Publications and Webinars on Asia-Pacific arbitration and ISDS

On 23 March 2022 Kyoto University awarded Luke Nottage an LLD by publications for his book of selected/updated and some new essays on International Commercial and Investor-State Arbitration: Australia and Japan in Regional and Global Contexts (Elgar, 2021). In addition, a Transnational Dispute Management report of (Young-OGEMID listserv) Q&A about the book was published in February 2022.

On 2 March 2022 Prof Luke Nottage joined Dr Michael Hwang SC (Singapore), Neil Kaplan CBE QC SBS (Hong Kong), Hafez Virjee (Paris) for a public webinar entitled “Between Theory and Practice”, discussing the development of international arbitration particularly in the Asia-Pacific region and the place of Australian practitioners in this global market: watch the recording here. The webinar also discussed the benefits of pursuing international arbitration as an elective course, in the context of the large range of international arbitration materials made available to Sydney Law School students and staff through the Delos Dispute Resolution platform thanks to a subscription donated by Dr Hwang.

On 25 February Luke Nottage was interviewed for a podcast recording by a Bosnia-based association for arbitration, discussing the hot topic of transparency vs confidentiality particular in investor-state dispute resolution. Below is the outline of key points discussed.

In addition, Luke Nottage spoke on ISDS and investment treaties at the UoW Transnational Law and Policy Centre‘s co-hosted symposium on topics being negotiated in the Australia-India FTA (recording here), focusing on mandatory mediation before investors arbitrate disputes, and was then invited to speak on ISDS reform more generally for a symposium hosted by the Indian government’s Centre for Trade and Investment Law.

Some of Luke Nottage’s related recent publications include an overview chapter for a new book on the Asian Turn in Foreign Investment, an econometric analysis of ISDS-backed treaties on FDI flows, international arbitration and society at large (in the new Cambridge Compendium), professional diversity in international arbitration, and a review forthcoming in the Australian Law Journal of a new book on International and Australian Commercial Arbitration.

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25 February 2022 webinar on Transparency in ISDS:

• Pros and cons of transparency in international arbitration generally?
  • Fewer costs and delays in procedures and award-writing if procedure limited to the parties/counsel and arbitrators, not wider public
  • vs leads to more info asymetries in this market for services (arbitrators, especially lawyers, even expert witnesses) hence potential costs and delays: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2987674
  • If diminishing net cost savings, even in intl commercial arbitration, less attractive balance from rule of law perspective, undermining legitimacy of international arbitration compared to (more public) litigation – see (Menon CJ article, quoted in my JoIA article on ACICA Rules 2021 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3931086: incidentally, those don’t relax confidentiality but do require disclosure of third-party funders)
  • Especially in investor-state arbitration, given its inherent greater public interests, and growing media attention (and polarisation)
• Current regime:
  • Already considerable (surprising) transparency in ISA re awards (2/3): https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3227401 **
  • ICC Rules (mostly an ICA org, occasionally ISA): no confidentiality imposed on parties
  • ICSID Convention / Rules (2/3 of ISA cases): likewise, but eg „shall promptly“ publish „excerpts of legal reasoning“ in awards, need consent of parties for full award (or leak!)
  • Ad hoc arb UNCITRAL Rules (eg 2010): likewise, can publish awards if parties consent, arbitrator discretion re other transparency (eg Philip Morris v Australia procedural order)
    • Revised 2013 for transparency in all treaty-based arbs, then 2014 Mauritius Convention to extend transparency to pre-2014 treaties (whether UNCITRAL or other Rules)
• The recent amendments of investment arbitration rules (most notably ICSID) and dispute resolution clauses in IIAs [eg] to allow third-party submissions.
  •  ICSID already in 2006 had amended its Rules for Convention and AF cases to somewhat expand confidentiality – https://icsid.worldbank.org/resources/rules-and-regulations/amendments/about
    • strengthened disclosure requirements for arbitrators (Arbitration Rule 6(2), Article 13(2) of the Arbitration (Additional Facility) Rules);
    • a provision on the possibility to hold open hearings (Arbitration Rule 32(2), Article 39(2) of the Arbitration (Additional Facility) Rules);
    • expanded transparency provisions to publish awards as soon as possible (Arbitration Rule 48(4), Article 53(3) of the Arbitration (Additional Facility) Rules);
    • the opportunity for non-disputing parties to file submissions (amicus curiae briefs) (Arbitration Rule 37(2), Article 41(3) of the Arbitration (Additional Facility) Rules); and
    • the possibility for a respondent to obtain an early dismissal of a case due to manifest lack of legal merit (Arbitration Rule 41(5), Article 45(6) of the Arbitration (Additional Facility) Rules).
  • Recently decided further ICSID Rules revisions (since late 2016) align AF Rules (which also now can be adopted even without any party being member of the ICSID Convention) with expansive transparency across all stages as in UNCITRAL Rules; plus for ICSID (Convention states) Arb Rules eg at https://icsid.worldbank.org/resources/rules-amendments
    • [Proposed Rule 62] Automatic publication of award if 60 days pass and no objection lodged by a party (cf earlier debate that such „deemed consent“ too incompatible with Convention, which would need to be then amended but too many member states!)
    • [Rule 63] Publish excerpts of legal reasoning re decisions other than awards, eg on jurisdiction (eg recently under Australia-Egypt BIT: do treaties providing that a host state „shall“ consent to ISA provide advance consent to that procedure? Earlier see my https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2424987)
    • [Rule 64] publish other docs lodged (eg party submission) also if agreed by parties or tribunal discretion / weighing
    • [Rule 65] shall allow non-parties to attend hearings (and publish transcript or recording) unless a party objects
    • [Rule 66] but subject to redaction etc for „confidential information“ (listed types below)
    • [Rule 67] expanded provisions so tribunals MAY allow submissions etc by „non-disputing parties“ eg amicus curiae – text below bolded
    • [Rule 68] provisions so tribunals SHALL allow „non-disputing treaty parties“
• Tension between the transparency concerns expressed by the States in the context of ISDS and the lack of actual application of the transparency rules in practice. 
  • Yet only 9 ratifications of Mauritius Convention, few of the big players (eg Canada 2016, Switzerland 2017, Australia 2020 alongside review of old BITs – but no public report!): lose control / treaty negotiating leverage? Prefer incorporating tailored regime in treaties, anyway need to do so (Rules options provided, and/or amendments) for post-2014 treaties as Mauritius Convention doesn’t apply to those
  • Some host states have been reticent about too much transparency, including in treaty (re)drafting or UNCITRAL reform deliberations: exposes their (even alleged) poor governance (hence many investors favour transparency, potentially even encouraging settlement: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2065636), impede settlement (only partly empirically justified? ** and see further Ubilava at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3352181), more costs and delays (arguments over exceptions to transparency: Prof Zachary Douglas at https://www.claytonutz.com/ialecture/previous-lectures/2020)
• Impact of legal tradition and culture on the approach to transparency in ISDS?
  • Less determined by say civil vs common law tradition, more eg socialist law / governance (eg Vietnam etc haven’t even ratified ICSID Convention, Chinese treatise were slow to incorporate much transparency) or developing country status (eg India?)
  • Culture might have some (small) impact: surveys etc show Eastern parties / counsel see confidentiality as advantage over litigation compared to Western, more generally think of eg https://en.wikipedia.org/wiki/The_Farewell_(2019_film) ?
• Possible solutions to the improvement of transparency, while maintaining the benefits of confidentiality that the parties desire
  • States party should try to agree in treaties in advance
  • or during proceedings (but then host state and investor, and often acrimonious generally)
  • Otherwise, tribunals and counsel need to be aware of the competing interests, pros and cons of transparency (especially for costs and delays) as discussed above, when weighing whether and how to allow disclosures.

New ICSID (Convention) Arbitration Rule 66

Confidential or Protected Information

For the purposes of Rules 62-65, confidential or protected information is information

which is protected from public disclosure:

(a) by the instrument of consent to arbitration;

(b) by the applicable law or applicable rules;

(c) in the case of information of a State party to the dispute, by the law of that State;

(d) in accordance with the orders and decisions of the Tribunal;

(e) by agreement of the parties;

(f) because it constitutes confidential business information or protected personal

information;

(g) because public disclosure would impede law enforcement;

(h) because a State party to the dispute considers that public disclosure would be

contrary to its essential security interests;

(i) because public disclosure would aggravate the dispute between the parties; or

(j) because public disclosure would undermine the integrity of the arbitral process.

Rule 67

Submission of Non-Disputing Parties

(1) Any person or entity that is not a party to the dispute (“non-disputing party”) may

apply for permission to file a written submission in the proceeding. The application

shall be made in the procedural language(s) used in the proceeding.

(2) In determining whether to permit a non-disputing party submission, the Tribunal

shall consider all relevant circumstances, including:

(a) whether the submission would address a matter within the scope of the dispute;

(b) how the submission would assist the Tribunal to determine a factual or legal

issue related to the proceeding by bringing a perspective, particular knowledge

or insight that is different from that of the parties;

(c) whether the non-disputing party has a significant interest in the proceeding;

(d) the identity, activities, organization and ownership of the non-disputing party,

including any direct or indirect affiliation between the non-disputing party, a

party or a non-disputing Treaty Party; and

(e) whether any person or entity will provide the non-disputing party with financial

or other assistance to file the submission.

(3) The parties shall have the right to make observations on whether a non-disputing

party should be permitted to file a written submission in the proceeding and on any

conditions for filing such a submission.

(4) The Tribunal shall ensure that non-disputing party participation does not disrupt the

proceeding or unduly burden or unfairly prejudice either party. To this end, the

Tribunal may impose conditions on the non-disputing party, including with respect

to the format, length, scope or publication of the written submission and the time

limit to file the submission.

(5) The Tribunal shall issue a reasoned decision on whether to permit a non-disputing

party submission within 30 days after the last written submission on the application.

(6) The Tribunal shall provide the non-disputing party with relevant documents filed in

the proceeding, unless either party objects.

(7) If the Tribunal permits a non-disputing party to file a written submission, the parties

shall have the right to make observations on the submission.

** “… around 85% of cases where either the investor or the state have won are fully Public, and almost all the rest are only Partly Confidential. For settled cases, as italicised, 41% are Public or Partly Confidential.  This suggests that minimising costs and delays through early settlement may often be facilitated by keeping the outcome at least partly private, but not necessarily in all situations.”