By Toby McIntosh
New transparency rules will go into effect April 1 for the world’s second largest arbiter of international investment treaty disputes, but their impact will be minimal.
The rules will apply only to the disputes under future treaties, not the 3,000 existing treaties.
This situation could change if an overarching treaty on transparency is signed, but that remains an open question.
Nevertheless, the rules adopted in 2013 signal a major shift in philosophy for the United Nations Commission for International Trade Law (UNCITRAL), which is a widely used source of rules for the arbitration of disagreements between investors and national governments and between private parties.
Despite the gaping hole in the new transparency rules, the optimistic view is that they serve a “norm-creating function.”
Three years in the making, the new rules are intended to expand transparency for so-called investor-State disputes that arise under the some 3,000 international investment treaties. In such treaties, states offer investors the option of taking disputes to international arbitration.
The numbers and significance of investor-State arbitrations has been growing. There were a record 62 in 2012, in all venues, and about 500 over the 15 years they have been in existence. The average total cost of such litigation is $8 million. Originally designed to protect against things such as uncompensated nationalization, the treaties have increasingly been used to challenge national policies, such as when Philip Morris objected to Australia’s rules on cigarette packaging. The new rules apply to investor-State disputes, not to private contract arbitrations.
UNCITRAL is the second most frequently used forum, the largest being one administered by the World Bank, the International Centre for Settlement of Investor Disputes (ICSID), and there are several others. The others are less transparent, observers said…