U.S. Model BIT Sets the Global Standard for ISDS Transparency
March 11, 2015
In April 2014, the United Nations Conference on International Trade Law (UNCITRAL) adopted new transparency rules for treaty-based investor-state arbitration (ISDS) conducted under UNCITRAL’s international arbitration rules. For the first time, the public would gain access to most information about ISDS claims filed with UNCITRAL. Previously, information about ISDS arbitrations under UNCITRAL had become available to the public only if the parties to the dispute had authorized publication, which was not the norm.
UNCITRAL’s rule change matched and in some cases exceeded the transparency obligations of the other major ISDS facility, the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). ICSID made a number of important amendments to its rules in 2006, including provisions that allowed, even encouraged, publication of more information about disputes.
These new procedures at ICSID and UNCITRAL constitute a major change in investor-state arbitration rules, which had evolved from confidential international commercial arbitration practices developed in the nineteenth century. Importantly, these improvements did not suddenly appear out of thin air. Their antecedent were the broad reforms in United States investment treaty practices that began with ISDS cases brought under the North American Free Trade Agreement (NAFTA) and later incorporated in U.S. practice officially beginning with the 2004 U.S. Model Bilateral Investment Treaty (BIT).
That new BIT text contained a number of key reforms, including an obligation for arbitral proceedings transparency (Article 29). The new provisions incorporated basic transparency practices initiated by the three NAFTA parties in 2001 into new U.S. treaties and free trade agreement investment chapters, and added new requirements that transcended ICSID’s rules at the time. Among the new sections were commitments to the publication of all pleadings, memorials, and briefs submitted by disputing parties, including redacted versions of documents containing information considered business confidential or related to essential security. The reforms also required publication of written materials provided by non-disputing Parties, whose right to submit views on matters of treaty interpretation is expressly recognized in the 2004 model, and amicus submissions, which tribunals were now authorized (even encouraged) to accept. The text authorized tribunals to appoint independent experts to report in writing on any factual issue concerning environmental, health, safety, or other scientific matters raised by a disputing party in a proceeding. Finally, and most importantly, the 2004 Model treaty required that tribunals open hearings to the public and publish the minutes or transcripts of tribunal hearings and all tribunal orders, awards, and decisions.
In the wake of these reforms, the expansion of information available about arbitration proceedings and decisions has provided a wealth of new information to scholars studying the actual performance of treaty-based investor-state arbitration. Initial studies are concluding that the process is serious and produces well-considered and balanced results that are consistent with similar cases brought before national courts. ICSID’s webcasts of arbitration hearings, when authorized by a treaty or the disputants, are allowing interested parties to observe both the professionalism of the proceedings while viewing evidence presented in real time. Few national courts anywhere in the world now provide equal, let alone greater, transparency of their proceedings. While ISDS critics complain of “secret tribunals,” in real life it’s difficult to find a legal proceeding with more public access than cases brought under U.S. investment agreements.
The adoption of U.S. standards for the transparency of investor-state arbitration by both major international organizations that facilitate the resolution of investor-state disputes is a major achievement for U.S. diplomacy and an important selling point for ongoing bilateral investment treaty and free trade agreement negotiations. Under U.S. agreements, transparency is a requirement, not an option. As senior administration officials, trade negotiators, and ambassadors seek to convince our trading partners of the value of improving trade and investment relations with the United States through negotiating new free trade agreements and BITs, we hope they will reinforce the benefits of the international transparency standards found in U.S. practice, as evidenced in our Model BIT approach.
Greg Hicks is a State Department fellow at CSIS. The views expressed herein are those of the author and do not necessarily reflect the views of the U.S. Department of State or the U.S. government.
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