With the increasing public awareness of international investment arbitration, the lack of transparency in ICSID arbitration procedures has been increasingly criticized. The arbitration mechanism reforms promoted by ICSID are also receiving much attention. In terms of transparency reforms, in recent years, ICSID has issued Proposals for Amendment of the ICSID Rules Working Paper 3, Working Paper 4, and Working Paper 5, aiming to further increase the transparency of arbitration procedures from the perspectives of public hearings, document disclosure, and third party participation, etc., to benchmark the UNCITRAL Transparency Rules. The UNCITRAL Transparency Rules, which came into effect in April 2014, provide higher transparency standards compared to the ICSID Arbitration Rules. However, the UNCITRAL Transparency Rules can only be applied with the agreement of the parties, unless the application conditions under the Mauritius Convention are met. The key issues to be explained include: the main differences between ICSID and UNCITRAL rules in transparency, the reasons for their divergence, the possibility of converging the two frameworks considering ICSID’s amendment process, and the positive impact brought by transparency reforms.
the comparatively lower transparency standards of ICSID rules regarding information disclosure
The ICSID Arbitration Rules and the UNCITRAL Transparency Rules differ significantly in terms of information disclosure (or “confidentiality”). Compared with UNCITRAL’s “presumed and compulsory” approach to public disclosure of documents, ICSID’s party-led, consent-based approach provides a comparatively lower transparency standard than that of the UNCITRAL rules. The UNCITRAL rules “impose an absolute duty on the tribunal to deliver its transparency policy” by using the word “shall” in various provisions. In contrast, the ICSID rules allow the extent of disclosure of information to be guided by party consent. In practice, ICSID tribunals have been conservative in deciding on issues of transparency. For example, in Biwater Gauff Ltd v Tanzania, the tribunal granted the claimant’s request for provisional measures on confidentiality and stated that the disclosure of some documents should not be allowed as it would jeopardize the procedural integrity of the arbitration process. The documents referred to include not only those containing business secrets, but also “information which aggravates disputes before investment tribunals”, considerably limiting the scope of documents that could be published. Similarly constraining is ICSID Arbitration Rule 48(4) which requires party consent for the publication of the final award. This indicates ICSID’s more restrictive approach to transparency in principle.
the stricter requirements of UNCITRAL rules on information disclosure
In contrast, Article 3 of the UNCITRAL Transparency Rules imposes comparatively greater disclosure obligations by requiring written submissions, transcripts of hearings, a list of exhibits of documents, expert reports, witness statements presented in the proceedings, and awards to be made available to the public. Therefore, based on the tribunal’s conservative approach in Biwater and ICSID Arbitration Rule 48(4), we should not expect the transparency standards between ICSID and UNCITRAL rules to be consistent, at least according to the current ICSID Arbitration Rules or the subjective initiative of arbitrators. The UNCITRAL rules provide more robust transparency standards compared to the relatively restrictive ICSID rules.
the narrower approach of ICSID rules regarding third party participation
In addition to information disclosure, the ICSID and UNCITRAL rules also differ significantly regarding third party participation. The UNCITRAL Transparency Rules grant tribunals broad powers to allow submissions from third parties, either upon application by the third party or on the tribunal’s own initiative. In contrast, the ICSID Arbitration Rules do not contain provisions allowing submissions by non-disputing parties, limiting third party participation absent party consent. This means third parties must convince the parties themselves to agree to their participation. For example, in Bear Creek Mining Corporation v. Peru, the tribunal rejected arguments that the tribunal had inherent powers under the ICSID Arbitration Rules to accept submissions from third parties and confirmed that the default position was that third party participation required the consent of both parties. Therefore, compared to the UNCITRAL Transparency Rules, the ICSID Arbitration Rules adopt a more restrictive approach regarding third party participation in investment arbitration proceedings.
the reasons for the divergence between ICSID and UNCITRAL rules
The ICSID and UNCITRAL rules diverge on transparency because they emerged in different historical contexts. As Prabhash Ranjan argues, relative to UNCITRAL, the ICSID rules were always meant for resolving investor-state disputes where confidentiality was once seen as the default rule. UNCITRAL came later after calls grew louder since the late 1990s for greater transparency in treaty-based investor-state arbitration. But amending ICSID’s rules is difficult because its membership spans 162 States. UNCITRAL comprises only 60 Member States, making consensus easier to achieve. In addition, ICSID’s arbitration model was shaped by its leading role conciliating and arbitrating disputes relating to foreign investments. The ICSID Convention itself requires elements of transparency, including publication of awards (subject to redaction of sensitive information). But overall the ICSID rules were shaped by the view that confidentiality encouraged a conciliatory process. By contrast, the UNCITRAL Transparency Rules emerged after the tide turned more in favor of transparency in international investment arbitration.
the possibility of convergence between ICSID and UNCITRAL rules
The latest ICSID proposals seek to align its rules with the key transparency features in the UNCITRAL Transparency Rules. For example, the proposals incorporate a presumption in favour of open hearings, with greater scope for confidentiality exceptions. The proposals also see a transition away from a consent-based document disclosure regime to one where specific categories of documents are subject to disclosure by default, while still allowing for redaction of sensitive information. However, the convergence between the ICSID and UNCITRAL rules has its limits. For instance, the ICSID proposals stop short of replicating the broad level of third party participation envisaged in the UNCITRAL Transparency Rules, limiting third party submissions to amicus curiae briefs. Overall the attempt to standardize ICSID’s transparency regime with that of UNCITRAL is evident from the proposals. If implemented, ICSID arbitration will experience a meaningful expansion in transparency. The takeaway is that while differences will remain, we should expect to see greater alignment between the two frameworks in the future.
the positive impact of transparency reforms on investment arbitration
The implementation of transparency reforms will have a number of positive effects on investment arbitration. First, transparency can enhance the legitimacy of investment arbitration, increasing public confidence in the regime. Second, transparency allows outside observers to better understand arbitral reasoning and monitor possible inconsistencies in awards, promoting coherence in the case law. Third, greater transparency empowers civil society groups to participate more effectively in relevant arbitrations as amicus curiae. Fourth, transparency helps hold arbitrators accountable and identify potential conflicts of interest. Finally, many argue transparency has a positive effect on the behaviour of disputing parties, incentivizing them to act reasonably. Therefore, the ongoing ICSID reform initiatives are a step in the right direction for investment arbitration.
In summary, there exist significant divergences between ICSID and UNCITRAL rules regarding the transparency of information disclosure and third party participation, mainly due to their differing historical contexts. However, considering ICSID’s amendment process, there is a possibility for the convergence of the two frameworks in the future. The implementation of transparency reforms will have positive impacts on investment arbitration.