UNCITRAL Arbitration and Conciliation Working Group continues discussions on transparency in investment arbitration | Practical Law

UNCITRAL Arbitration and Conciliation Working Group continues discussions on transparency in investment arbitration | Practical Law

UNCITRAL has published its report on the Arbitration and Conciliation Working Group's 54th session between 7 and 11 February 2011, on the subject of transparency in treaty-based investor-state arbitration.

UNCITRAL Arbitration and Conciliation Working Group continues discussions on transparency in investment arbitration

by PLC Arbitration
Published on 02 Mar 2011 • International
UNCITRAL has published its report on the Arbitration and Conciliation Working Group's 54th session between 7 and 11 February 2011, on the subject of transparency in treaty-based investor-state arbitration.
UNCITRAL has published its Report of Working Group II (Arbitration and Conciliation) on the work of its fifty-fourth session. The 54th session of Working Group II took place in New York between 7 and 11 February 2011. As previously reported, the working group is discussing transparency in investment treaty arbitration, with a view to producing a legal standard on this issue (see Legal update, UNCITRAL working group's report on transparency in investment arbitration).
The working group is currently focusing its discussions on the scope of application and form of a legal standard on transparency for future and existing investment treaties (respectively) and the content of that legal standard.
Regarding the scope and form of future investment treaties, the main issues discussed were:
  • The key issue regarding the scope of application of a legal standard for future investment treaties is that of consent and, specifically, the manner in which that consent would be expressed. No decision was made on this issue, which will be revisited once the content of the legal standard becomes clearer. However, the options are:
    • a presumption in the legal standard that the standard would apply to future investment treaties referring to the UNCITRAL arbitration rules. Under this approach, the legal standard on transparency would apply, unless states provided otherwise by opting out of the legal standard ("opt-out" solution). This would ensure a wider application of the legal standard on transparency, in accordance with the mandate of the working group to promote transparency. One issue which would need further consideration is whether the opt-out solution would require amendment of the UNCITRAL Arbitration Rules 2010; or
    • a requirement for states to expressly consent that the legal standard on transparency would apply. This would require states to expressly opt into the legal standard for it to apply ("opt-in" solution). If this solution was adopted, as a matter of policy, states should be made aware of the rules which would be applicable.
  • In terms of form, it was agreed that the legal standard should be drafted as detailed stand-alone rules of procedure, rather than mere guidelines. This was on the basis that guidelines would not provide the certainty contemplated by UNCITRAL's objective of harmonising international trade law. Delegations who previously favoured guidelines agreed to approach the drafting exercise on this basis, on the understanding that their earlier preference for guidelines was motivated by a wish to ensure that the legal standard would apply only where there was clear and specific reference to it (that is, by virtue of an opt-in solution).
  • No conclusion was reached on whether rules on transparency should be applicable as a supplement to the UNCITRAL arbitration rules or more generally to treaty-based investor-state arbitration, regardless of the applicable arbitration rules.
Regarding the applicability of a legal standard on transparency to existing investment treaties, the working group decided to revisit the matter in the context of its discussions on whether the standard should apply on an opt-out or opt-in basis. The working group has also requested the Secretariat to explore further the options of making the legal standard on transparency applicable to existing treaties and to prepare drafting proposals for instruments to make the standard applicable for consideration at a later stage.
The working group considered whether investors should be permitted to refuse an offer of transparent arbitration. It concluded that such an option should not be included in the legal standard on transparency. However, it left open for further consideration the question whether investor and state parties to a dispute could depart from the rules on transparency.
In terms of the content of the legal standard on transparency, the outcome of the discussions was as follows:
  • The content of the legal standard might need to be reconsidered and possibly diluted in case the working group decides that the standard will apply on an opt-out basis.
  • Regarding the publication of information regarding the commencement of arbitral proceedings, two alternative proposals emerged:
    • information regarding the names of the parties, their nationalities and a brief description of the subject of the dispute should be made publicly available once the notice of arbitration was received by the respondent; and
    • once the respondent has received notice of arbitration, it should make publicly available information regarding the names of the parties, their nationalities and the economic sector involved. It should also make the notice of arbitration publicly available, suitably redacted to remove anything to which either the claimant or the respondent objects on the ground that it contains protected information.
  • Regarding whether (and which) documents should be published, the Secretariat will prepare drafts based on the proposals made. These include proposals that:
    • all documents submitted to the tribunal should be made publicly available, unless all parties agreed otherwise;
    • a defined list of documents (to include the notice of arbitration, pleadings, submissions to the tribunal by parties and written submissions by non-parties, minutes or transcripts of hearings, orders, awards and decisions) should be made available; and
    • the tribunal should decide, in consultation with the parties, which documents to make publicly available.
  • There was broad support for a provision that awards should be made publicly available, subject to adequate protection of confidential or sensitive information. The working group asked the Secretariat to prepare draft proposals on the publication of awards taking into account its discussions.
  • On the subject of public hearings, there was a divergence of views on the extent to which parties should have a right to object to open hearings. The working group asked the Secretariat to prepare draft proposals for consideration at a future session, covering the following options:
    • either disputing party should have the right to veto public hearings;
    • the tribunal should have discretion to decide the issue; or
    • hearings should be public, subject to exceptions on logistical grounds and possible limitations on transparency.
  • The Secretariat will prepare proposals on the criteria for submissions by third parties. A provision similar to that in Rule 37(2) of the ICSID Arbitration Rules was favoured, with the addition of a requirement to reveal the identity of the third party and the nature of any relationships with any of the parties to the dispute.
  • The Secretariat will prepare draft proposals on a provision for the protection of confidential and sensitive information for consideration at a future session.
Source: UNCITRAL.