In a controversial move, government delegations at the Working Group II of the United Nations Commission on International Trade Law (“UNCITRAL”) agreed during its 58th Session in February 2013 in New York City (“February 2013 Meeting”) to adopt new transparency rules that will apply on a default basis to all future arbitration proceedings under bilateral investment treaties (“BITs”) that use the UNCITRAL arbitration rules – unless the treaty parties expressly opt out of the new rules.

The new rules will provide for open oral hearings and the publication of key documents, including Notices of Arbitration, pleadings, transcripts, and all decisions and awards issued by the tribunal. However, the arbitrators still retain the discretion to keep some confidential information from public release. These new rules apply only to investor-state arbitrations under the UNCITRAL rules, which are the second most frequently used set of rules for solving investor-state disputes. These rules differ considerably from standard practice in commercial arbitration.

As a result of resistance toward either the automatic inclusion of these new rules or an arbitral tribunal having discretion to apply them, the delegates at the February 2013 Meeting decided that the new wording of Article 1(2) will apply to existing treaties only if the parties to a dispute all consent or where the contracting parties to a treaty have given their blessing to the application of the transparency rules under that treaty regime.

Indeed, explicit consent will be required even where an earlier treaty contains a potentially “dynamic” arbitration offer (e.g., a reference to the UNCITRAL rules as revised or amended from time to time) that provides an arguable basis for arbitrators to find that the transparency rules apply.

The impact of the new rules will depend on the political outcome as states can either make them applicable to existing treaties by way of mutual declarations or conventions, but can also opt out from the rules in their future BITs. Nonetheless, the rules are likely to be used as the United States has already voiced support for their application to existing investment treaties and the European Union trade spokesman declared them a benchmark for all the EU’s future BITs. While there may be benefits to transparency in certain contexts – for example, in cases where environmental or human rights issues are in play – in other settings greater transparency may be used as a sword in order to extract a settlement. To enter into force, the rules still need to be approved by the UNCITRAL Commission in July 2013 and then by the UN General Assembly in September 2013.