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UNCITRAL and ISDS Reforms: Moving to Reform Options … the Politics

Published on November 8, 2018        Author: 
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In the last blog, I provided an update on the UNCITRAL process, including the consensus decision from Vienna last week to move forward to consider possible reforms of investor-state arbitration. This decision is very significant. But to get a sense of how this decision was reached and where the process might be heading, I thought it would be helpful to provide my sense of the politics of the process as well as some projections about how it might move forward.

As stated previously, I am a member of the Australian delegation but I am included in that delegation in my independent academic capacity, so nothing in my writings or talks should be taken to reflect Australia’s views. My academic views are exactly that: mine and academic. Nevertheless, I hope that these views are informed. These blogs are based on official interventions during the UNCITRAL plenary sessions as well as discussions with a diverse range of actors from the process.

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UNCITRAL and ISDS Reforms: Moving to Reform Options … the Process

Published on November 7, 2018        Author: 
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Last week has been described as a watershed moment for ISDS reform. During a meeting in Vienna, states decided by consensus on the desirability of developing reforms in UNCITRAL with respect to investor-state arbitration. States now have an opportunity to make proposals for a work plan about what reforms to consider and how to go about considering them. To the extent that the tide has turned on traditional investor-state arbitration, it is now up to states to tell us where they want to sail.

As you might imagine, reaching a decision like this involved quite a process, along with a lot of politics. In this blog, I set out the process in terms of what was decided in Vienna, what was not decided, and what the next steps will be for moving forward in 2019. In the next blog, I will provide some context to this development, giving some insights into the politics of the process as well as some projections about how this process might develop.

This reform process will be long and its ultimate outcome remains unknowable. But the momentum for and direction of reforms are becoming increasingly clear. The calls for systemic reform are rising, though different states may mean different things by “systemic.”

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UNCITRAL and ISDS Reforms: Concerns about Costs, Transparency, Third Party Funding and Counterclaims

Published on June 6, 2018        Author:  and
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As explained in a previous post, we have put together four posts that compile the most relevant quotes from the first two meetings of the UNCITRAL Working Group sessions on states’ concerns about investor-state dispute settlement. To facilitate discussions about the desirability of reforms and their potential nature, we have organized these quotes into key themes that emerged during the meetings. This blog sets out quotes about costs, transparency, third party funding and counterclaims. The other blogs deal with concerns about:

  1. Facts versus Perceptions and Systemic Problems or Solutions
  2. Consistency, Predictability and Correctness
  3. Arbitral Appointments, Incentives and Legitimacy

We avoid editorializing because we think that it is important for other stakeholders to hear states’ concerns expressed in their own words. We have grouped states’ concerns under headings but otherwise have kept the interventions on each sub-topic in the order in which they were made. For an analytical framework for understanding these reform dynamics, see Anthea Roberts, Incremental, Systemic, and Paradigmatic Reform of Investor-State Arbitration, 112 AJIL _ (2018) (forthcoming).

  1. Costs & duration of arbitral proceedings

SOUTH AFRICA – on significant costs of arbitration: “In terms of the issue of costs when it comes to ISDS, we believe that the amounts at stake in investment treaty arbitration are often very high. Claims for compensation do amount to billions of dollars in most cases and in this context entering into treaties with the investor dispute settlement clauses carry significant financial costs for governments particularly the developing countries whose fiscal position can be seriously affected even when cases have been discontinued or when the outcome is said to be in favor of the state. The state will usually have to bear the exorbitant costs of legal defense and arbitrators fees. Furthermore large claims may serve to sustain threats of arbitration increasing the bargaining power of investors in informal discussions with governments to water down regulatory measures or to settle a dispute.” Read the rest of this entry…

 
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UNCITRAL and ISDS Reforms: Concerns about Arbitral Appointments, Incentives and Legitimacy

Published on June 6, 2018        Author:  and
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As explained in a previous post, we have put together four posts that compile the most relevant quotes from the first two meetings of the UNCITRAL Working Group sessions on states’ concerns about investor-state dispute settlement. To facilitate discussions about the desirability of reforms and their potential nature, we have organized these quotes into key themes that emerged during the meetings. This blog sets out quotes about arbitral appointments, incentives and legitimacy. The other blogs deal with concerns about:

  1. Facts versus Perceptions and Systemic Problems or Solutions
  2. Consistency, Predictability and Correctness
  3. Costs, Transparency, Third Party Funding and Counterclaims

We avoid editorializing because we think that it is important for other stakeholders to hear states’ concerns expressed in their own words. We have grouped states’ concerns under headings but otherwise have kept the interventions on each sub-topic in the order in which they were made. For an analytical framework for understanding these reform dynamics, see Anthea Roberts, Incremental, Systemic, and Paradigmatic Reform of Investor-State Arbitration, 112 AJIL _ (2018) (forthcoming).

  1. General observations: the lack of independence and impartiality of adjudicators

INDIA – on the problem of pro-investor and pro-state arbitrators for impartiality and independence: “The very fact that there are investors arbitrators and there are states arbitrators is a testimony that impartiality and independence is lacking in the system. The system is lacking in adequate ethical requirements. And there’s a lot of conflict of interest in this system which needs to be corrected. Third party funding is a problem as well. The mix of third party funding, multiple hatting and lack of adequate ethical standards has the potential to derail the system.” Read the rest of this entry…

 
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UNCITRAL and ISDS Reforms: Concerns about Consistency, Predictability and Correctness

Published on June 5, 2018        Author:  and
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As explained in a previous post, we have put together four posts that compile the most relevant quotes from the first two meetings of the UNCITRAL Working Group sessions on states’ concerns about investor-state dispute settlement. To facilitate discussions about the desirability of reforms and their potential nature, we have organized these quotes into key themes that emerged during the meetings. This blog sets out quotes about predictability, consistency and correctness. The other blogs deal with concerns about:

  1. Facts versus Perceptions and Systemic Problems or Solutions 
  2. Arbitral Appointments, Incentives and Legitimacy 
  3. Costs, Transparency, Third Party Funding and Counterclaims

We avoid editorializing because we think that it is important for other stakeholders to hear states’ concerns expressed in their own words. We have grouped states’ concerns under headings but otherwise have kept the interventions on each sub-topic in the order in which they were made. For an analytical framework for understanding these reform dynamics, see Anthea Roberts, Incremental, Systemic, and Paradigmatic Reform of Investor-State Arbitration, 112 AJIL _ (2018) (forthcoming).

  1. Inconsistency and lack of predictability:

EUROPEAN UNION – on the relationship between costs and consistency and predictability: “We think that the system has an effect of increasing those costs and hence by looking at the system we may be able to identify ways to gradually bring about reductions and these costs. We see this happening in three ways. The first way is because the system as it currently functions does not bring about predictability and does not bring about consistency. What does this mean. It means that in any given case before any freshly constituted ad hoc tribunal, a lawyer who is doing his or her job properly will make any possible argument that can be made legally in that particular situation. It doesn’t matter if that particular legal argument has been dismissed on multiple occasions by other tribunals. It may be the case that that particular ad hoc tribunal will accept the argumentation and so any diligent lawyer will have to make that argument again. So we think increasing and dealing with the issue of predictability and consistency will help address the issue of costs.” Read the rest of this entry…

 
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UNCITRAL and ISDS Reforms: What are States’ Concerns?

Published on June 5, 2018        Author:  and
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What are states’ concerns about investor-state dispute settlement (ISDS)? To help answer that question, we have put together four posts that compile the most relevant quotes from the first two meetings of the UNCITRAL Working Group sessions. To facilitate discussions about the desirability of reforms and their potential nature, we have organized these quotes into key themes that emerged during the meetings.

As explained in a previous post, UNCITRAL granted Working Group III a mandate to: (i) identify and consider concerns regarding ISDS; (ii) consider whether reform was desirable in light of any identified concerns; and (iii) if the Working Group were to conclude that reform was desirable, develop any relevant solutions to be recommended to the Commission.

The mandate calls for the process to be “fully transparent” and thus recordings of the session are available online. These posts are in keeping with that call for transparency. They communicate states’ key concerns to other interested stakeholders, which is important given the disconnects that often exist between different communities in the field.

This post will list quotes about two general issues that emerged in the Working Group: whether states should be concerned with facts and perceptions, or just facts; and whether some of the problems identified were systemic in nature or called for systemic solutions. The next three blogs provide quotes about the concerns states raised with respect to the following topics:

  1. Consistency, Predictability and Correctness of Awards
  2. Arbitral Appointments, Incentives and Legitimacy
  3. Costs, Transparency, Third Party Funding and Counterclaims

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Is International Law International? Continuing the Conversation

Published on February 9, 2018        Author: 
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This post is part of the Joint Symposium that we are co-hosting with Opinio Juris on Anthea Roberts’ new book Is International Law International? (OUP, 2017). 

In the movie Shadowlands, the character C. S. Lewis says, “We read to know that we’re not alone.” For me, perhaps it is also true to say, “I write to know that I am not alone.” Implicit in Is International Law International? is a series of questions: Have you seen what I have seen? Do you analyze it in the same way? If not, what has your experience been and what do you make of that? How and why are your reactions similar to or different from mine? And what does that mean regarding whether international law is, should be and can be international?

I want to thank EJIL: Talk! and Opinio Juris for hosting, and the contributors for engaging in, this sort of dialogue. Two common themes of the contributions are that my book represents the start of a conversation rather than the final word and that it provides a platform for future research. I agree. My book is a big-picture macrosketch based on detailed microobservations that seeks to challenge existing understandings. A lot of details need to completed, analyses tested, additional points noted and implications thought through. In the spirit of continuing this exchange, I offer some reflections below.

Before doing so, I wanted to note that, reading the comments, I was struck once more by how much we approach international law from our particular national perspectives. Whether it is Vera Rusinova reflecting on international law through the iron curtain, Hélène Ruiz Fabri drawing connections with debates in the French literature, Marko Milanovic considering the differences he has experienced in the US and UK academies, or Bing Bing Jia providing insights into Chinese international law textbooks, each of us brings our biography into play when analyzing our field. Of course, this observation is part of the point of my book. But it also means that we won’t be able to access the richness of this variety, in both sources and perspectives, unless we diversify our interactions and networks. Read the rest of this entry…

 

The Parochialism of Western Cosmopolitanism in a Competitive World Order

Published on February 7, 2018        Author: 
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This post is part of the Joint Symposium that we are co-hosting with Opinio Juris on Anthea Roberts’ new book Is International Law International? (OUP, 2017). 

We are familiar with the question: Is international law law? In my new book, I ask instead: Is international law international? Not particularly, is my answer—at least, not in the way that it tends to be conceptualized by international law academics in different states and in the international law textbooks and casebooks that they use.

When asked to reflect on the professional community of international lawyers, Oscar Schachter memorably called it an “invisible college” whose members were “dispersed throughout the world” yet “engaged in a continuous process of communication and collaboration.” But in rendering that college visible, I find that international lawyers may be better understood as constituting a “divisible college” whose members hail from different states and regions and who often form separate (though overlapping) communities with their own understandings and approaches.

In tracing these divisions and considering their consequences, I make three arguments. First, international lawyers are often subject to differences in their incoming influences and outgoing spheres of influence in ways that affect how they understand and approach international law. Second, actors, materials and approaches from some states and regions have come to dominate certain transnational flows and forums in ways that make them disproportionately instrumental in constructing the “international.” Third, existing understandings of the field are likely to be disrupted by factors such as changes in geopolitical power, making it increasingly important for international lawyers to understand the perspectives of those from unlike-minded states.

My book invites international lawyers to look in the mirror to discern and become more reflective about their blind spots and parochialism. It encourages international lawyers to recognize and speak openly about some of the socializing factors, incentives and power dynamics that shape their divisible college. It suggests that they try to see the field through the eyes of others and to diversify their sources, networks and perspectives. This call is particularly appropriate for Western international lawyers—myself included—who often study, work and publish in a Western bubble, which makes it harder for us to understand and adjust to the newly emerging competitive world order. Read the rest of this entry…

 

UNCITRAL and ISDS Reform: Pluralism and the Plurilateral Investment Court

Published on December 12, 2017        Author: 
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As described in a previous post, the UNCITRAL mandate on the possible reform of investor-state dispute settlement (ISDS) requires states to first identify and consider concerns regarding ISDS before going on to consider and develop any relevant reforms. Although states in the November 2017 session did not debate potential reforms, different solutions lurked in the room like elephants, often seeming to inform the positions taken by various delegations on whether particular issues (such as inconsistency) amounted to “problems.”

In particular, a division appeared to be evident between some states that seem inclined (at least presently) toward incremental, bilateral reforms (such as the US and Japan) and others that openly embrace systemic, multilateral reform (such as the EU and Canada). This positioning reflects broader dynamics about debates over ISDS reforms, in which the issue is often framed as a comparison of the relative merits of investor-state arbitration and a multilateral investment court with states staking out positions as loyalists or reformists respectively.

This dichotomy is false and unhelpful, however, because it presents ISDS reforms as requiring a binary choice. To start with, these are not the only choices. In addition to states that favour incremental and systemic reforms of the existing system, there are states that reject the need for international claims by investors at all. These revolutionaries include Brazil, which has embraced an Ombudsman model followed by state-to-state dispute settlement, and South Africa, which has opted primarily for protection via national legislation and courts. Read the rest of this entry…

 

UNCITRAL and ISDS Reform: Not Business as Usual

Published on December 11, 2017        Author: 
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In late November 2017, states from around the world convened in Working Group III at UNCITRAL in Vienna to begin debates about the possible reform of investor-state dispute settlement (ISDS). In accordance with the UNCITRAL mandate (see  Annotated Provisional Agenda) that was given in July 2017:

The Working Group would proceed to: (i) first, identify and consider concerns regarding ISDS; (ii) second, consider whether reform was desirable in light of any identified concerns; and (iii) third, if the Working Group were to conclude that reform was desirable, develop any relevant solutions to be recommended to the Commission.

I attended the Working Group III meetings as an independent legal expert on the Australian delegation, though anything I write is attributable to me personally not Australia. Given the potential importance of these reform efforts, and the public interest in them, this post marks the first in a series that seeks to explain and contextualise the UNCITRAL ISDS reform process. These posts are consistent with the mandate’s call for the process to be “fully transparent” (see  Annotated Provisional Agenda). Recordings of the session are also available online.

The UNCITRAL debates on ISDS reforms are highly political. On an international level, states have split on whether to embrace ISDS and, if so, whether international claims by investors would be better heard by ad hoc arbitral bodies or a permanent investment court. On a domestic level, ISDS has proved highly controversial in a number of states, resulting in strong pushback. Dealing with such a highly charged issue is certainly not “business as usual” for UNCITRAL. This was evident in the November meetings in two key ways. Read the rest of this entry…