UNCITRAL standards for transparency,

accountability and good governance

Andrés Jana L.

17 July 2014

Av. Andrés Bello 2711 - Pisos 8 y 9 | Torre Costanera - Las Condes Santiago - Chile | Tel. (562) 2757-7600 | Fax. (562) 2757-7601 

The purpose of the draft convention on transparency in treaty-based investor-

State arbitration

WORKING GROUP MANDATE (2008/2010): Consider principles that would achieve transparency, while balancing the public

interest and the need to protect confidentiality in effort to establish a uniform law

on transparency in treaty-based investor-State arbitration. Objectives:

(1) creating public knowledge of the initiation of an investor-State arbitration;

(2) allowing third parties to make submissions to the tribunal where such submissions

would be helpful and relevant and would not unduly delay, interfere with, or

increase the costs of, the proceeding;

(3) allowing open hearings;

(4) making the decisions and award of the tribunal public; and

(5) preserving the existing power of an arbitral tribunal to allow closed proceedings

and restrict access to documents, or portions thereof, when necessary to protect

confidential business information and/or information that is privileged or otherwise

protected from disclosure under the domestic law of the disputing State.

PREVIOUS CASE LAW: Metalclad Corp. v. Mexico: each party is free to speak publicly of the arbitration

unless the parties agreed otherwise; Biwater GAUFF Ltd. v. Tanzania : there is neither any general duty of

confidentiality nor any general rule of transparency in ICSID arbitral proceedings; it

is the responsibility of each arbitral tribunal to find the appropriate balance; S.D. Meyers, Inc. v. Canada: there is no general principle of confidentiality in the

arbitration before it under NAFTA and the 1976 UNCITRAL rules; Methanex Corp. v. USA: subject to the deletion of some secret information, either

party is at liberty to disclose the major pleadings, orders and awards unless the

parties agreed otherwise; but third parties could not be granted the right to attend

oral hearings; United Parcel Service v. Canada: pursuant to NAFTA and 1976 UNICTRAL rules,

pleadings, documents and evidence should be communicated to the other

disputing party, other NAFTA parties, arbitral tribunal, and the secretariat—but no

one else.

RECENT CASE LAW: Telefonica v. United Mexican States(ICSID Case No. ARB(AF)/12/4), 8 July 2013

“…Neither the APPRI nor the ICSID Convention, nor the Arbitration Rules (Additional Facility) contain general rules on publicity or confidentiality that must be observed by the Parties in the present proceedings. On the other hand, and for the reasons that have been expressed, neither the NAFTA nor its Note of Interpretation nor the Federal Transparency Law is applicable to decide the issue in dispute between the Parties.

The Tribunal deems it necessary to come up with a solution that permitsthe preservation of the integrity of the proceeding, protect the information

that is subject to confidentiality and addresses the Respondent’s concern that it must be in a position to provide the public with information about the arbitration proceeding.”

As a consequence of the foregoing, the Tribunal decides that:

(i) The Parties shall refrain from disclosing to third parties:(a) The transcripts or minutes of the hearings;(b) The documents provided by the Parties in the proceeding;(c) The correspondence related to procedure (between the Parties or between

the Parties and the Tribunal)The Parties retain the right to request the Tribunal to lift or modify the foregoingrestrictions in concrete cases and with justification.

(ii) Disclosure of the Tribunal’s orders and decisions to third parties will require prior authorization of the same, except for the Award or this Procedural Order that establishes the rules on confidentiality.

(iii) The Parties are authorized to participate in public discussions about the general aspects related to this arbitration, provided that such discussions do not make the resolution of the dispute more difficult or become a mechanism for confrontation or an instrument to exacerbate the dispute, exert undue pressure or circumvent the confidentiality rules indicated by the Tribunal in this Procedural Order.

The form of the legal standard - Initial Working Group considerations:

- Model Investment Treaty;

- Model Clauses or Guidelines;

- Annex to UNCITRAL Arbitration Rules (optional or mandatory, opting—in or –out);

Future treaties: “… presumption on application of the rules on transparency could

be structured in a way that provided the needed level of certainty to parties as to

whether or not they were operating under the transparency provisions in a given

arbitration.” Existing treaties: “It was said that UNCITRAL’s mandate included preparing or

promoting the adoption of new international conventions, model laws and uniform

laws, but that UNCITRAL had no authority to create by itself legislative obligations

for States without their consent. Consequently, it was said that the only possibility

for the Working Group to enhance transparency in treaty-based investor-State

arbitration was to formulate provisions and to encourage States to use them.”

The UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration

were adopted by the Commission during its 46th session, apply only to a treaty

providing for the protection of investments or investors concluded on or after

April 1, 2014. UNCITRAL Commission 46th Session “confirmed that the question of applicability

of the legal standard on transparency to investment treaties concluded before

the date of adoption of the rules on transparency…was party of the mandate of

the Working Group and questions of great practical interest…”

The Commission “agreed by consensus to entrust the Working Group with the

task of preparing a convention on the application of the UNCITRAL Rules on

Transparency in Treaty-based Investor-State Arbitration to existing treaties, taking

into account that the aim of the convention was to give those States that

wished to make the rules on transparency applicable to their existing treaties an

efficient mechanism to do so, without creating any expectation that other States

would use the mechanism offered by the convention.”

States should not be pressured to join the Convention:

“the Commission agreed that there was not, and should not be, any value

judgment attached to whether a State decided to accede to the convention, and

that pressure ought not be brought to bear on States to accede to a convention.

It was said that that matter could be clarified, for instance, in the preamble to the

convention.”

It was highly debated whether to include this statement into thePreamble. WG Discussion: “a Contracting Party ought not to have to recall the fact that other

States were not obliged to sign the transparency convention, and that to the contrary, a Contracting Party would hope that other States did accede to the transparency convention in order that it would come into effect.”

It was decided to leave it for the proposal to the General Assembly resolution recommending the Transparency Convention.

IMPORTANT DRAFTING CONSIDERATIONS: Relation between the transparency convention and existing investment

treaties

A great number of delegations were inclined to view the transparency

convention as a successive treaty pursuant to article 30 of the Vienna

Convention. Validity of unilateral offer by a State when the investor home State is not a

Party

Separate provisions for reciprocal application and unilateral offer with the

possibility to formulate a reservation to preclude the latter. Application to arbitrations under the UNCITRAL Rules or under all rules

If the Convention were made applicable regarding all arbitration rules, the proceedings would be transparent, but if it were only made applicable to arbitrations under UNCITRAL Rules, the investor would have the opportunity to determine whether proceedings would be transparent or not.

Temporal limitation

Legal impossibility to make the Convention applicable to future treaties.

IMPORTANT DRAFTING CONSIDERATIONS: Fostering higher standards of transparency

Excluded application of 2nd sentence of Article 1(7) of the Rules: where the Rules conflicted with the treaty, the provisions of that treaty should prevail.

Policy concern

It was unanimously agreed that it would be unacceptable for a Party to accede

to the Transparency Convention and then carve out the entire content by use of

the reservations: dealt with through general rules of International Law. Entry into force

3 signatures: “the mandate given to the Working Group was to create an efficient mechanism for those States that wanted to apply the Rules on Transparency to be able to do so, and requiring a great number of States to sign the transparency convention before it came into effect would undermine that objective.”

Most-Favored-Nation clause“It is not clear whether transparent arbitration would constitute more or lessfavourable treatment of an investor.”

Article 2—Application of the UNCITRAL Rules on Transparency: Bilateral or multilateral application: the respondent State is a Party that has

not made a relevant reservation under Art. 3(1)(a) or (b), and the claimant is

of a State that is a Party that has not made a relevant reservation under

article 3(1)(a). Unilateral offer of application: respondent is a Party that has not made a

reservation relevant to that investor-State arbitration under article 3(1), and

the claimant agrees to the application of the UNCITRAL Rules on

Transparency.

Article 3—Reservations: 3(1)(a): Specific investment treaty. 3(1)(b): Specific set of arbitration rules or procedures other than UNCITRAL’s. 3(1)(c): State is respondent in case of unilateral offer

PREAMBLE:

The Parties to this Convention,

Recognizing the value of arbitration as a method of settling disputes that

may arise in the context of international relations, and the extensive and

wide-ranging use of arbitration for the settlement of investor-State

disputes,

Also recognizing the need for provisions on transparency in the settlement

of treaty-based investor-State disputes to take account of the public

interest involved in such arbitrations,

Believing that the Rules on Transparency in Treaty-based Investor-State

Arbitration adopted by the United Nations Commission on International

Trade Law on 11 July 2013 (“UNCITRAL Rules on Transparency”), effective

as of 1 April 2014, would contribute significantly to the establishment of

a harmonized legal framework for a fair and efficient settlement of

international investment disputes,

PREAMBLE:

Believing that the Rules on Transparency in Treaty-based Investor-State

Arbitration adopted by the United Nations Commission on International

Trade Law on 11 July 2013 (“UNCITRAL Rules on Transparency”),

effective as of 1 April 2014, would contribute significantly to the

establishment of a harmonized legal framework for a fair and efficient

settlement of international investment disputes,

Noting the great number of treaties providing for the protection of

investments or investors already in force, and the practical importance

of promoting the application of the UNCITRAL Rules on Transparency

to arbitration under those already concluded investment treaties,

Noting also article 1(2) and (9) of the UNCITRAL Rules on Transparency,

Have agreed as follows…

From the Preamble it follows that the purpose of the Convention, taking

into account the public interest involved in investor-State disputes and

the effort to harmonize the legal framework to ensure fair and efficient

settlement, is to extend the Rules on Transparency to the great number

of investment treaties that have already been concluded.

UNCITRAL standards for transparency,

accountability and good governance

Andrés Jana L.

17 July 2014

Av. Andrés Bello 2711 - Pisos 8 y 9 | Torre Costanera - Las Condes Santiago - Chile | Tel. (562) 2757-7600 | Fax. (562) 2757-7601 

The purpose of the draft convention on transparency in treaty-based investor-

State arbitration