Transparency of Investment Arbitration Proceedings

1. Introduction

Investment arbitration (arbitration between a foreign company and a state) is a growing area of dispute resolution. International investment treaties, of which there are over 2,500,[1] provide redress for parties in an investment dispute through international arbitration.

There are several reasons why international arbitration is the preferred method of dispute resolution in investment disputes. Principal among these is that pursuant to international conventions, arbitral awards (the decision of the tribunal) are widely enforceable internationally. The most important of these conventions is the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the ‘New York Convention’), to which more than 145 states are party.[2] The award is binding in all states signatory to the applicable convention.

The parties enjoy more flexibility than if they were to litigate before the national courts. They appoint an arbitrator (or panel of arbitrators), choose the venue for arbitration, and determine the process and rules by which each party must abide. The parties can appoint an arbitrator with particular competence in the subject of dispute, with more experience than a judge may have in that particular area. The choice of venue and process allows for neutral proceedings; whereas litigation before a national court may seem favourable to one party. Arbitration can also be less expensive and resolve disputes more quickly.[3]

Arbitration is useful commercially because of the privacy it affords to each party. However, when a government is party to the proceedings there is a conflict between the principle of transparency which applies to matters which are in the public interest and the principle of confidentiality enshrined in commercial arbitration.

Arbitration is seen as an alternative to litigation through the national court system and many countries allow the national courts only limited powers of interference in the arbitration itself, although awards are often enforceable through the national courts.

2. Governance

2.1  Legal framework

Investment disputes are usually decided under public international law, normally arising from bilateral trade treaties and consented to by the investor. The applicable treaty and/or the investment contract will specify the arbitration rules which are to apply to a dispute.

The seat of arbitration determines the substantive and procedural law which is applicable to the dispute, and is usually the same as the venue. Many countries have arbitration laws that provide a legal framework for the conduct of arbitrations, which often include mandatory requirements. In England, Wales and Northern Ireland, the Arbitration Act 1996 applies to all arbitration proceedings which have their seat within the jurisdiction.[4] By virtue of s. 2 Arbitration Act 1996, some provisions apply to all arbitration proceedings, regardless of the seat. These include: the enforceability of arbitral awards (s. 66), the court powers of securing witness attendance (s. 43) and a number of other court powers (s. 44).

2.2 Arbitration rules

Investment arbitration can either be institutional or ad hoc. Increasingly, institutional arbitration is being used as the preferred method of dispute resolution. Many different institutions, such as the London Court of International Arbitration (LCIA) and the International Chamber of Commerce (ICC), have the competency to manage and administer international arbitration, and the parties agree to be bound by the procedural rules of that institution.

One of the most important of these institutions is the International Centre for the Settlement of Investment Disputes (ICSID), which is concerned exclusively with disputes between investors and states. The ICSID Convention,[5] which has been ratified by more than 140 states, requires compliance with its awards by all contracting states. Importantly, national courts have no jurisdiction to intervene in ICSID proceedings; ICSID operates within an autonomous jurisdictional system by virtue of the ICSID Convention.[6] This is considered to ensure the neutrality of proceedings by excluding interference from national courts. ICSID rules of arbitration are updated by amendment of the convention (the last amendment came into effect on 10 April 2006).

Ad hoc arbitration arises where the parties do not agree any institutional procedural rules, and manage the arbitration proceedings by agreeing their own procedural framework. Many countries have arbitration laws to provide a legal framework for arbitration, but these are often limited in scope and require the parties to decide how the arbitration is to be conducted. Most commonly, the United Nations Commission on International Trade Law Rules (UNCITRAL Rules) are adopted.[7]

3. Transparency

There is no consensus as to whether arbitration proceedings should be confidential or subject to transparency requirements. Some courts have rejected the notion of confidentiality as an inherent element of agreements to arbitrate, namely the highest courts in Australia, Sweden and some courts in the United States of America (U.S.A.). However, other jurisdictions, such as the United Kingdom (U.K.) and France, continue to see confidentiality as an essential feature of arbitration.[8] The current position relating to some of the most important rules are discussed below.

3.1  The current position

The UNCITRAL Arbitration Rules provide that hearings shall be held in private unless the parties agree otherwise (Article 25(4)) and that the award may be made public only with the consent of the parties (Article 32(5)).[9] However, whilst this is accurate at the time of writing, a working group of UNCITRAL has put forward a draft for transparency rules (see below, 3.3) and so the current position may change.

The ICSID Arbitration rules allow for public access to hearings unless either party objects (Rule 32(2)).[10] The award will not be published without the consent of the parties; however, excerpts of the legal reasoning of the Tribunal shall be included in its publications (Rule 48(4)).

The LCIA Arbitration Rules stipulate that hearings are conducted in private unless the parties agree otherwise (Article 19.4).[11]  Unless both parties consent, the proceedings are to be kept confidential and there will be no publication of the award (Article 30).

3.2 Legal challenges

Biwater Gauff Ltd. v Tanzania (2006)[12] was a highly politicised dispute between a UK company, Biwater Gauff, and the Republic of Tanzania in which the ICSID tribunal addressed the issue of disclosure of documents to the public.

Biwater Gauff contended that despite the amendment of the ICSID Arbitration Rule 32(2), which now states that ‘unless either party objects’, disclosure would still be subject to the consent of the parties. Tanzania on the other hand argued that investment arbitrations under ICSID were subject to higher levels of transparency, particularly with the online availability of documents and decisions. Tanzania also stated that the measures requested by Biwater Guaff would run counter to the trend towards transparency as reflected in the ICSID amendments.[13]

The Tribunal stated that ‘there is no provision imposing a general duty of confidentiality in ICSID arbitration, whether in the ICSID Convention, any of the applicable Rules or otherwise. Equally, however, there is no provision imposing a general rule of transparency or non-confidentiality in any of these sources.’[14] Due to this lack of a general rule on this issue it was within the discretion of each individual tribunal to find the right balance when conducting proceedings, and make a case-by-case determination.

The Australian case Esso Australia Resources Limited v Plowman [1995][15] raised the idea of a presumption in favour of transparency, which the High Court of Australia reinforced, recognising the accepted need for greater transparency in this field, but stating they would balance the specific interests of confidentiality against this presumption if there were any specific interests that may militate in favour of restrictions.[16]

Methanex Corporation v United States of America[17] involved a dispute under the North American Free Trade Agreement (NAFTA), a trade agreement between the U.S.A., Canada and Mexico using the UNCITRAL Arbitration Rules. The case allowed proceedings limited to a certain issue to be help in the open.

3.3 UNCITRAL Transparency Rules

Working Group II of UNCITRAL is working on draft Transparency Rules for investment arbitration proceedings.[18] In their current form, the Rules provide for much greater transparency than before, however, it is unclear what scope the Rules will have and it may be possible for parties to opt out of the Rules.

Under draft Article 2, the name of the disputing parties, the economic sector involved and the treaty under which a claim was being made will be made public. Draft Article 3 provides for the publication of certain documents, including written statements, written submissions and awards. It also grants the Tribunal discretion to publish further documents and allows for third party requests for publication of documents (administrative costs will be borne by the third party). Expert reports and witness reports will be automatically available on request.

Pursuant to draft Article 6, hearings involving substantive matters (not merely procedural matters) will be by default held in public, except for those parts of hearings that must necessarily be in private for the protection of confidential information. This Article has been left open for further discussion. Draft Article 7 protects confidential information. The Working Group is proposing a draft convention which would apply the rules of transparency to investment treaties which are already in force.

3.4 Pressure for reform

A joint statement made by two leaders of the transparency movement in investment arbitration, the Centre for International Environmental Law (CIEL) and the International Institute for Sustainable Development (IISD), concerning possible amendments to the UNCITRAL Arbitration Rules, seeks to justify the move towards transparency:

First, the very presence of a State to the arbitration raises a public interest because the nationals and residents of that State have an interest in how the government acts during the arbitration and in the outcome of the arbitration. Moreover, the existence of this public interest has implications for the conduct of arbitration…Second, investor-State arbitrations often involve large potential monetary liabilities for public treasuries. And any award of compensation will affect the State’s budget.[19]

4. Third Party Intervention

4.1 Amicus Curiae

Amicus curiae, meaning ‘friend of the court,’ is used to describe a third party that voluntarily joins a dispute to provide an opinion on a matter of public interest. It is important to emphasise that an amicus curiae does not gain any rights when joining the arbitration process. Amicus curiae are not to be equated to witnesses or experts nor should they be considered another party to the case. The amicus curiae’s sole purpose is to provide an opinion; to sincerely aid the Tribunal by providing information on an issue of public interest. However, amicus curiae can be liable in civil or criminal proceedings for any false statements made by them.

It is often the case that an amicus curiae states its opinions via written submissions which are considered when settling the dispute. NGOs, public bodies and even other governments may be given amicus curiae. The parties to the dispute may argue against any amicus curiae submissions, stating it is creating extra costs and delaying proceedings. The parties are also likely to want to protect any confidential business information which may be at risk of becoming known by allowing another person access to proceedings.

There is a useful guide to applying for amicus curiae status at:

A4ID: Amicus Curiae and Investment Arbitrations

4.2 The current position

The UNCITRAL Arbitration Rules contain no provision for third party intervention. However, the draft Transparency Rules allow amicus curiae to be allowed to make submissions to the tribunal. The amicus curiae must apply to the tribunal if it wishes to make submissions, and the tribunal will consider whether the third person has a significant interest in the matter and whether the third person can provide assistance to the tribunal (draft Article 4). Draft Article 5 allows submissions by a non-disputing party to the treaty, although it is still considering whether or not the tribunal will enjoy any discretion as to those submissions.

Article 37 ICSID Arbitration Rules provides for written submissions from a third party where the tribunal allows, after consultation with both parties to the dispute. The tribunal will consider whether or not the third party has a significant interest in the proceedings, whether its submissions would address a matter within the scope of the dispute and whether it would assist the tribunal in the determination of a factual or legal issue.[20]

The LCIA Rules do not allow for third party submissions.

4.3 Examples of amicus curiae

4.3.1 Methanex Corp. v. United States (2005)[21]

This case, also described above, was the first NAFTA case to consider amicus curiae submissions. The International Institute for Sustainable Development (IISD), along with three NGOs submitted applications and IISD was granted the right to submit a written brief.

4.3.2   Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A v. Argentine Republic, (2006)[22]

This case concerned a decision by ICSID. Five NGOs applied to submit and amicus curiae brief. For the first time the Tribunal held that it had the power to allow third party submissions. The Tribunal also set a list of criteria for considering an amicus curiae application: the suitability of the third party to make a submission, the subject matter of the submission and the procedure for allowing and making a submission.

5. Conclusion

The right to arbitration is enshrined in treaties and in investment contracts. Arbitration can be institutional, where the parties accept the administration of an arbitral institution, or ad hoc, where the parties manage the arbitration, usually in reliance on an established set of rules. This report has examined some of the most common institutions and rules that parties to investment arbitration use.

Currently, unless both parties consent to publication, arbitration under the UNICTRAL Rules and the LCIA Rules is confidential. The ICSID Rules differ only slightly; allowing for publication unless the parties object and allowing for the publication of excerpts of legal reasoning.

However, the UNCITRAL are drafting Transparency Rules which provide for greater transparency (though the rules may not have universal applicability). The UNCITRAL group meets twice a year and will next reconvene in February 2013.

ICSID permits written third party submissions, subject to certain conditions, whereas UNICTRAL and the LCIA make no provision or third party involvement in proceedings. However, the draft UNCITRAL Transparency Rules allow third party submissions subject to similar conditions to those imposed by ICSID.

There is a growing trend towards transparency in investment arbitration. The draft UNCITRAL Transparency Rules are indicative of a more amenable attitude to transparency and third party submissions. However, arbitration remains a party-led form of dispute resolution, and parties to a dispute still have considerable control over the proceedings.


[1] Advocates for International Development (prepared by Clifford Chance), ‘At a Glance to Arbitration’, p. 17, Accessed 25 November, http://a4id.org/sites/default/files/user/documents/arbitration.pdf

[3] For a discussion of the advantages and disadvantages of arbitration, see Organisation for Economic Co-operation and Development, ‘Arbitration and Competition, 2010, p. 8, Accessed 25 November, http://www.oecd.org/daf/competition/abuseofdominanceandmonopolisation/49294392.pdf

[6] Advocates for International Development, ‘At a Glance Guide to Arbitration’, p. 19.

[8] Crook, John R. ‘Joint Study Panel on Transparency in International Commercial Arbitration’, ILSA Journal of International and Comparative Law, Vol 15, Issue 2 (Spring 2009), p364

[9] Knahr, Christina and Reinisch, August, ‘Transparency versus Confidentiality in International Investment Arbitration – The Biwater Gauff Compromise’, The Law and Practice of International Courts and Tribunals, Vol. 6, Issue 1 (2007), p. 99

[12] Biwater Gayff Limited v United Republic of Tanzania, (2006), ICSID Case No. ARB/05/22

[13] Transparency v Confidentiality in International Investment Arbitration – The Biwater Gauff Compromise, Law and Practice of International Courts and Tribunals, Vol 6, Issue 1 (2007) Christina Knahr, p104.

[14] Biwater Gayff Limited v United Republic of Tanzania

[15] Esso Australia Resources Limited v Plowman [1995], HCA 19

[16] Ibid.

[17] Methanex Corporation v United States of America (2005), 44 ILM 1343

[19] Teiltelbaum, Ruth. ‘Look at the Public Interest in Investment Arbitration: Is it Unique? What Should We Do About It.?’ Publicist, Vol 5, Issue 1 (2010), p. 55

[20] ICSID Rules of Procedure for Arbitration Proceedings, Art 37(2)

[21] Methanex Corporation v United States of America (2005), 44 ILM 1343

[22] Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A v. Argentine Republic, (2006), ICSID Case No. ARB/03/17

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