ARTICLE Reforming the investor-state dispute settlement mechanism and the host state’s right to regulate: a critical assessment Tanaya Thakur Ó The Indian Society of International Law 2020 Abstract This paper aims at understanding the relationship between the investor-state dispute settlement (ISDS) mechanism and the host states’ right to regulate. Frag- mented into over 3300 bilateral investment treaties (BITs), international investment law is being increasingly challenged by states who believe that the regime is imbal- anced. This can be seen from the decision of various states to either opt out of bilateral investment treaties or to reform the existing treaties. This paper would analyze the several connotations that the term right to regulate possesses and then attempt to see whether the present ISDS mechanism poses threat to host state’s regulatory power. Right to regulate for the purpose of this paper means the right of states to deviate from their investment commitments for public purposes such as health, environment, sustainable development, corporate social responsibility, without incurring the duty to compensate. It is stated by various authors that the investment regime has led to a situation of regulatory chill. Regulatory chill is understood to be a situation where governments do not enact or enforce legitimate regulatory measures due to concern about ISDS. The paper argues that though the present system imposes limitations on the host state’s right to regulate, it cannot be said to have created a chilling effect. It is further discussed that the ambiguity of the ISDS procedure leads to a situation where Doctoral Candidate, RGSOIPL, IIT Kharagpur. LLM, South Asian University Delhi. BA LLB (Hons), Cha- nakya National Law University, Patna. The paper is based on the author’s LLM dissertation. The author extends sincere gratitude to Dr. Prabhash Ranjan for his help and guidance. The author is indebted to Santosh Anand for his valuable suggestions. Author thanks the reviewer(s) for their insightful comments. Tanaya Thakur LLM, South Asian University, New Delhi, India Tanaya Thakur (&) Doctoral Candidate, RGSOIPL, IIT Kharagpur, Kharagpur, India e-mail: thakurtanaya123@gmail.com Tanaya Thakur Lucknow, India 123 Indian Journal of International Law https://doi.org/10.1007/s40901-020-00111-2