On 12 November 2015, the European Union’s proposal for “Investment Protection and Resolution of Investment Disputes” was made public. This proposal is part of the chapter on Investment contained in the Transatlantic Trade and Investment Partnership (“TTIP“), currently being negotiated between the EU and the United States. One significant aspect in this proposal is the provision on Transparency contained in Article 18 of Section 3 of the chapter on Investment. It provides for the application of the UNCITRAL Rules on Transparency in treaty-based Investor-State Arbitration (“the Transparency Rules“), with a few additional obligations. In fact, all proposals for the TTIP submitted by the EU since July 2013 have provided for incorporation of the Transparency Rules in Investor-State disputes. These Rules have also been incorporated in the Comprehensive Economic Trade Agreement between the EU and Canada. The aforementioned developments make it important to answer the question: What are the important obligations that the Transparency Rules impose on the parties, counsel and the tribunal? This article throws light on these aspects.

What are the relevant obligations under the Transparency Rules?

The Transparency Rules aim at increasing transparency in Investor-State arbitration proceedings in several ways.

  1. Firstly, once the respondent State receives the notice of arbitration, either the State or the Investor must send a copy of the notice of arbitration to the “repository” under the Transparency Rules. The “repository” is the Transparency Registry operated by UNCITRAL: http://www.uncitral.org/transparency-registry/. UNCITRAL will then publish the names of the disputing parties, the economic sector involved and the treaty under which the claim is being made (Article 2 Transparency Rules).
  2. Secondly, documents relating to the arbitration must be made available to the public, i.e. they will also be uploaded on the UNCITRAL Transparency Registry (Article 3 Transparency Rules). This includes the notice of arbitration, the response to the notice of arbitration, the statement of claim, the statement of defense and any further written statements or written submissions by any disputing party. In addition to this, any written submissions made by non-disputing parties to the treaty (e.g. amicus submissions), transcripts of hearings, where available and orders, decisions and awards of the arbitral tribunal are also to be made public. While exhibits themselves may not be published under the Transparency Rules, the parties shall publish a table listing all exhibits to the briefs and to the expert reports / witness statements.

Here, the EU’s proposal for transparency in the TTIP goes further than the UNCITRAL Transparency Rules. The EU’s proposal provides that exhibits to expert reports and witness statements shall also be published.

  1. Thirdly, the Transparency Rules allow a person that is not a disputing party to make written submissions with respect to a matter within the scope of the dispute, i.e. amicus curiae (Article 4 Transparency Rules) and for a person that is a non-disputing party to the concerned treaty, to make submissions with respect to a matter within the scope of the dispute or with respect to issues of treaty interpretation (Article 5 Transparency Rules). The Transparency Rules provide the Tribunal with discretion whether to allow such submission. When exercising its discretion, the Tribunal will consider whether the third person / non-disputing party has a significant interest in the arbitral proceedings and whether the submission will assist the arbitral tribunal in the determination of the facts and the law. The Transparency Rules do not provide for such third person or third party to make oral submissions or participate in the hearings of the arbitration.
  2. Fourthly, the Transparency Rules provide for open hearings and thereby a revolution of arbitration proceedings. Article 6(1) Transparency Rules states:

hearings for the presentation of evidence or for oral argument (“hearings”) shall be public.

In this regard, the arbitral tribunal has to make logistical arrangements to facilitate public access to hearings, including by organizing attendance through video links or other appropriate means (Article 6(3) Transparency Rules). The Transparency Rules do, however, also contain a vague exception to the “open hearing”: the tribunal could hold the hearing in private where this is necessary for logistical reasons. It remains to be seen how this exception is going to be interpreted in practice.

  1. Finally, while the Transparency Rules allow increased transparency and access to information by the public, it also protects the interests of the parties and the integrity of the arbitral process by not making confidential or protected information available to the public (Article 7 Transparency Rules).

Confidential information includes confidential business information, information that is protected against being made available to the public under the treaty, under the law of the respondent state or under any laws or rules determined by the arbitral tribunal, and information the disclosure of which would impede law enforcement (Article 7(2) Transparency Rules).

Furthermore, in order to protect the integrity of the arbitral process, the Tribunal could decide to withhold information, if such information could hamper the collection or production of evidence, lead to the intimidation of witnesses, lawyers, or members of the arbitral tribunal (Article 7(6), 7(7) Transparency Rules).

When are the Transparency Rules applicable?

It goes without saying that the Transparency Rules are applicable if the treaty pursuant to which the arbitration is commenced (e.g. CETA) explicitly provides for the applicability of the Transparency Rules.

For all other disputes, the scope of application is stipulated in Article 1 Transparency Rules: The Transparency Rules were adopted in 2013 and came into effect on 1 April 2014. These Rules were incorporated into the UNCITRAL Arbitration Rules (as revised in 2010) by including a new Article 1(4) Transparency Rules which reads as follows “For Investor-State arbitration […], these Rules include the UNCITRAL Rules on Transparency in treaty-based Investor-State Arbitration (“Rules on Transparency”) […] “. This means: The Transparency Rules apply to all Investor-State arbitrations initiated under the UNCITRAL Rules unless the parties to the treaty have agreed otherwise.

Since the Transparency Rules came into effect on 1 April 2014, they apply only to Investor-State arbitrations commenced pursuant to treaties concluded on or after 1 April 2014. In order for the Transparency Rules to apply to treaties concluded prior to 1 April 2014, either the parties to the arbitration have to agree to their application or the parties to the treaty must give their consent to the application of the Transparency Rules to arbitration proceedings that have commenced after that date. In other words, parties have to “opt in” to the Transparency Rules in respect of pre-April 2014 treaties.

Acknowledging this limitation of the temporal scope of the Transparency Rules, the General Assembly of the United Nations adopted the United Nations Convention on Transparency in treaty-based Investor-State Arbitration. The Convention aims at promoting and increasing the application of the Transparency Rules. The Convention basically states that the UNCITRAL Transparency Rules shall also apply to any arbitration initiated pursuant to treaties concluded before 1 April 2014, whether or not conducted under UNCITRAL Rules. At last count, 16 States had signed the Convention, and Mauritius is the sole country to have also ratified it.[1] While the Convention has yet to enter into force,[2] it recognizes the increasing demand to provide for transparency in the settlement of treaty-based Investor-State disputes.