The biphasic carbonylation of vinyl aromatic compounds to the isomeric arylpropanoic acids has been studied in detail using a novel water-soluble palladium complex, [Pd(Pyca)(TPPTS)]+TsO-. The effect of various reaction and catalyst parameters such as promoters, solvents, P/Pd ratio, CO partial pressure, temperature and concentration of substrate on the catalytic activity and selectivity has been investigated using styrene as the model substrate. High catalytic activity (TOF = 282 h(-1)) and selectivity to the branched product (similar to91 %) was observed with [Pd(Pyca)(TPPTS)]+TsO- catalyst. P-31 NMR experiments were carried out to study the mechanistic details and to understand the nature of catalytic species formed under the reaction conditions, based on which a plausible catalytic cycle has been proposed. (C) 2002 Elsevier Science B.V. All rights reserved.