UNCITRAL working group reviews draft rules on transparency

Practical Law UK Legal Update 4-518-1201 (Approx. 5 pages)

UNCITRAL working group reviews draft rules on transparency

by PLC Arbitration

Applicability of the rules on transparency (Article 1(1))

The working group reviewed the latest version of Article 1(1) of the proposed draft rules on transparency, which consisted of two options, namely whether parties should be required to opt in or opt out of the rules. Each option in turn consisted of two variants, depending on whether the rules should apply to future investment treaties only or future and certain existing investment treaties.

The opt-out option received more support than at the 55th session (see Legal update, UNCITRAL's Arbitration working group continues transparency discussions), although there was still support for the opt-in solution as well. Various proposals were made to reconcile the two approaches. After further discussion, the working group requested the Secretariat to prepare a single revised version of Article 1(1), which would encapsulate the proposal that:

For investment treaties concluded after the date on which the rules on transparency would come into force (future treaties), a reference to the UNCITRAL arbitration rules would include a reference to the rules on transparency, unless the state parties agreed otherwise. They would be able to do this by choosing an earlier version of the UNCITRAL arbitration rules (that is, the UNCITRAL Arbitration Rules 2010).
For existing investment treaties, the rules on transparency would only apply where the parties had expressly consented to them, with wording being used to make it clear that there could be no dynamic interpretation of existing investment treaties that would make the transparency rules applicable to them.

Delegations in favour of a different solution to that proposed were invited to co-ordinate their efforts and send their drafting suggestions to the Secretariat to be considered by the working group.

Application of rules on transparency by the disputing parties (Article 1(2))

Draft Article 1(2) prohibits disputing parties from opting out of or diverging from the rules on transparency once adopted by the parties to the investment treaty. There was some debate about whether this Article was needed, but it was ultimately decided to retain it for now. The revised draft Article 1(2) will provide that the tribunal shall ensure the application of the rules on transparency, but that the rules may be adapted by the tribunal.

Discretion of the arbitral tribunal (Article 1(3))

Draft Article 1(3) provides that the arbitral tribunal should exercise discretion, where permitted to do so under the rules, taking into account the:

Need to balance the public interest in transparency in treaty-based investor-state arbitration and of the particular arbitral proceedings.
Disputing parties' interest in a fair and efficient resolution of their dispute.

The working group agreed to adopt the substance of the draft, with some slight variations to the opening sentence.

Relationship between the rules on transparency and any transparency provisions in the investment treaty (Article 1(4))

The working group clarified that, if the investment treaty provided for a transparency regime less favourable than the transparency rules, the treaty provisions would prevail. However, the working group agreed there was no need to include this provision in the transparency rules, as this was a matter of treaty interpretation. Therefore, Article 1(4) should be deleted.

Relationship between the rules on transparency and the applicable arbitration rules (Article 1(5))

A majority of the working group supported the draft Article 1(5), which states that the rules on transparency shall supplement the applicable version of the arbitration rules. This was with an amendment to clarify that where there is any conflict between the rules on transparency and the arbitration rules, the rules on transparency shall prevail.

Publication of information at the commencement of arbitral proceedings (Article 2)

Draft Article 2 concerns publication of information at an early stage of the arbitral proceedings, before the constitution of the arbitral tribunal. The proposed draft contained two options:

Under option 1, general information would be conveyed to the public, and the publication of the notice of arbitration (and of the response) would be dealt with under Article 3, after the constitution of the arbitral tribunal.
Option 2 contained a procedure for the publication of the notice of arbitration and the response before the constitution of the arbitral tribunal.

The majority of the working group preferred option 1 and agreed wording to the effect that the disputing parties should promptly send a copy of the notice of arbitration to the designated repository, once received by the respondent. The repository would then publish information regarding the:

Names of the disputing parties.
Economic sector involved.
Treaty under which the claim is being made.

Publication of documents (Article 3)

Although the working group did not complete their discussions of Article 3, the following suggestions were made:

Deletion of any references to "exhibits" and "a table listing all exhibits" from the list of documents that should be made available to the public.
Simultaneous publication of the notice of arbitration and the response to it.
Deletion of the words "further statements or written submissions", "exhibits" and "orders and decisions of the arbitral tribunal" from Article 3(1).

Discussions on Article 3 will continue at a future session.

We will continue to monitor developments.

Source

UNCITRAL: Report of Working Group II (Arbitration and Conciliation) on the work of its fifty-sixth session (New York, 6-10 February 2012) (16 February 2012).

UNCITRAL working group reviews draft rules on transparency | Practical Law