Analysis: Will UNCITRAL arbitrations become even more secretive?

Investment Treaty News (ITN) | 3 September 2006

International Institute for Sustainable Development (Canada)

Analysis: Will UNCITRAL arbitrations become even more secretive?

By Luke Eric Peterson

Proposals tabled by the Vienna-based UNCITRAL Secretariat could have the effect of streamlining the resolution of international commercial disputes, however, certain of the proposals could make it more difficult for observers to discover and monitor international arbitrations taking place under the UNCITRAL rules.

In particular, a proposal to extend the principle of confidentiality to the very “fact” of an arbitration proceeding would mean that a large portion of arbitrations brought pursuant to international investment treaties would be subject to an effective disclosure ban.

Currently, parties to UNCITRAL arbitrations may choose to disclose the existence of such disputes, as well as other information (arguments, legal pleadings), so long as there is no specific agreement between the parties to keep such details confidential.

Under the current system, dozens of investment treaty arbitrations using the UNCITRAL rules of procedure have come to public light - many of them reported in this newsletter or through the mainstream media.

While an unknown number of UNCITRAL-based investment treaty arbitrations remain under the radar - thanks to the desire of the respective parties involved - the new proposals to be considered by the UNCITRAL Working Group could ensure that all future UNCITRAL-based arbitrations go under the radar (unless the parties to an arbitration unanimously wished otherwise).

The proposal to extend confidentiality to the “fact” of a proceeding could have knock-on effects, insofar as it would render it much more difficult - if not impossible - for interested third-parties to seek permission to intervene in investment treaty arbitrations where the UNCITRAL rules of procedure are used.

In recent years, so-called amicus curiae have intervened in a handful of investment treaty arbitrations, where such cases were thought to touch upon particularly sensitive issues, such as a government’s right to regulate for environmental or public health purposes. (Disclosure: the publisher of this newsletter, the IISD, successfully intervened in one such arbitration under the North American Free Trade Agreement).

Assuming that the parties to an UNCITRAL arbitration were obliged to keep the fact of that arbitration confidential, the very existence of that arbitration proceeding, much less the identity of the members of the tribunal (to whom any amicus curiae application must be addressed) and the legal pleadings and arguments, might remain a secret.

Interestingly, among the various new proposals tabled by the UNCITRAL Secretariat to the Working Group is one that would “add an express provision (to the UNCITRAL rules) on third party intervention”. That proposal does not clarify whether this “express provision” would pave the way for third party interventions, or bar the door to such interventions. However, the parallel proposal to extend confidentiality to the “fact” of the arbitral proceeding - which would make it very difficult for would-be interveners to learn of pending arbitrations - seems to detract from effective third party intervention in such cases.

Ultimately, however, it is the member-governments of the UN Commission on International Trade Law that are charged with weighing and elaborating upon the proposals drafted by the UNCITRAL Secretariat

The various proposals are to be discussed by the UNCITRAL Working Group in Vienna from Sept.11-15, after which Working Group member-governments will direct the Secretariat to develop a draft set of revised UNCITRAL rules.

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