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Home Archive for category "International Economic Law"

Bending the Knee or Extending the Hand to Industrial Nations? A Comment on the New Draft Treaty on Business and Human Rights

Published on August 23, 2019        Author:  and
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On 16th of July, 2019, the Open-Ended Intergovernmental Working Group (OEIWG) on transnational corporations and other business enterprises with respect to human rights published a revised draft(RD) for a treaty on business and human rights. It is the second substantial draft of such treaty after the zero draft(ZD) released exactly one year earlier. The new draft contains some big concessions to States and businesses opposing the treaty.

The OEIWG was established in 2014 by the UN Human Rights Council (through resolution 26/9) to develop a legally binding instrument to regulate, “in international human rights law, the activities of transnational corporations and other business enterprises” (Art. 1 Res. 26/9). The OEIWG held its latest session in October 2018. The RD itself was prepared by the Chairman of the OEIWG over the last months. A first point of procedural criticism is thus that despite the inputs in the previous OEIWG’s sessions, there was no transparent process in the stage of drafting. The text was created by the chairman and his team alone. A drafting team consisting of legal experts representing different areas of expertise and different geographical regions would have given the draft more procedural legitimacy. The “power of the pen” should not be underestimated.

On substance, much could be said about the draft. We will focus on three particularly pertinent points: the new scope of the draft treaty; the comprehensive inclusion of human rights abuses in conflict areas; and the issue of corporate liability.

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Living in the Shadow of Flawed Peace: How General International Law Is Implicated in the Trade War between Japan and South Korea

Published on August 22, 2019        Author: 
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As the anniversary of V-J Day approaches, the legacy of World War II still casts a long shadow on its previous Pacific theatre.  Last month, an unprecedented quadripartite incident involving warplanes from, inter alia, Japan and South Korea played out in the territorial airspace of the contested Dokdo/Takeshima islands, disputed territory that was left unresolved in the postwar San Francisco Peace Treaty of 1951 (SFPT).  Yet, the warning shots fired above those tiny rocks is not the only instance of regional tensions heating up in Northeast Asia.  On 2 August, Japan decided to remove South Korea from its list of trusted trade partners, following its restrictions on the exportation of three important chemicals to South Korea imposed last month.  Days later, Japan pulled back and permitted export of a key chemical for semiconductor manufacturing in Korea.  The two Asian economic titans have since brought their trade war to the attention of the WTO’s General Council

Yet the WTO is not the only international legal regime engaged in the escalating trade conflict between Japan and South Korea.  In this contribution, I aim to show that the now seldom-trodden postwar peace treaties concluding WWII are still pertinent to current international relations as evidenced by the diplomatic row between Seoul and Tokyo.  Self-help remains relevant to the effective operation of the international legal order, especially with respect to the enforcement of international legal rules lying outside the purview of any (quasi)judicial fora such as flaws from postwar peace treaties. 

The End of a World War  

While Japan ended its colonial rule of the Korean Peninsula following its surrender to the Allies at the end of WWII, the Peninsula was soon split into two entities.  Because of the Allies’ disagreement as to whether Korea was a belligerent party, neither Pyongyang nor Seoul signed the SFPT.  Despite its exclusion of both Koreas, the SFPT includes a China/ Korea entitlement clause (article 21).  Among other things, article 4—the framework provision on, inter alia, the disposition of property of Japan and of its nationals in the territories renounced by Japan (including the Korean Peninsula) and the relevant claims—is applicable to Korea by way of this special clause.  Yet the apparent omission of the reparation clause (article 14) sowed seeds of the lingering dispute over responsibility and reparations between Japan and South Korea. Read the rest of this entry…

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UNCITRAL and ISDS Reform: China’s Proposal

Published on August 5, 2019        Author:  and
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On 19 July 2019, China submitted its proposal on investor-state dispute settlement (ISDS) reform to UNCITRAL. A Chinese version is available, though an English translation is yet to be posted. China reaffirms its commitment to ISDS as an important mechanism for resolving investor-state disputes under public international law. However, it takes note of significant criticisms of ISDS and suggests various pathways for reform including, most notably, supporting the study of a permanent appellate body. In combination with the European Union’s “open architecture” approach, where the EU has signalled that it is open to working with other states that might wish to sign onto an appellate body and/or the multilateral investment court, this means that two of the world’s three biggest economies have now signalled support for significant reform of ISDS, including the possible creation of a permanent appellate body.

China’s UNCITRAL submission

China began in the investment treaty system as an ISDS sceptic but, over the years, has become an ISDS convert. In this submission, China starts from the position that ISDS plays an important role in protecting the rights of foreign investors and promoting cross-border investment, as well as helping to build the rule of law in investment governance and avoiding economic disputes between investors and states escalating into political battles. Given this, China affirms its belief that ISDS is overall a mechanism that is worth maintaining. Given China’s growing interests as a capital exporter, particularly along the Belt and Road route, this endorsement of ISDS should not come as a surprise and is in line with the evolution of China’s treaty practice toward embracing ISDS over a full range of disputes.

Despite this general affirmation, China recognizes that there have been significant criticisms made of ISDS that need to be addressed. These include that: the current system lacks an institutionalized and reasonable error-correcting mechanism; the current system of ad hoc awards lacks stability and predictability; the professionalism and independence of arbitrators has been put into question; third party funding is affecting the balance of parties’ rights; and investment arbitration proceedings are long and costly. Of note, China also states that the phenomenon that the arbitrators and lawyers of investment arbitration are limited to a few experts deserves special attention. China states that ISDS should be more open and inclusive with increased participation of experts from developing countries. Read the rest of this entry…

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The Colombian Constitutional Court Judgment C-252/19: A new frontier for reform in international investment law

Published on July 29, 2019        Author: 
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On 6 June 2019, the Colombian Constitutional Court announced its long-awaited decision (made public 2 July 2019) regarding the constitutionality of the 2014 Colombia – France Bilateral Investment Treaty (BIT). Using an innovative line of reasoning, the Colombian Court did not only rule on whether or not this text was constitutional. It further declared the BIT to be “conditionally constitutional” [condicionalmente exequible], requiring the issue of a joint interpretative note that would clarify the meaning of several standards of treatment contained in the BIT.  

This is not the first time that a constitutional adjudicator has analyzed international investment agreements. In Europe, for instance, resistance to International Investment Agreements (IIAs), such as the Comprehensive Economic and Trade Agreement between Canada and the European Union (CETA), has been framed in constitutional terms. However, there are several factors which point to the importance of this judgement not only for the two countries involved but also, more broadly, for the way multilateralism is understood.

The Court decision and the remedy of ‘conditioned constitutionality’

On 10 July 2014, France and Colombia signed a BIT in order to establish a legal framework for foreign investment. In line with updates to other investment agreements in recent years, the revised Colombia – France BIT incorporates a series of features that aim to protect the regulatory space of states. However, the treaty also contains clauses that have been criticized (see here) for not protecting the interests of a developing state such as Colombia.

After a detailed analysis of all the provisions in the BIT and the arguments for and against the declaration of constitutionality, the Court decided that the treaty was compatible with the Colombian Constitution. However, for some clauses of the BIT, it made the declaration of constitutionality conditional on the implementation of a future interpretative declaration of the two countries that would clarify the meaning of the words used to draft substantive standards of treatment.  The Court sketched its methodology in the following way: Read the rest of this entry…

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An International Investment Advisory Center: Beyond the WTO Model

Published on July 26, 2019        Author: 
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Establishing an international investment advisory center is now a priority for many states.  UNCITRAL Working Group III has put the issue at the top of its agenda for ISDS reform.  The European Commission is considering an advisory center for its proposed Multilateral Investment Court.  The Netherlands government has commissioned a feasibility study.

Thinking about an international investment advisory center naturally starts with the Advisory Centre on WTO Law (ACWL).  Established in 2001, the ACWL is the “first true center for legal aid within the international legal system.”  It seeks to level the playing field by giving developing states the same in-house capacity that developed states enjoy.  The ACWL provides developing states with training, confidential advice on WTO law, and assistance or financial support during WTO dispute-settlement proceedings.  The center receives funding from developed and developing states, including voluntary contributions and (below-market) fees from dispute-settlement proceedings.  Two decades on, the ACWL has established itself as an integral part of the WTO dispute settlement system, playing “a crucial role in maintaining a viable and credible rules-based multilateral trading system.” 

But is the ACWL the right model for an international investment advisory center?  Unlike the WTO regime, the international investment regime is decentralized.  There is no global treaty on investment protection, no global forum for addressing all investment-related issues, and no global institution to help states avoid, manage, and resolve investment disputes efficiently and effectively.  Instead, each State—developing and developed—must devise its own approach to foreign investment and devote the human and financial resources necessary to comprehend, navigate, and develop that regime.

The decentralized nature of the international investment regime has important consequences.  States often struggle to comprehend and comply with their international investment commitments across all levels of government, making it difficult to avoid or settle investment disputes.  Many states lack significant expertise with investment arbitration, making it difficult to defend themselves effectively, or proactively shape the development of international investment law.  States’ frequent reliance on external counsel may hinder the development of in-house government legal capacity essential to establishing coherent and consistent national treaty practice. A cycle of uncertainty, inexperience, and incapacity has bred discontent with the current regime, threatening its legitimacy.  Viewed from that perspective, an international investment advisory center focused primarily on helping developing-state respondents in investment arbitration may fail to address underlying needs and broader concerns.

Broad Participation, Maximum Impact, Minimum Cost

A successful advisory center could help fill six gaps in the international investment regime: Read the rest of this entry…

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Why Arbitrate Business and Human Rights Disputes? Public Consultation Period Open for the Draft Hague Rules on Business and Human Rights Arbitration

Published on July 12, 2019        Author: 
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In June 2019, the Draft Hague Rules on Business and Human Rights Arbitration (hereafter, “Draft BHR Arbitration Rules”) was released for global online public consultation, with the consultation period set to end by 25 August 2019.  Judge Bruno Simma chairs the global Drafting Team that has collaborated in developing the draft rules, since the Drafting Team started its work in January 2018 with the support of the City of the Hague.  (Drafting Team Members and Working Group Members all listed here.) The final version of the Hague Rules on Business and Human Rights Arbitration will be published on 10 December 2019.  Before the release of the Draft BHR Arbitration Rules, the Working Group had produced a 2017 concept paper on business and human rights arbitration.  This was followed by the creation and first meetings of the Drafting Team in January 2018; the Drafting Team’s production of its Elements for Consideration in Draft Rules, Model Clauses, and Other Aspects of the Arbitral Process in time for the November 2018 Online Consultation Procedure; the April 2019 meetings of the Drafting Team and the June 2019 publication of the Summary of the Sounding Board Consultationsup to the June 2019 release of the Draft BHR Arbitration Rules.  

As described in the Draft BHR Arbitration Rules:

“The Hague Rules on Business and Human Rights Arbitration provide a set of procedures for the arbitration of disputes related to the impact of business activities on human rights.  The Hague Rules are based on the UNCITRAL Arbitration Rules, with modifications needed to address certain issues likely to arise in business and human rights disputes.  As with the UNCITRAL Arbitration Rules, the scope of the Hague Rules is not limited by the type of claimant(s) or respondent(s) or the type of subject-matter of the dispute and extends to any disputes that the parties to an arbitration agreement have agreed to resolve by arbitration under the Hague Rules.  Parties could thus include business entities, individuals, labor unions and organizations, States and State entities and civil society organizations. Equally, the Hague Rules purposefully do not define the terms “business”, “human rights”, or “business and human rights.” For the purposes of the Hague Rules, such terms should be thus understood at least as broadly as the meaning such terms have under the UN Guiding Principles on Business and Human Rights. However, in the vast majority of cases, no definition of these terms should be necessary at all.

Like the UNCITRAL Rules, the Hague Rules do not address the modalities by which the parties to the arbitration may consent to it nor the content of that consent, which are matters for the parties. Consent remains the cornerstone of business and human rights arbitration, as with all arbitration, and it can be established before a dispute arises, e.g. in contractual clauses, or after a dispute arises, e.g. in a submission agreement (compromis). Model Clauses may provide potential parties with options for expressing their consent to arbitration. In addition, like the UNCITRAL Rules, the Hague Rules do not address enforcement of arbitral awards made under these Rules, which are governed by national law and various treaty obligations, including in most cases the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. While these Rules have been conceived as a uniform set of rules, we acknowledge that the parties remain entitled to exercise their discretion in opting out of certain provisions that do not respond to their specific needs as arising out the dispute at issue. Certain other Model Clauses are being developed in this respect.” (Emphasis added.)

I have served in the Drafting Team under Judge Simma’s leadership since January 2018. My colleagues Martin Doe, Steve Ratner, and Katerina Yiannibas have helpfully crystallized elsewhere several of the main points of innovation contained in the Draft Rules, such as:

“1. provisions on facilitating settlement and mediation, and emphasizing the complementarity of arbitration to such procedures as the OECD National Contact Points system (Articles 1(6), 17(3), 42, and 51)

2. provisions to address the inequality of arms which may arise in such disputes (inter alia, Articles 5(2), 20(4), 24, 27(2), and 27(4));

3. the establishment of the Permanent Court of Arbitration as the default appointing authority, given its intergovernmental nature and experience in business and human rights disputes (Article 6);

4. procedures for multiparty claims and joinder by third parties (Article 17-bis);

5. a procedure for the early dismissal of claims manifestly without merit, developed on the basis of similar procedures in the ICSID, SIAC, SCC, and HKIAC Rules (as well as the proposed new ICSID Rules) (Article 23-bis);

6. provisions making the arbitral tribunal’s power over interim measures more robust, and at the same time more flexible (Article 26);

7. an emergency arbitrator mechanism elaborated on the basis of the ICC and SCC Rules (Article 26-bis);

8. specialized evidentiary procedures drawn up on the basis, inter alia, of the IBA Rules and Rules of the International Criminal Court, among others (Articles 27, 28, and 30(3));

9. measures to protect the identity of parties, counsel, and witnesses where such protections are warranted by the circumstances of the case, while ensuring due process is maintained for all parties (Articles 17(5), 28(3), and 37(5));

10. provisions on transparency and third-party participation (Articles 24-bis and 33-38);

11. tailored provisions on remedies in the business and human rights context (Article 40);

12. rules on applicable law that enhance flexibility and party autonomy (Article 41);

13. rules to protect the public interest in the case of confidential settlements (Article 42(1));

14. nuanced rules in respect of costs and deposits that encourage the tribunal to sensitive to the interests of access to justice (Articles 46-49);

15. an expedited arbitration procedure for small claims (Article 52); and

16. a Code of Conduct that reflects the highest standards for independence and impartiality in international dispute resolution (Annex).”

In this post, I do not aim to provide an authoritative commentary on the Draft Rules (which is exactly what our global online consultation procedure is for).  Rather, and notwithstanding the explicit caveat drawn by the Drafting Team above on leaving the modalities and content of consent to arbitration to the parties, I instead offer my personal observations to examine the essence of main criticisms (see public comments of the Columbia Center for Sustainable Investment here as well as a few questions and comments I received at Harvard Law School in April 2019), directed against having the BHR Arbitration Rules in the first place: 1) whether companies and human rights victims would even consent to arbitration; and 2) if they do consent, whether one should view that consent with skepticism as to the authenticity of arbitration as a mode of access to justice for human rights victims.  The gist of my argument is this: while the BHR Arbitration Rules will never purport to be the exclusively prescribed mechanism for human rights victims of transnational business conduct and neither does it presume to displace State-based judicial or non-judicial remedies, against the realities of a continuing limited universe of legally binding human rights recourse against the impacts of private transnational activities, we cannot afford to close off the arbitral option either. As human rights practitioners well know, no single dispute resolution mechanism for human rights disputes against transnational business is perfect, and even recent national court victories in Lungowe v. Vedanta (as spearheaded by my BHR Drafting Team colleague Richard Meeran of Leigh Day) depend on the jurisdictional openness of a State’s judicial system to transnational tort claims.  The question, in my view, thus has to be reframed away from “why international arbitration?“, to “why not also international arbitration?“.

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Deep Seabed Mining in the Area: is international investment law relevant?

Published on July 10, 2019        Author: 
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The last decade has seen a renewed interest in the commercial exploitation of deep seabed minerals located beyond national jurisdiction. However, the respective responsibilities of deep sea miners and of their sponsoring states in this process have not been clarified fully. This short piece argues that international investment law is part of the legal framework applicable to the relationship between the deep sea miner and the state sponsoring it. More specifically, it attempts to demonstrate that deep sea mining operations can constitute a foreign-owned investment within the territory of a host state. Thus, when accepting to sponsor deep sea mining activities, states need to be mindful of the additional disciplines imposed by international investment law. 

The seabed beyond national jurisdiction (named as the “Area” by UNCLOS) is known to contain valuable mineral resources including copper, nickel, zinc and rare earth metals which have become particularly valuable because of recent technological innovations. The International Seabed Authority has awarded twenty-nine exploration contracts to a variety of state and private corporate bodies for vast zones in the Pacific and Indian Oceans. Foreign capital has become increasingly involved in this economic activity. Thus, Nauru Ocean Resources, a Nauruan entity which was granted an exploration contract in 2011, is a subsidiary of the Australian corporation Deepgreen Mineral Corp. UK Seabed Mineral Resources is a subsidiary of the well-known Lockheed Martin. However these activities are controversial and there exist glaring gaps in the scientific knowledge of the ecosystems where deep sea mining is supposed to take place. Read the rest of this entry…

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An Analysis of the Use of ICJ Jurisprudence in Investor-State Dispute Settlement

Published on May 13, 2019        Author: 
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Last October 2018, the International Court of Justice (“ICJ” or “the Court”) issued its merits judgment in Obligation to Negotiate Access to the Pacific Ocean (Bolivia v. Chile). In a brief passage, the Court summarily dismissed Bolivia’s argument that the doctrine of “legitimate expectations” exists in general international law outside the context of fair and equitable treatment clauses. Despite the brevity of the Court’s analysis – and the minor importance of the legitimate expectations issue in that case – this finding drew attention from media outlets dedicated to investor-State dispute settlement (“ISDS”), including IAReporter. That the discussion of legitimate expectations in the Bolivia v. Chilejudgment was considered newsworthy in the ISDS sphere is a reflection of the importance that ISDS practitioners place on ICJ jurisprudence. As Professor Alain Pellet observed in a 2013 lecture, “[n]ot only do … investment tribunals… refer to the jurisprudence of the World Court, but they show a particular deference to it.”

There is some evidence, discussed below, to suggest that ISDS tribunals have referred to ICJ jurisprudence with increased frequency in recent years. Moreover, as ICJ President Abdulqawi Ahmed Yusuf highlighted in his October 2018 speech to the U.N. General Assembly, the Court today is particularly busy. There may thus be even more opportunities for jurisprudential cross-pollination in the near future. Now is an opportune time to consider why, when, and how investor-State tribunals refer to ICJ jurisprudence.

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The Right to Development and Archaic Dichotomies in UNCITRAL ISDS Reforms

Published on May 2, 2019        Author: 
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Editor’s Note:  This is the concluding post in this week’s series of several posts critically examining the UNCITRAL ISDS reform process, which held its latest Working Group III meetings in New York on April 2019.  On Monday we featured the introduction from UNCITRAL Academic Forum Chair Malcolm Langford and our Contributing Editor Anthea Roberts, who summarized key points of contention raised by States as to the narrower procedural reforms to ISDS as the mandate of UNCITRAL Working Group III.  Posts on Tuesday (see here and here) from our Contributing Editor Anthea Roberts and her co-author Taylor St. John addressed geopolitical and ideological issues that affect ISDS reforms. On Wednesday, we featured a response post on Costs, from Susan Franck, Academic Forum Member and author of the new 2019 book, Arbitration Costs: Myths and Realities in Investment Treaty Arbitration (OUP, 2019).  EJIL:Talk! Editor Diane Desierto concludes this series, with observations drawn from her own public work today in Geneva, where she is serving as Resource Expert on Institutional Compliance with the Right to Development at the 20th Intergovernmental Working Group Session on the Right to Development, organized by the United Nations Office of the High Commissioner for Human Rights.

It would not have escaped our scrutiny from this week’s excellent posts by Malcolm Langford, Anthea Roberts, Taylor St. John, and Susan Franck that the UNCITRAL ISDS Reform debates of States are taking place with an occluded (if not opaque) understanding of the supposed position(s) of “developing countries”, or indeed, what their respective needs for reform and flexibility in UNCITRAL ISDS reforms are, as each developing country undertakes its desired reform path.  As my colleagues rightly pointed out this week, one cannot approach “developing countries” with a monolithic understanding (or perceived understanding) of a regional, categorical, or group approach. The World Bank dropped the classification of “developing countries” in 2016, given the lack of agreement over the definition of this classification and the deep geographic, topographic, economic, and political diversity even within ‘developing country’ groupings themselves. It is thus entirely obsolete, in today’s international economic system, to even keep assuming that the G77 Non-Aligned Movement of the 1970s would have any degree of settled unanimity today among them as to their respective foreign investment interests, all the more so since there are more capital-exporting States within the “Global South” that are themselves heavily investing across and within the “Global South”.

On the one hand, some “developing countries” have a disproportionately outsized titanic impact on global investment, especially China, which now singularly dominates the writing of the future of the terms of global infrastructure investment through its Belt and Road Initiative (BRI). China’s leading role in global infrastructure investment was on full display at the 2nd Belt and Road Initiative International Forum in Beijing last week, attended by most world leaders, notwithstanding concerns about the new “colonization” seemingly emerging from BRI projects whose terms, as described recently in The Financial Times, are often bilaterally negotiated within an opaque “mish-mash” of   debt-based infrastructure projects affecting about 62% of the world’s population but which still remain non-transparent to all investment affected stakeholders. On the other hand, some ‘developing countries’, such as low-lying island States comprising around 37 States and around 50 million people, face raging existential issues from the climate change onslaught, and continue to face investment treaty claims as respondent host States (e.g. Mauritius has 3 pending, Cabo Verde has 1 pending, Dominican Republic has 6, Barbados has 1, Guyana has 1, Trinidad and Tobago among many others in this UNCTAD list), while the low-lying island States remain just as beholden to take an ISDS system still largely being written by other States contributing to the very phenomenon causing their impending extinction.  

We do not hear much about the economic, political, structural, resource, fiscal, and negotiating power inequalities and asymmetries between and among the “Global South” of “developing countries” in the UNCITRAL ISDS reform debates.  The focus has been on identifying what “developing countries” supposedly think or prefer, rather than taking each State – at whatever stage of development – as they are in evaluating the impacts of the actual distributional decisions they are making today in the ISDS reform process, and particularly whether these decisions are consistent with their commitments to the right to development (and the full range of human rights capabilities encompassed by this right).  Leaving it to States to do this kind of analysis through their respective investment treaty programs, in my view, does not solve any collective action problems arising from the globalization of our ISDS system. Neither does it significantly advance peoples’ right to development when we allocate ISDS reform into ‘procedural’ (for UNCITRAL) and ‘substantive’ (for States in their respective individual investment treaty programs), or characterize individualized State preferences for investment dispute decision-making in shorthand as ‘the West and the Rest’.  The rigor demanded of us in our responsibility to realize the right to development should be an occasion for pause in our use of, and reliance on, all these constructs and dichotomies.

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Observations on Costs: A Response and Implications for UNCITRAL and ISDS Reforms

Published on May 1, 2019        Author: 
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Editor’s Note:  This week, we will be featuring several posts critically examining the UNCITRAL ISDS reform process, which held its latest Working Group III meetings in New York on April 2019.  Monday’s introduction from our Contributing Editor Anthea Roberts and UNCITRAL Academic Forum Chair Malcolm Langford summarized key points of contention raised by States as to the narrower procedural reforms to ISDS as the mandate of UNCITRAL Working Group III.  In Tuesday morning’s post and Tuesday afternoon’s post, Contributing Editor Anthea Roberts and her co-author Taylor St. John address geopolitical and ideological issues that affect ISDS reforms. Today we feature a response post from Academic Forum Member Susan Franck, author of the new 2019 book, Arbitration Costs: Myths and Realities in Investment Treaty Arbitration (OUP, 2019).

We are in the midst of a unique political, legal, and psychological moment. UNCITRAL Working Group III’s effort will have a legacy that affects discourse about international economic dispute settlement for decades to come. It was, therefore, with great interest, that I read the Academic Forum’s submission on EJILTalk! on costs, as costs are at the forefront of the debate.

International arbitration costs are part of what motivated my own research agenda. Whether it was my 2005 article, Legitimacy Crisis in Investment Treaty Arbitration, where I made claims about the costs of investment treaty arbitration (ITA) with a limited set of anecdotal information, or my later articles, Empirically Evaluating Claims and Rationalizing Costs, where I confronted the cold reality that I had not systematically tested my earlier assertions and instead corrected my error by offering data.

As my most recent book, Arbitration Costs, explains that ITA costs are “the dull knife that cuts both ways,” I found the framing of the cost-related mandate to be somewhat unfortunate, namely an exploration of “Excessive Costs and Insufficient Recoverability of Cost Awards.” Students of psychology know that the framing of questions affects the information sought, the processing of derivative information, and subsequent decisions. Rather than focusing on costs and cost recoverability generally—which are important concerns that should be of interest to all stakeholders—the evocative framing creates challenges for balanced and holistic analysis. As Chapter 2 of Arbitration Costs explores cognitive illusions, that likely influence debates about ITA and that my previous experiment with Anne van Aaken and others demonstrated affect arbitrator decision-making, it is vital to acknowledge that illusions of framing, negativity, and confirmation bias, among others could skew both the conversations and derivative choices at a critical inflection point. 

There are undoubtedly many thoughtful aspects of the post.  The most valuable relate to focusing on: (1) raw descriptive arbitration costs, (2) factors tribunals should consider in making cost assessments, and (3) highlighting the importance of security for costs. The observations nevertheless require a degree of caution and may benefit from rebalancing, lest policy reform presumably designed to be helpful nevertheless generate negative externalities.

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