Investment Treaty News | 22 January 2009
The United Kingdom tight-lipped over dispute with an Indian investor
By Damon Vis-Dunbar
The United Kingdom has formally declined to release a notice of arbitration delivered by an Indian citizen under the UK-India bilateral investment treaty, explaining that it would likely “prejudice relations between the United Kingdom and an international organisation ; UNCITRAL.”
UNCITRAL is a United Nations body responsible for international business law whose arbitration rules are commonly used to settle investment disputes between host states for foreign investors.
In this case, the UNCITRAL Arbitration Rules have been applied to a dispute between an Indian citizen and the United Kingdom. In 2006, an Indian lawyer named Ashok Sancheti served the UK with a notice of arbitration, complaining of “blatant discrimination by different organs and functions of the United Kingdom in dealing with me as an inward investor.” This is the only investment-treaty claim currently pending against the UK, according to the UK’s Foreign and Commonwealth Office (FCO).
The arbitration proceedings became public in 2008, when UK courts described the dispute in rulings related to a separate case between Sancheti and the City of London. ITN subsequently requested a copy of the notice of arbitration, as well as any other decisions or awards which may have been submitted by the tribunal. However, the UK’s Foreign Office has formally declined the request, citing provisions on confidentiality in the UNCITRAL rules.
In coming to a decision, the FCO said it had considered “the desirability for disclosure based on the grounds of transparency and accountability of a public authority.” However, the FCO also weighed “factors favouring withholding the material-in particular the public interest in maintaining good relations with UNCITRAL.”
Ultimately, the FCO concluded that “the public interest in withholding the material outweighs the public interest in disclosure.” The FCO explained that it risked censor from the Tribunal hearing the arbitration, given that the parties had not agreed to publicly disclose documents submitted in the arbitration proceedings.
The UNCITAL arbitration rules state that “Hearings shall be held in camera unless the parties agree otherwise” and “The award may be made public only with the consent of both parties.”
The UNCITRAL rules of arbitration-popular for settling commercial and treaty-based investment disputes-have come under increased scrutiny in the last couple years, as governments are currently in the process of revising the rules for the first time since they were adopted in 1976. As ITN has previously reported, certain civil society groups-including the IISD, the publishers of ITN-have called for revisions that would increase the level of transparency with regards to investor-state arbitrations under international investment agreements.
For previous ITN reporting on Ashok Sancheti v. the United Kingdom, see “Indian lawyer pursues claim against the United Kingdom under the India-UK BIT”, By Damon Vis-Dunbar, 28 November, 2008, available here.
For previous ITN reporting on transparency in the UNCITRAL Arbitration Rules, see : “UNCITRAL Working Group meets as investor-state questions loom”, By Luke Eric Peterson, 5 February 2008, available here