Under transparency rules adopted by the United Nations Commission on International Trade Law (UNCITRAL) on July 11, 2013 (hereafter, the “Rules”), investor-State arbitration proceedings are no longer presumed to be confidential and, instead, must proceed in favor of public access.1 In a stark divergence from the confidentiality typically afforded to arbitral proceedings, the Rules require that both hearings and relevant documents be made public. The Rules explicitly limit their application to investor-State arbitrations pursuant to bilateral investment treaties (BITs) that incorporate the UNCITRAL rules for dispute resolution—not BITs that require the use of other arbitration rules (such as ICSID rules), or other types of arbitrations subject to the UNCITRAL commercial rules. Importantly, whether the Rules will apply at all to an investor-State arbitration under UNCITRAL rules depends upon when the BIT was executed:
- Disputes arising out of treaties executed on or after April 1, 2014, will be subject to the Rules unless the sovereign parties to such treaties affirmatively opt out.
- Disputes arising out of treaties executed before April 1, 2014, will not be subject to the Rules unless the sovereign parties amend their treaties to opt in or if the disputing parties consent to the application of the Rules in a particular arbitration.2
Investors must consider the implications of the Rules when deciding whether to pursue an investment or arbitrate a dispute. As discussed below, while these Rules do provide measures to protect confidential information, the protection afforded could vary significantly depending on the composition of the arbitral tribunal. This reality, in turn, adds yet another consideration for investors to consider when selecting an arbitrator in a dispute subject to these new Rules.
Under the New Rules, the Tribunal Must Ensure that Hearings, Oral Arguments and Documents Are Accessible to the Public
In an effort to bring transparency to investor-State arbitrations, the new UNCITRAL rules provide that:
- hearings for the presentation of evidence or for oral argument shall be made publicly accessible;
- the tribunal must make arrangements to facilitate public access to hearings, such as by video link; and
UNCITRAL will oversee a publicly accessible repository for published information concerning investor-State arbitrations, making available and maintaining:
- information relating to the initiation of investor-State arbitrations under the UNCITRAL rules, including the name(s) of the disputing parties, the economic sector involved and the treaty under which the claim is being made;
- copies of notices, responses, statements of claims or any other written submissions by the disputing parties, non-disputing parties and third parties; transcripts; and orders, decisions and awards of the tribunal (a table of applicable exhibits must be made public, but the actual exhibits need not be included); and
- copies of expert reports and witness statements if a request is made by any person to the arbitral tribunal.
The New Rules Provide Broad Protections for Confidential Information and Vest Discretion in the Tribunal to Protect It from Disclosure
The primary purpose of the Rules is to allow public access to arbitration proceedings, but they do also recognize the need to protect confidential information. Accordingly, the Rules vest the arbitral tribunal with wide discretion to protect the following categories of information:
- confidential business information;
- information that is protected under the applicable treaty;
- information that is protected against being made available to the public by law of the respondent State, or other applicable laws;
- information of a nature that publication would be contrary to essential security interests;
- information that would “impede law enforcement”; and
- information that would jeopardize the integrity of the arbitration process.
Although these new Rules will only apply to a relatively small subset of arbitrations under the UNCITRAL rules—investor- State disputes—investors must consider their implications when deciding whether to pursue an investment. In particular, investors should be aware that although the Rules do contemplate the protection of certain categories of confidential information, the amount of protection could vary depending on the composition of the arbitral tribunal. In turn, when selecting an arbitrator(s), parties to a dispute under the Rules should carefully analyze whether the proposed arbitrator is likely to respect the protection of confidential information.