UNCITRAL and ISDS Reforms: Battles over Naming and Framing

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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.  Yesterday’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.  The next series of posts this week focus on broader issues and substantive questions that suffuse the reform process. In this morning’s post and this post, Contributing Editor Anthea Roberts and her co-author Taylor St. John address geopolitical and ideological issues that affect ISDS reforms. Anthea Roberts attends UNCITRAL Working Group III as part of the Australian delegation but she acts and writes in her independent academic capacity. Taylor St John attends UNCITRAL as an observer from PluriCourts, University of Oslo.

A striking feature of the debates over ISDS reform in the last UNCITRAL session were the battles over naming and framing. In some ways, these battles reflect the power that names and frames have in shaping our understanding of reality, guiding and limiting debates, and making some approaches or positions seem more obvious or appealing than others. In another way, these debates often represented proxy battles for deeper, substantive divisions among various states of the type we addressed in our previous blog on the Divided West and the Battle for and by the Rest.

What is in a name? Does framing matter?

When we imagine negotiations between governments, we often picture hard bargaining over bracketed text. In reality, the early stages of negotiation are often more about framing, particularly when negotiations deal with new issues or evolving processes. Framing plays a crucial role in creating the conceptual categories through which participants understand dynamics and formulate or communicate their positions. Every frame simultaneously reveals and obscures, both providing insights and limiting vision.

Naming is important because the names attached to positions can be relatively neutral or can be designed to make some positions seem more attractive or inevitable than others. Actors can attempt to use names dispassionately to describe situations or as advocacy tools to support particular positions. Sometimes it is not clear which is being done. Sometimes different actors can be using the same names in different ways.

Names and frames are often in flux during negotiations. Particularly in a consensus driven negotiation, we should expect naming and framing to shift over time in order to forge consensus among disparate groups. Heated debates in the UNCITRAL ISDS reform process over the use of the names “incremental” and “systemic” provide a good illustration of these phenomena.

Academic naming and framing

Not all states think alike when it comes to ISDS reform. From an academic perspective, it is helpful to sketch some of the initial camps that have developed with respect to ISDS reforms. Although not all states have determined their positions with respect to ISDS reforms, states that have declared a preference typically cluster around three ideal types, which one of us has previously described as incrementalists, systemic reformers, and paradigm-shifters.

On this framing, incrementalists believe that international investment arbitration should be retained even if it is subject to various targeted reforms; systemic reformers accept that international claims by investors should remain but think they should be handled by a new institutional arrangement, like an international court and appellate body; and paradigm-shifters think the whole regime should be up ended because investors should not be permitted to bring direct claims before international tribunals, whether judicial or arbitral.

Of course, positions within any of these camps are not uniform, nor are the camps the only options available. It would be possible to develop alternative camps or ones between particular poles. States might, for instance, come to support semi-systemic reforms like the introduction of an appellate body over investor-state arbitration for example. Some states might switch camps or have different treaties with different treaty parties that reflect different positions. But this typology provides a way to sketch out the general lay of the land by identifying its outermost poles.

This nomenclature was chosen to be as value-neutral as possible – incremental reformers instead of loyalists, paradigm-shifters instead of revolutionaries or transformational reformers – after discussion with many actors involved in the process to ensure that the names reflected positions as fairly and accurately as possible. But no naming can ever be entirely neutral. Different conceptualisations reveal certain elements while obscuring others. Underlying realities may also shift in a way that makes particular naming inadequate to describe evolving positions or politically charged. These names proved to be a case in point.

Evolving concerns

Early on in the UNCITRAL process, some of the states in the incrementalist camp had no objection to be referred to as incremental reformers. They argued that many of the concerns about investor-state arbitration were overblown or had been and could be significantly addressed through targeted reforms on a bilateral or multilateral basis. They supported “evolution” not “revolution,” pointing out the dangers of jettisoning some of the benefits they perceived of the existing system, such as flexibility and depoliticisation. However, as the UNCITRAL debates evolved, these states became less and less comfortable with the label “incremental reformers” for four reasons.

The first reason had to do with what the names revealed and obscured in terms of the reforms and their effects. The naming focused on the natureof the reforms, not their effects. The framing asked were the reforms suggested incremental (small in scale) or systemic (larger in scale)?But this was inadequate to capture some of what these reformers thought they were doing. It was possible, they pointed out, to have incremental or targeted reforms that had significant effects. Similarly, we would observe that it is possible to have systemic reforms that might have only incremental effects, as many NGOs would argue with respect to the proposed Multilateral Investment Court. So, it is important to think about the issue of scale or extent with respect to both the nature of reforms and their effects.[1]

The second reason had to do with evolving state positions within the room. In Vienna 2018, more states started using the word “systemic” when describing the nature of their concerns about the investment treaty system. This usage created two problems from the perspective of the camp associated with incrementalism. First, as more states voiced systemic concerns about investor-state arbitration, it became harder for this camp to sell “incremental” reforms as a sufficient response to the perceived seriousness of the objections being raised. Second, this language could mistakenly give the impression that states voicing systemic concerns were supporting the multilateral investment court, which was not necessarily the case.

Overt politicisation

The third reason became stark in New York in 2019: these names were deployed in a highly politicised way. This overt politicisation began on day one when Mauritius attempted to set the scene for the delegates (particularly new ones) of the Working Group.

“There is a small group of states that have made it clear that they do not want for this work to take place at all,” Mauritius explained. Their position had evolved over time. First, they argued that there were no concerns. When that didn’t work, they next argued that even if there were concerns, there was no need for reforms. Now, they have to accept there are concerns but they argue that “there is no need for systemic reform and that we should work only or as a matter of priority on so-called incremental reform.” Their aim, he said, was delay: “the implication is … let us please work as slowly as possible on that so that if we ever get to systemic reform our children will be dealing with it rather than us.”

Mauritius had nothing against soft law reforms, the delegate explained, but thought that the substance of systemic reform needed to be considered: the “one type of reform that would most comprehensively address the concerns that we have identified is systemic reform.” There was no objective reason for some states to “block work” on such reform. “We are not proposing that anything be rushed,” he claimed, but “we will oppose and we do hope that the group as a whole will oppose attempts to filibuster.” The simplest approach, he suggested, was to have two streams – one working on soft law and the other on a court and appellate body. “That is a reasonable solution and we do hope that everyone will be approaching this exercise as you put it in good faith.”

Mauritius had done multiple things in its framing. It reduced the three main camps into a single binary – incrementalists versus systemic reformers. It suggested that two options – soft law and work on a court proposal – represented a sharp and exclusive dichotomy, rather than being outer poles along a gradual continuum of reform options, some of which could be overlapping. It suggested that some states were not really interested in actual reform and were using discussion of incremental options as a way to stall or stymie the consideration of systemic reforms that were wanted by a majority of states. And it suggested a two-track solution was the only reasonable way to avoid bad faith delaying tactics. Incrementalism was thus equated with inadequate reforms and obstructionist motives.

The pressure built on Tuesday. Germany explained that it had high expectations for ambitious, systemic reforms. That did not stop an a la carte approach with a menu of reforms. But the incrementalists should not be able to “block” the approach of those who want broader reform. Don’t “fall in the traps laid out so skilfully here,” the delegate warned. “We have to seize this once in a lifetime opportunity” to effect systemic reforms no matter how daunting and “not yield to those who [are] thinking small.” Mauritius chimed in again too expressing the hope that the call to work on aspects that can inspire maximum consensus was not a “veiled threat” to block work on other aspects, such as a court.

Political consequences

The fourth reason was that the language became more consequential on Wednesday when the Swiss delegation proposed a two-track working plan where one track would focus on “incremental reforms” (such as a code of conduct, third party funding etc) and the other on “systemic reforms” (mainly a court and appellate body). Whether to divide the work into two work plans was the most controversial issue of the week. Now these two workplans had names attached to them – incremental and systemic – and so a debate that was already highly divisive came to be fought through terminology that had become increasingly politicised.

Mexico objected that the term “systemic” could mean different things to different actors. Russia spoke about the ethics of how the Working Group functions, reminding delegates that “Everybody here works in good conscience” and requesting some members of the working group to “refrain from excessive language.” The Russian delegate objected to the framing that what was needed was the creation of a tribunal and that anyone who didn’t agree was accused of not being constructive or of not acting in good conscience. Chile called on the Working Group not to use the labels incremental and systemic or to create “imaginary blocks against each other.” Chile did not want the paper it submitted with other states to be viewed or labelled as incrementalist, reiterating that it was “fully committed to reform” – “substantial and meaningful reform and not cosmetic or minor changes or tweaks to the system” as some had suggested.

Against these positions, many other states took the floor to argue in favour of the dual work plan, pushing that the Working Group had to deal with all reform options, including incremental and systemic reforms. But these terms were also being used in a new setting and the fit was awkward. Some of the reforms that might be developed on the “incremental” track, such as a code of conduct or rules on third party funding, might also apply in whole or in part to any court developed under the “systemic” track. How should these cross-cutting issues be treated? If these were lanes on a highway, how many were there, did they intersect and could you switch lanes?  And what about other reforms that were different in kind, like the creation of an advisory centre? Where did they fit?

A Compromise Solution

In a consensus-based forum, these sorts of stand-offs have to be resolved. Here, the most important issue was whether to have a work plan that was sequential (starting with more modest reforms with a higher degree of consensus) or concurrent (including work on more ambitious but more divisive reforms, such as a court) and, if concurrent, how the time should be divided among different reform proposals. In reaching agreement on this controversial issue, it was important to step away from the language of incremental and systemic reform because it had become polarising.

The European Union made the first overture to this effect. The two tracks were not fixed lanes and certain issues could change lanes. Although the incremental and systemic terminology might be useful in general terms to describe some of the discussions in the group, the Union did not think that it was appropriate for naming the two workstreams. Perhaps the workstreams should be referred to as “rules, principles, guidance” and “mechanisms” instead. The United States welcomed this intervention. In the same spirit, the United States suggested that the two sorts of reform archetypes might be better understood through the nomenclature “functional and structural.”

Overnight, a compromise was worked out as described in a previous blog and in IA Reporter. The Working Group would not label the reform types incremental and systemic, but it recognised that there were fundamental differences in some of the reforms being proposed. Some were more structural in nature, others involved reforms within the current system (the parties couldn’t agree on what to call these!), and some straddled the line between the two. The key was that multiple potential reform solutions would be developed simultaneously. One reform option that would move forward at the start was how to develop structural reforms. There would also be discussion of which other solutions would be considered and how many could be developed at once, taking into consideration issues such as capacity.

Lessons learned

We take away four key lessons from this experience:

  1. Naming and framing matters. Names and frames are useful for communicating and clarifying debates and possible options for moving forward. Yet names and frames also shape how participants inside the room understand the debates and communicate their positions. We should expect names and frames to be contested during negotiations, as states claim or reject terminology to achieve their negotiating ends. Every naming/framing reveals and obscures, even relatively neutral terminology can come to take on toxic connotations, and new wording will give rise to new debates. For instance, does the new framing of “structural” reforms instead of “systemic” ones create problems for NGOs that wish to widen the terms of the existing debates to consider more substantive issues?
  2. Academic framing not advocacy positions or anodyne descriptions. Despite sometimes leading to controversy, we will continue to name and frame the debates and positions as we see them emerging. Our aim is to describe what is going on and offer first-cut conceptualisations; ours is an academic exercise, but one that is happening in real time. We test our framing with diverse participants within the process to check that it has some level of resonance across the room. We aim to give a genuine sense of disagreements and the divisions, not a sanitised or anodyne one. It is not our aim to function like the official UN reports where references to controversies are frequently eliminated (as was the case here where references to “incrementalism” were deleted on Russia’s request).
  3. Naming/framing and debating/compromising will be an iterative dynamic. Names and frames are likely to change numerous times over the course of these negotiations. Doing history in real time means that we will suggest names and frames and others will contest and stress test them – showing what they reveal and obscure and where they have pitfalls. We should not be surprised when particular participants invoke these terms for political ends or if they develop connotations we did not initially anticipate. When a particular name/frame becomes a paralysing division within the group, we should also expect the Chair will seek to move past existing formulations and language to broker a compromise position. Naming and framing will thus be an iterative process.
  4. Sometimes the names change, but the positions remain the same. In all these debates over names, did the underlying positions shift? Not really. As naming and framing is an iterative process, it is a bit like a snake has shed its last skin but it still a snake. There are still states that support at most targeted reforms to investor-state arbitration, others that are pushing for a court, some that may be open to some sort of mixture, and others who question the need for arbitration or an international court. But the change of names is still significant and telling in two ways:
    1. No one wants to be an incremental reformer anymore. It is clear that many states have serious, systemic concerns about investor-state arbitration. Given the politics, every side now will clamour to be understood as representing systemic reforms to systemic problems. We are all systemic reformers now.
    2. There will be a heightened sensitivity in the room to the possibility of, and accusations about, obstructionism. Those states that favour reforming but ultimately keeping investor-state arbitration are sensitive to the accusation of obstructionism, which may affect their strategies going forward.

*We are grateful to Jorge Vinueles for making this distinction between incremental and systemic reforms and effects in his presentation at the Latin American Society of International Law conference in 2018.

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