Transparency and the UNCITRAL Arbitration Rules

In 2006 the United Nations Commission on International Trade Law (UNCITRAL) began revising its arbitration rules, which are the second-most commonly used in investor–state arbitration. IISD obtained status in 2006 to observe this process, and has actively participated in every session of the Working Group since.

IISD was instrumental in bringing the issue of transparency to the forefront of UNCITRAL's agenda. Working with partners, IISD provided expertise throughout the negotiation process, by intervening in the discussions, preparing analyses of textual options and proposing content for rules on transparency. In July 2013 UNCITRAL formally adopted the UNCITRAL Rules on Transparency in Treaty-based Investor–State Arbitration (“Transparency Rules”), which will officially come into effect on April 1, 2014.

As mandated by the organization's member states, the UNCITRAL Working Group II on Arbitration and Conciliation has now started the preparation of a transparency convention. The transparency convention is intended to facilitate application of the Transparency Rules to investor-state arbitrations arising under the bulk of investment treaties concluded prior to the Rules' entry into force, including arbitrations under rules other than the UNCITRAL Arbitration Rules.

Key developments and documents:

• April 2017: On April 18, 2017, Switzerland became the third country to ratify the United Nations Convention on Transparency in Treaty-based Investor–State Arbitration (the Mauritius Convention), after Canada and Mauritius. In accordance with Article 9(1) of the Mauritius Convention, it shall enter into force six months after the date of deposit of the third instrument of ratification, acceptance, approval or accession. 
   
• August 2015: The UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration (UNCITRAL Rules on Transparency) were applied for the first time in Iberdrola, S.A. and Iberdrola Energia. S.A.U. v. Bolivia (PCA Case No. 2015-05). According to the first procedural order issued by the arbitral tribunal, the parties to the disputes agreed to the application of the UNCITRAL Rules on Transparency to their proceeding, although the case was initiated under the 1976 UNCITRAL Arbitration Rules.
   
• March 2015: The United Nations Convention on Transparency in Treaty-based Investor–State Arbitration (the Mauritius Convention) was opened for signature on March 17, 2015. Representatives of Canada, Finland, France, Germany, Mauritius, Sweden, the United Kingdom and the United States signed it at the signing ceremony, which took place in Mauritius.
   
• December 2014: The United Nations General Assembly adopted the Convention on Transparency in Treaty-based Investor–State Arbitration (the Mauritius Convention) by Resolution 69/116 on December 10, 2014. The Mauritius Convention allows state parties to express consent to the application of the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration to treaties entered into prior to April 1, 2014.
   
• April 2014: The UNCITRAL Rules on Transparency in Treaty-based Investor–State Arbitration (UNCITRAL Rules on Transparency) came into effect. Article 1 provides that they shall apply to a treaty-based investor–state arbitration initiated under the UNCITRAL Arbitration Rules if the treaty is concluded on or after April 1, 2014, unless the state parties to the treaty have agreed otherwise. The Australia–Korea free trade agreement (FTA) became the first affected treaty, as it was concluded on April 8, 2014, and its Investment Chapter contains a provision allowing investor–state disputes to be resolved under the UNCITRAL Arbitration Rules (Article 11.16(3)(c)).
   
• February 2014: The UNCITRAL Working Group II preparing the new Convention on Transparency in Treaty-Based Investor-State Arbitration came close to finishing its work during the week of February 3–7 in New York. The committee completed a full second reading of the convention text, but was unable to take on the anticipated third and final reading as time ran out. Although not complete, the convention that is emerging will provide a practical tool for governments that wish to ensure that arbitrations under the investment treaties to which they are a party will be fully transparent and accessible to all stakeholders and observers. The convention will require the states that join it to apply the UNCITRAL Rules on Transparency in Treaty-Based Investor-State Arbitration that were finalized at the UNCITRAL full commission meeting in July 2013.
  
  It is worth noting that divides over the convention text were not North-South or region against region. Rather, the vast majority of developed and developing countries supported options to promote transparency when policy issues were debated. It was just a small number of governments that sought the transparency-restricting options, reflecting an important shift that took place in the negotiators' perspectives as well as that of the UNCITRAL Secretariat, who were largely skeptical in 2006 when IISD and CIEL took the issue to UNCITRAL. This was a very positive development that was solidified at last week's session. The third and final reading of the convention text is now scheduled for the first week of the next commission meeting, July 7-11, 2014, in New York.
   
• September 2013: The Working Group II (Arbitration and Conciliation) launched discussions on a draft transparency convention during its session from September 16– 20, 2013 in Vienna. IISD participated in the meeting.
  Report of Working Group II (Arbitration and Conciliation) on the work of its fifty-ninth session
   
• July 2013: The UNCITRAL Rules on Transparency in Treaty-based Investor–State Arbitration were adopted, representing a great victory for IISD and partners working on the issue. The Transparency Rules are the ground-breaking result of several years of negotiations in the UNCITRAL Working Group on International Arbitration. The Transparency Rules constitute a robust, innovative set of procedural rules that will make arbitrations involving a state, initiated under an investment treaty, accessible to the public. 
  UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration
   
• IISD and partners have prepared a commentary to the new rules:
  New UNCITRAL Arbitration Rules on Transparency: Application, Content and Next Steps
   
• October 2012: From October 1–5, 2012, the UNCITRAL Working Group II on Arbitration and Conciliation met in Vienna to negotiate a legal standard on transparency in treaty-based investor–state arbitration. The Working Group continued with the second reading of the draft rules on transparency currently under consideration. While most states were supporting strong transparency rules at that point, there was still some disagreement as to the scope of application of the rules. The resolution of this sticking point was perceived as crucial as to whether or not the Working Group would successfully fulfill its mandate to ensure transparency in investor–state dispute settlement. The Working Group met again at UN Headquarters in New York City in February 2013, and was expected to then complete the second reading of the rules on transparency in investor–state arbitration.
  Report of Working Group II (Arbitration and Conciliation) on the work of its fifty-seventh session
   

• IISD and partners have submitted the following papers to the Working Group meeting in Vienna:
  Submission to UNCITRAL Working Group II on International Arbitration
  Submission to UNCITRAL Working Group II on International Arbitration - Comments on Draft Articles 1, 3, 7 & 8

  
   
• February 2012: UNCITRAL country delegations had a critical opportunity to bring much- needed transparency to international arbitrations between foreign investors and host governments in discussions held on February 6–10, 2012 in New York. In her commentary in the lead-up to the meetings, Nathalie Bernasconi-Osterwalder highlighted crucial issues that the governments would be debating. IISD and the Center for International Environmental Law (CIEL) also produced a paper describing what government delegations involved in the UNCITRAL process should do in New York to bring long-awaited transparency to these investor–state arbitrations. During the meetings, a large number of countries, both developed and developing, strongly supported concrete options advocated by IISD and CIEL. However, some delegations blocked progress. The effort to ensure transparency in investor–state arbitration continued at a fifth meeting on this topic in October 2012.
  A Critical Opportunity for Transparency in Investor– State Disputes as Government Delegations and Arbitration Experts Meet in New York
  Comments on the Scope of Application of UNCITRAL’s Draft Rules on Transparency in Investor-State Arbitration
  (PDF - 651 KB)
  Countries Continue to Pursue Efforts to Increase Transparency in Investor–state Dispute Settlement
   
• October 2011: From October 3–7, 2011, a working group of the United Nations Commission on International Trade Law (UNCITRAL) met in Vienna to continue work it began over a year ago on how to ensure transparency in investor–state arbitration. The UNCITRAL Secretariat had produced two texts containing draft transparency rules that served as the basis for discussion during the upcoming October 2011 meeting.
  Rules 1-6 (PDF - 1 MB)
  Rules 7-8 (PDF - 927 KB)
   
• IISD and CIEL produced a paper commenting on the proposed draft articles.
  Comments on Draft Rules on Transparency in Investor-State Arbitration (PDF - 723 KB)
   
• February 2011: The United Nations Commission on International Trade Law (UNCITRAL) Working Group II on International Arbitration and Conciliation met in New York on February 7-11, 2011 to discuss how to integrate transparency into investor–state dispute settlement under UNCITRAL arbitration rules. IISD and CIEL have prepared a brief note summarizing their positions on preferred ways forward for the Working Group. In particular, the note expands on how the optimal form for ensuring transparency is to develop rules on transparency in investor–state arbitration that will be integrated into UNCITRAL arbitration rules, whether as an annex or otherwise. Separate rules or guidelines pursuant to which states would have to specifically opt in to would do nothing to make the UNCITRAL arbitration rules more transparent as they apply to investor–state arbitration.
  Ensuring Transparency in Investor–State Dispute Resolution under the UNCITRAL Arbitration Rules
   
• October 2010: At its 41st session, the UNCITRAL Commission “agreed by consensus on the importance of ensuring transparency in investor–State dispute resolution.” The UNCITRAL Working Group II on International Arbitration and Conciliation met in Vienna on October 4–8, 2010 to discuss how this can be done. IISD and CIEL proposed a legal annex to the UNCITRAL Rules on Arbitration.
  "Ensuring Transparency" in Investo–State Dispute Resolution Under the UNCITRAL Arbitration Rules
  (PDF - 507 KB)
   
• February 2009: IISD and CIEL briefed an UNCTAD Expert Meeting on the revision of UNCITRAL arbitration rules.
  Revision of UNCITRAL Rules and Investment Arbitration: An Update on the Ongoing Process to Increase Transparency in Investment Arbitration
   
• November 2008: Nathalie Bernasconi-Osterwalder presented to participants of the 13th International Anti-Corruption Conference in Athens, Greece, how corruption, transparent investor–state dispute settlement and the UNCITRAL revision process relate to each other.
  Combating Corruption Through more Transparent Dispute Settlement Processes
   
• June/July 2008: The governing body of UNCITRAL reached consensus that the UNCITRAL arbitration rules should provide for transparency in arbitrations brought by investors against states (investor–state arbitrations). It mandated the group revising those rules (Working Group II on Arbitration and Conciliation) to begin discussions on transparency immediately after it finished its work revising the generic arbitration rules.
  CIEL and IISD call for an end to an era of secrecy in investor–state arbitration: UN body must support transparency in new arbitration rules (PDF - 69 KB)
  UN body supports transparency in new arbitration rules
  Report of the United Nations Commission on International Trade Law, 41st session (June 16–July 3, 2008), V. Arbitration and conciliation: Progress report of Working Group II (paras. 308–316). (PDF - 1.3 MB)
   
• February 2008: “UNCITRAL Working Group rebuffs calls for greater transparency in investor–state arbitration” - The UNCITRAL Working Group II on Arbitration and Conciliation set back calls by many states and non-governmental organizations to discuss introducing transparency requirements into international rules governing arbitrations brought by private foreign investors against states. It asked the UNCITRAL governing body (the Commission) for further guidance on how to move forward on the issue of transparency. IISD expressed its deep disappointment at the efforts of some governments to block the inclusion of transparency provisions in the revised rules, following the UNCITRAL Working Group's session in New York, February 4 to 8, 2008. The UNCITRAL Arbitration Rules are the second most commonly used rules for arbitrations by foreign investors against states. However, the rules were drafted 30 years ago with private commercial disputes in mind and do not address the public interest implications of investor–state disputes. IISD and Center for International Environmental Law (CIEL) have issued:
  Block of countries refuses to discuss transparency in investor-State arbitration (press release) (PDF - 59 KB)
  Revising the UNCITRAL Arbitration Rules to Address Investor-State Arbitrations (PDF - 227 KB)
  Proposed Revisions to the UNCITRAL Rules For Investor-State Arbitrations - English (PDF - 185 KB) - Français (PDF - 186 KB) - Español (PDF - 184 KB) showing how the UNCITRAL Rules can be simply amended to address the needs of investor-state arbitrations.
   
• 2007: In February, IISD participated as an observer in the UNCITRAL Working Group’s session for the first time. IISD prepared a joint paper with the Center for International Environmental Law (CIEL) that set out why and how the UNCITRAL Rules should be revised to address the public interest needs of state arbitrations.
  Revising the UNCITRAL Arbitration Rules to Address State Arbitrations (February 2007) (PDF - 273 KB)
   
• 2006: The UNCITRAL Arbitration Rules were designed 30 years ago with disputes between private commercial parties in mind, and are now among the leading rules for investment treaty arbitrations. While the UNCITRAL Rules' emphasis on confidentiality and party autonomy may be suitable for arbitrations between private parties, such an emphasis is not appropriate for investor–state arbitrations, where private versus public interests are at stake. IISD submitted a first paper highlighting public interest issues when the process for the revision of UNCITRAL Arbitration Rules commenced:
  Good Governance and the Rule of Law: Express rules for investor-State arbitrations required (PDF - 178 KB)
  
  

• IISD’s partner, the Center for International Environmental Law (CIEL), issued two related press releases:
  UNCITRAL Arbitrations Involving State as a Party - Transparency, Public Participation and Accountability
  CIEL Urges UNCITRAL Member Governments to Adopt More Transparent and Participatory Arbitral Rules for Disputes Involving States