The confidentiality of arbitral proceedings is generally regarded as one of the key benefits of arbitration. However, in the area of investment arbitration, there appears to be an emerging trend towards increased transparency.
A major step towards more transparency is the adoption of the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, which enter into force on 1 April 2014. Enhanced transparency in investment arbitration is also part of the European Union's investment policy and is likely to be integrated in its future free trade agreements, currently being negotiated with Canada and the United States.
The UNCITRAL Transparency Rules were adopted by the United Nations Commission on International Trade Law on 11 July 2013. They will apply to investor-state arbitration initiated under the UNCITRAL Arbitration Rules pursuant to an investment treaty concluded on or after 1 April 2014 unless the parties to the treaty have agreed otherwise. They will also apply to investor-state arbitration pursuant to investment treaties concluded before 1 April 2014 if the parties to the arbitration or the parties to the investment treaty have agreed to their application after 1 April 2014. Further, if the UNCITRAL Transparency Rules apply pursuant to a treaty or to an agreement by the parties to such treaty, it is generally not possible for disputing parties to derogate from them. Finally, the UNCITRAL Transparency Rules are also available for use in investor-state arbitration under rules other than the UNCITRAL Arbitration Rules as well as in ad hoc proceedings.
The introduction of the UNCITRAL Transparency Rules follows long-lasting public and academic criticism about the lack of transparency in investor-state arbitration, casting doubts on its legitimacy. One current example is the ICSID arbitration case of Vattenfall v Germany. Following Germany's decision significantly to speed up the phaseout of nuclear power generation, the Swedish energy company Vattenfall brought a claim against the German government under the Energy Charter Treaty. Despite enormous public interest in Germany, only minimal information about the case has been made available to the public.
To take into account public interest in treaty-based investor-state arbitration, the new UNCITRAL Transparency Rules will provide for the publication of documents exchanged in the proceedings, including all written statements and written submissions by the parties, hearing transcripts and all orders, decisions and awards of the arbitral tribunal. Further, under the UNCITRAL Transparency Rules, all hearings for the presentation of evidence or for oral argument will generally be public. The UNCITRAL Transparency Rules also contain provisions for submissions by third parties.
Exceptions to transparency will apply for confidential or protected information, as determined by the arbitral tribunal after consultation with the parties. In addition, before any information is made public, the party that voluntarily introduced it into the record will be permitted to withdraw all or part of the document from the record of the arbitral proceedings.
Finally, information will not be made available to the public if this would jeopardize the integrity of the arbitral process (i.e., disclosure could hamper the collection or production of evidence or lead to the intimidation of witnesses, lawyers acting for disputing parties or members of the arbitral tribunal, or could create comparably exceptional circumstances).
Despite the fact that the UNCITRAL Transparency Rules will not necessarily apply to all investor-state arbitration proceedings initiated after 1 April 2014, their significance for the handling of future investment disputes should not be underestimated. The European Commission has already reached a political agreement with Canada to introduce the UNCITRAL Transparency Rules in the upcoming EU-Canada free trade agreement and has declared that it intends to push for similar provisions in its future investment treaties. As a result of the ongoing public criticism regarding investor-state proceedings and their lack of transparency, the European Commission will shortly start public consultations on the investment chapter of the future EU-US free trade agreement. The European Commission's position on transparency in investor-state arbitration is of particular importance: since the Treaty of Lisbon, the European Union is competent to negotiate investment treaties on behalf of all EU member states.
Even in cases where the UNCITRAL Transparency Rules do not apply, for example in the ICSID arbitration Vattenfall v Germany, it can be expected that the very existence of these new rules will increase the pressure on disputing parties in investor-state arbitration to allow for greater transparency.
Therefore, all companies and states involved in investor-state arbitration will likely need to be mindful of increasing transparency when conducting these disputes, which will further add to the complexity of such proceedings.
Dr David Buntenbroich