UN body supports transparency in new arbitration rules

July 3, 2008

New York: On June 27, 2008, the main body of the United Nations Commission on International Trade Law (UNCITRAL) reached consensus that the UNCITRAL arbitration rules should provide for transparency in arbitrations brought by investors against States, referred to as investor-State arbitrations. It mandated the group currently revising those rules (Working Group II) to begin discussions on transparency immediately after it finishes its work revising the generic arbitration rules.

This decision is due to efforts of the Center for International Environmental Law (CIEL) and the International Institute for Sustainable Development (IISD) with governments (both industrialized and developing countries). In the UNCITRAL meeting on June 27, those efforts paid off with the United Kingdom, United States and Canada leading the efforts, strongly supported by developing countries, including Argentina, Mexico and, most strongly of all, Uganda. Transparency, including opportunity for public participation, is required because of the important public interests typically present in investor-State arbitrations.

The UNCITRAL arbitration rules were originally designed for use in private commercial arbitration, allowing for a high degree of secrecy. For example, there is no requirement that even the existence of an arbitration proceeding or a decision of a tribunal be made public. UNCITRAL is currently revising its international arbitration rules for the first time in 30 years.

In February 2008, UNCITRAL's Working Group II, which is focused on revising the international arbitration rules and is composed predominantly of private arbitrators, rebuffed calls by many States and civil society to introduce transparency requirements into investment arbitrations. The Working Group said it would need a clear mandate from its governing body, the UNCITRAL Commission, before it was prepared to further consider the issue.

Apart from the mandate the UNCITRAL Commission has given to provide transparency in investor-State arbitration, the outcome of June's meeting is also significant because the work on transparency should (in the words of the United Kingdom) commence "seamlessly" after finishing the work on the generic rules. This means that work can commence immediately after the final reading of the revised generic rules, before their adoption by the Commission. It is therefore still a possibility that the transparency rules can be adopted as one package with the generic rules. Preparatory work to be undertaken now by the UNCITRAL Secretariat will assist in this respect. Finally, the Commission's recognition of the need to include public policy/treaty expertise in delegations (which was strongly expressed by Mexico and reinforced by Canada) portends a considerable.