Alexis Mourre

Amongst many interesting developments in the law and practice of arbitration, 2017 has seen the intensification and deepening of the thinking on the need to reform the current investor-state dispute settlement regime (ISDS). The matter is under consideration at the UN Commission on International Trade Law (UNCITRAL), with Working Group III identifying concerns regarding ISDS, considering whether reform is desirable and, as the case may be, developing relevant solutions.

This work will be built upon the contribution of academics, research institutions, and of course arbitration institutions and practitioners. One of the very important contributions to the debate has already been made by a research group led by Prof. Gabrielle Kauffmann-Kohler at the Center for International Dispute Settlement (CIDS) of the University of Geneva. At the same time, some States are taking steps to replace the current ISDS clauses in their treaties by including references to permanent bodies, or are considering doing so. CETA, which was signed in 2016, notably includes provisions replacing the traditional arbitration mechanism by panels selected from a permanent tribunal with an appeals mechanism. It was recently reported in the press that a similar system would be under consideration in the context of the ongoing reform of NAFTA. One important part of this debate is also the opening of a consultation on the reform of the ICSID rules, the only specialized multilateral institution devoted to investment arbitration, with which ICC maintains a longstanding and fruitful institutional cooperation.

The private sector, and in particular potential claimants in investment arbitration, has to be properly heard in this debate. The ICC International Court of Arbitration has to that effect organized, with CIDS, a roundtable discussion between representatives of the business sector and a delegation from UNCITRAL. This meeting took place on 16 November 2017 at the ICC premises in Paris, and has given rise to very interesting contributions on the part of investors, highlighting the need for effective remedies and accessibility to a neutral dispute resolution mechanism.

A delegation of the ICC International Court of Arbitration led by its Secretary General Alexander G. Fessas also actively participated to the recent session of the UNCITRAL Working Group III in Vienna during the last week of November 2017. The ICC Court will continue to participate in the work conducted by UNCITRAL in this field in 2018.

The Court has longstanding experience in arbitrations involving public interests. 11% of the ICC cases involve a state or a state entity. The Court also has administered 38 treaty-based arbitrations, and many Bilateral Investment Treaties offer ICC arbitration as one of the options available to the claimant.

In the presence of public interests and as shown by the 2012 ICC Report on Arbitration involving States and States Entities, the Court is deeply aware of the need to ensure the complete neutrality of the process, both before the institution and the arbitral tribunal itself. In this context, arbitration must reform and allow for the adoption of transparency rules. It is noteworthy, in this regard, that the ICC Rules are flexible enough to allow for the adoption by the parties and arbitral tribunals of rules of full transparency as proposed by the UNCITRAL Rules on Transparency in Treaty-Based Investor-State Arbitration and provided in the Mauritius Convention on Transparency. In particular, parties and arbitrators may agree on the publication of submissions and awards, as well as the publication of any decision made by the institution, the opening of any hearing to the public, and the hearing of non-parties and amici curiae.

It is also feasible to devise an agreed two-tier arbitration mechanism under the ICC Rules, whereby awards would be subject to limited or de novo review by an appellate ICC tribunal. Although such arrangements may not be advisable in commercial contracts, they may well find their way in investment contracts or treaties providing for ICC Arbitration as the dispute settlement mechanism.

The legitimate concerns raised by a number of states as to the current system of ISDS have to be acknowledged and properly addressed. Issues relating to consistency, abuse of rights or forum shopping deserve serious consideration. The ICC Court will therefore actively contribute to the ongoing debate, in the UNCITRAL context and in other forums. It will do so by building upon its deeply rooted values of neutrality, ethics and transparency.

From that perspective, particular attention should be given to the principle of party equality, particularly in the constitution of arbitral tribunals. One of the concerns raised by the creation of permanent bodies is that the parties would no longer have the ability to select arbitrators for confirmation, and that – at least under the current EU proposals – panels would be composed of arbitrators exclusively selected by the state parties and having their nationality. One of the important features of ICC Arbitration is in this regard Article 13(5) of the Rules, whereby the sole arbitrator or the president of the arbitral tribunal shall be of a nationality other than those of the parties. The necessity of avoiding conflicts of interests, including issue conflicts, should also be at the core of the debate. Robust arbitral institutions with experience in dealing with these matters, undoubtedly add great value to the process in the interest of all parties. Any reform proposal should be mindful of the need to ensure forthcoming and transparent disclosures as well as an efficient recourse to an institutional mechanism to resolve challenges.

We should, however, also be mindful that one of the advantages of the current ISDS system remains the adoption of flexible and transnational procedural rules that are widely applied in international commercial arbitration. Preserving the ability of arbitrators and parties to frame the procedure in accordance with their wishes and the requirements of each individual case should also be a priority. Likewise, the availability of international arbitrators experienced in large and complex cases – be they commercial or not – is an important asset for the resolution of investor-state disputes, and a situation whereby the choice of the parties would be unduly narrowed to a limited number of individuals deprived of that experience would certainly be prejudicial to the needs of an effective, open and balanced system.

We are at the very beginning of an entirely new chapter of the history of arbitration in investor-state disputes. This debate is a unique opportunity to improve the system in the interest of both states and investors, and to remove the existing negative perceptions that negatively affect not only investment arbitration but also, indirectly, commercial international arbitration. The ICC Court will take all its part in it.