ADBI-ADB Second Alternative Dispute Resolution (ADR) Policy Dialogue - Day 2

Why It Matters

Embedding mediation into investment dispute frameworks cuts costs, preserves state‑investor relationships, and steers ISDS reform toward more sustainable, market‑friendly outcomes.

Key Takeaways

• ICSID promotes mediation alongside arbitration to reduce dispute costs.
• Asia‑Pacific accounts for over $462 bn 2024 FDI, driving dispute growth.
• RCEP’s pending ISDS decision will shape regional dispute‑resolution standards.
• ICSID’s 2022 mediation rules allow voluntary, cross‑border settlement without membership.
• ADB‑ADBI ADR network aims to embed mediation as first instinct.

Summary

The second day of the ADBI‑ADB Alternative Dispute Resolution Policy Dialogue turned its focus to investment dispute resolution, opening with a keynote from Martina Polasek, Secretary‑General of the International Centre for Settlement of Investment Disputes (ICS ID). Polasek outlined how mediation is being positioned as a core complement to arbitration within the evolving ISDS landscape.

Polasek highlighted that the Asia‑Pacific region attracted more than $462 billion in foreign direct investment in 2024, making it the world’s top FDI destination and a hotbed for investment disputes. By the end of 2025, ICSID had logged nearly 1,100 arbitration and conciliation cases, with 15 % involving regional states as respondents. She noted that 66 % of ASEAN‑negotiated investment treaties now contain ADR clauses, far above the global average, and that the RCEP will decide by 2027 whether to retain an ISDS mechanism, a choice that will reverberate globally.

A concrete illustration came from a public Ecuador‑energy case where investors pursued mediation in parallel with domestic litigation and arbitration, ultimately bundling multiple claims into a single settlement. Polasek emphasized that more than one‑third of cases involving ADB members settle or are discontinued before an award, underscoring mediation’s practical impact. She also announced new steps: mandatory mediation notices in arbitration filings, updated procedural orders, a growing library of treaty‑mediation analyses, and the upcoming Singapore office to boost regional accessibility.

The implications are clear: mediation offers a lower‑cost, relationship‑preserving alternative that can be invoked at any stage of a dispute, potentially reshaping the cost structure and political acceptability of ISDS. The ADB‑ADBI joint ADR network aims to make mediation the default instinct for investors and states, accelerating the shift toward more flexible, sustainable dispute‑management systems across the Asia‑Pacific.

Original Description

This policy dialogue responds to the growing need among the Asian Development Bank’s developing member countries to strengthen their capacity to manage and prevent investment disputes while promoting practical dispute resolution tools.

Visit https://www.adb.org/adbi/adbi-adb-alternative-dispute-resolution-program to know more