributing to legitimacy – consistency and flexibility. Jurisprudence constante has evolved incrementally through tribunal reasoning. Interpreting Article 32 of the Vienna Convention on the Law of Treaties (‘VCLT’), the arbitral tribunal in  Canadian Cattlemen v. United States reasoned that judicial decisions qualify as “supplementary means of interpretation.” Thus, prior awards were treated not as binding but as interpretive aids that help to confirm the interpretation derived under Article 31 of the VCLT. The tribunal’s reliance on past awards to confirm the interpretation shows how tribunals rely on past cases for interpretation without sliding into precedent.

In Saipem v. Bangladesh, the tribunal went further and reasoned that there exists a “duty to adopt solutions established in a series of consistent cases,” in the absence of compelling grounds to deviate. This duty was tied to the “legitimate expectations of the community of States and investors towards certainty of the rule of law” (para 90). Thus, the tribunal formulated a limited obligation to follow prior reasoning, not as binding precedent, but as a means to enhance predictability and legitimacy.

The tribunal in AES v. Argentina further affirmed the absence of the rule of precedent under international law or Convention on the Settlement of Investment Disputes between States and Nationals of Other States (‘ICSID’) specifically, while emphasising the distinct language of each treaty (para 23). However, it rejected the claim that prior awards should be ignored altogether, holding that the earlier reasoning could provide “lines of reasoning” worth adopting if persuasive (para 30). The change in principle from “duty” to a “standard of engagement” is most clearly articulated in

practice, this engagement has been uneven. The tribunals often cite earlier awards without engaging with their reasoning, using citation as a proxy for legitimacy. Scholars stress that jurisprudence constante requires engagement, i.e., explaining why or why not a precedent is persuasive. All these cases addressed Argentina’s necessity defense during the economic crisis:

Thus, jurisprudence constante enhances legitimacy when tribunals engage with prior reasoning, but weakens when reduced to mere citation. Unlike stare decisis, it rests on persuasive reasoning and engagement rather than binding authority, offering a balance between flexibility and consistency. However, the permanence and structure of standing mechanisms would affect this balance as the subsequent section seeks to demonstrate.

III. Standing Mechanisms and the Precedent Question: Analysing the Interaction

The case for reforming ISDS through standing adjudicatory mechanisms rests on three arguments. First, ISDS resembles public law adjudication, however, ad hoc arbitration lacks the independence expected in such adjudication. Permanent courts could reduce bias. Second, vague treaty standards have produced divergent interpretations, while existing review mechanisms, such as ICSID annulment committees, are narrow and inconsistent. A standing tribunal or appellate body could foster coherence. Third, without hierarchy, investment law lacks any “progressive development,” and struggles to crystallise into stable doctrines. Appellate review could fill this gap. Still, critics warn that greater uniformity may undermine flexibility, party autonomy, and feasibility within a fragmented treaty regime.

The MIC proposal sits at an extreme end of institutionalisation. It is structured as a permanent multilateral body with standing judges and potentially an appellate body. Permanence creates the structural conditions under which jurisprudence constante may transform into stare decisis. Repeated reliance on earlier rulings by the same body of judges, subject to appellate review, could gradually produce authoritative interpretations. While this may enhance predictability, it risks eroding the treaty-specific flexibility central to legitimacy of ISDS.

The CETA Tribunal reflects a more cautious approach. It introduces permanent tribunal members, strict appointment rules, and extensive transparency obligations, along with an appellate mechanism. These features promote deliberation and coherence, thus, reducing fragmentation in interpretation. However, appellate review risks creating a hierarchy akin to stare decisis, especially if the appellate bodies articulate general principles applicable to the system. Thus, CETA strikes some compromise since it enhances the persuasive authority of prior rulings while moving closer to a binding precedent structure.

By contrast, the EU-Chile model preserves greater flexibility. Instead of a standing bench, it has a roster-based panel appointments, and excludes appellate review. This limits the shift to a binding precedent structure, as panels remain ad hoc and non-hierarchical. The design supports a softer form of jurisprudence constante, since consistent reasoning may accumulate, but its authority is more likely to rest on persuasiveness rather than institutional compulsion. In this sense, the EU-Chile model preserves the current dynamic of arbitral citation practices while adding some consistency through its roster system.

The above analysis highlights the varying trade-off between consistency and flexibility. The MIC leans toward systemic coherence at the cost of adaptability. The EU-Chile model preserves flexibility but may not fully address legitimacy concerns tied to inconsistency. CETA positions itself in the middle, fostering systemic stability while risking the gradual shift of jurisprudence constante. The table below summarises the key features and the varying impact on jurisprudence constante:

IV. Recalibrating the Legitimacy Question: Implications of the Interaction

The main tension that this paper seeks to examine is how standing mechanisms interact with jurisprudence constante. Intuitively, it can be argued that the very existence of a standing mechanism destabilises jurisprudence constante. Once a permanent appellate court develops a body of rulings, lower tribunals will treat them as de facto binding. This risks hollowing out the dialogic quality of jurisprudence constante, which derives legitimacy from its sensitivity to context, and the policy choices of host States. Legitimacy in this model would have to be derived from consistency due to hierarchy, not persuasive reasoning. The trade-off is thus, stark: Standing mechanisms promise consistency but risk substituting one legitimacy deficit (fragmentation) for another (loss of flexibility and state autonomy). However, the proposal for standing mechanisms can also be seen as opportunity to improvise jurisprudence constante, focusing on engagement with prior reasoning rather than mere citation.

By institutionalising adjudication through permanent judges, appellate review, and databases of case law, standing mechanisms could discipline jurisprudence constante. They create structural incentives for engagement with prior reasoning, aligning with Kaufmann-Kohler’s view that arbitrators have a duty to strive for predictability and contribute to the harmonious development of the law. Features like appellate oversight could be structured to give effect to the “soft precedents test,” requiring tribunals to justify departures from established lines of reasoning, thus, increasing the level of engagement required. Under this approach, consistency would emerge not from the binding force of hierarchy, but from the quality of reasoning. Legitimacy would rest not only on outcomes, but on the engagement of tribunals with previous awards.

Thus, the interaction between standing mechanisms and jurisprudence constante should not be understood as a binary between flexibility and consistency. Rather, it is a spectrum where design choices determine the balance. If appellate rulings are treated as binding especially across treaties, the system risks turning into stare decisis. If, however, the emphasis is on persuasive reasoning, requiring tribunals to explain, justify, and situate their rulings within the relevant discourse, then standing mechanisms could reinforce legitimacy by institutionalising

V. Conclusion

The interaction between jurisprudence constante and standing mechanisms reveals the stakes of the legitimacy debate. If legitimacy of ISDS rests solely on eliminating inconsistency, then standing mechanisms may appear attractive. But if legitimacy also requires preserving flexibility, party autonomy, and sensitivity to treaty diversity, then jurisprudence constante, properly disciplined, offers a more balanced solution. The real challenge is not to replace one with the other but to integrate them, i.e., to build standing mechanisms that reinforce the deliberative, persuasive reasoning rather than harden it into rigid precedent. Only then can ISDS reconcile its competing demands of consistency and flexibility.