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Behind Closed Doors: Fixing the Democracy Deficit in the International Dispute Settlement System

The international dispute settlement system suffers a significant democracy deficit. Transparency is lacking in almost all international dispute settlement mechanisms, and opportunities for public participation are woefully absent.

Many of the worst instances of denial of transparency and public participation occur in disputes brought by investors under the approximately 3000 international investment agreements (IIAs) currently in force. Most IIAs allow investors to bring arbitral cases against the State in which its investment is located – cases which by definition allege that the government has violated international law, typically involve important issues of public interest such as challenges to financial, health or environmental regulations, and can result in large judgments that must be paid from the public fisc.


IIAs typically provide that the investor gets to choose among two or three named sets of rules under which the arbitration is to proceed, including the arbitration rules promulgated by the United Nations Commission on International Trade Law (UNCITRAL). These rules were originally developed for purely commercial disputes where no State party or public interest is involved. Not only are most investor-State proceedings brought under the UNCITRAL rules non-transparent and void of opportunity for meaningful public participation, some of them are entirely secret so that even their existence is unknown to the public and analysts. The human rights to participate in decision-making and to access to information are clearly implicated. Not surprisingly, transparency is a central element of the current debate around investor-State arbitration.

After prodding by the Center for International Environmental Law (CIEL) and the International Institute for Sustainable Development (IISD), UNCITRAL commenced and recently completed work on two important new international transparency instruments: the Rules on Transparency in Treaty-Based Investor-State Arbitration (adopted in 2013), and the Mauritius Convention on Transparency in investor-State arbitrations (finalized by UNCITRAL on 9 July 2014). The Convention will be considered for adoption by the UN General Assembly in the fall of 2014.

The Transparency Rules, which are the product of several years of painstaking analysis and drafting by governments, the arbitration community, and non-governmental organizations (NGOs), comprise a comprehensive set of procedural rules that provide for transparency and accessibility to the public throughout the arbitral process. Among other things, the Rules provide that the existence, subject-matter, pleadings, hearings and outcomes of investor-State arbitrations will be public and that the public has the opportunity to participate via amicus curiae (friend of the court) briefs in those arbitrations. UNCITRAL acts as the Registry for the Transparency Rules, which is on its website. The Rules thus have the potential to bring much needed transparency and opportunity for public participation to investor-State arbitrations.

The Transparency Rules went into effect 1 April 2014. However, they do not – by their own terms – apply to arbitrations brought under any IIA in force before that date unless the Parties to that agreement “opt in” to such applicability or the parties to a particular arbitration agree to apply them. This opt-in requirement was the price that several countries demanded for getting good rules. It was a heavy price because so many IIAs are already in place; the vast majority of future investor-State arbitrations are expected to occur under pre-existing IIAs.

The Transparency Rules will apply to arbitrations brought under IIAs entered into after 1 April 2014, unless the Parties to the IIA “opt out”. The first IIA (Switzerland-Georgia) to refer to the Rules includes them, which is a start. The risk nevertheless exists that the Rules will only very rarely apply unless States opt in to having the Rules apply to pre-existing IIAs. UNCITRAL thus perceived a need to develop ways to facilitate opting-in by States with respect to pre-existing IIAs. The Working Group II, which negotiated the Rules, suggested the texts of model unilateral and joint declarations and model amendments to achieve that. In addition, UNCITRAL decided to develop a global treaty to facilitate opting-in.

The Mauritius Convention on Transparency was negotiated by the same UNCITRAL Working Group II that negotiated the Transparency Rules, in order to facilitate opting in with respect to arbitrations brought under pre-existing IIAs. The Convention will serve as a mechanism by which States can conveniently agree to reciprocal application of the Rules in arbitrations brought under pre-existing agreements.

Importantly, the Convention allows States to agree to apply the Transparency Rules even in arbitrations brought under other (i.e., non-UNCITRAL) sets of rules or institutions. Moreover, it allows States to make binding unilateral standing offers to investors to apply the Rules even where they would otherwise not apply.

The Convention was finalized by UNCITRAL on 9 July 2014. It will be considered by the UN General Assembly in the fall of 2014 and is expected to be approved by the General Assembly without any modification. The Convention is tentatively scheduled to be opened for signature in Port Louis, Mauritius on 17 March 2015. It will enter into force after the third State ratifies it.

Together, the Rules, Registry and Convention are part of a larger process of opening up international dispute settlement and creating a new paradigm in which the public is able to know what is happening in these disputes and participate meaningfully in them.

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