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The United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (the "Mauritius Convention") entered into force on 18 October 2017. An important development in investor-State dispute settlement (“ISDS”), the Mauritius Convention significantly expands the circumstances in which new transparency provisions – concerning arbitration commencement, publication of documents, third-party input, public hearings and confidential information – may apply. While it will be some time before the Mauritius Convention has broad application, it represents an important evolution for ISDS which has significant implications for States and investors alike.
In addition to specific International Chamber of Commerce, London Court of International Arbitration and Stockholm Chamber of Commerce rule provisions, the United Nations Commission on International Trade Law (“UNCITRAL”) Arbitration Rules have traditionally emphasised party confidentiality and privacy in an international arbitration context. Mindful of the special nature of ISDS, UNCITRAL Working Group II undertook a significant review into transparency in ISDS, with a view to maximising principles of good governance and accountability in an ISDS context. This culminated in the entry into force of the UNCITRAL Transparency Rules (“Rules”) in 2014.
However, as the Rules only apply to treaties concluded on or after 1 April 2014 (unless the parties have agreed otherwise), and only to investor-State disputes under the UNCITRAL rules, they currently apply only to a minority of treaty-based disputes. While the parties to the relevant treaty or arbitration may specifically provide for the application of the Rules, the Mauritius Convention attempts to widen application to the over 3,000 individual bilateral investment treaties, regardless of the date of the treaty underlying the dispute and its applicable set of rules.
On 18 April 2017, Switzerland ratified the Mauritius Convention, following Mauritius and Canada in doing so. The Mauritius Convention required three ratifications for entry into force and therefore gained force of law as between these three States, now being Parties to the Convention, on 18 October 2017. The Mauritius Convention will apply to ISDS arbitrations arising out of treaties concluded before 1 April 2014, regardless of the applicable arbitration rules in the relevant treaty, provided that the respondent State and the claimant's State are both parties to the Mauritius Convention and have not made the relevant reservations permitted by Article 3 of the Convention. The Rules will also apply to investor-State arbitrations arising out of investment treaties concluded before 1 April 2014 where only the respondent State is Party to the Convention (and has not made a reservation permitted under Article 3) and the claimant agrees to their application.
The Rules (specifically, the Articles referred to below) modify an ISDS arbitration’s procedural regime to provide for:
- communication of the commencement of an ISDS arbitration to a Transparency Repository (under Article 2);
- publication of prescribed documents including the notice of arbitration (and its response), statements of claim and defence, any further written statements and submissions and a table listing exhibits, expert reports and witness statements and any non-disputing party submissions (under Article 3);
- at the tribunal’s discretion, provision for third parties and non-disputing treaty parties to make written submissions (under Articles 4 and 5);
- public hearings, with exceptions for confidential information and logistical infeasibility (under Article 6);
and - protection of confidential or protected information (under Article 7).
The Rules were developed as a consequence of the significant growth in ISDS in recent years. The desire for transparency recognises that ISDS may involve contentious public policy issues, such as disputes relating to public health and the environment. The Mauritius Convention will provide States and investors alike with greater certainty on the level of transparency in ISDS while ensuring confidential information is protected. In addition, the prospect for third parties to make written submissions will further maximise the opportunity for input.
The consequences of this new regime are significant. States, including Australia in recent proposed amendments to its international arbitration regime, are already addressing the implications of the Mauritius Convention under domestic law. The ratification by only three States means reliance on utilising the Rules by consent will likely be required for some time. The Mauritius Convention, however, does remain an important step in attempting to standardise transparency in ISDS.
Thanks to Michael Smyth for his assistance in the preparation of this article.
25 January 2018
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