IBA publishes report on investment treaty arbitration

IBA publishes report on investment treaty arbitration

33618388_xlThe IBA Subcommittee on Investment Treaty Arbitration (the Subcommittee) has published a report following the Subcommittee’s survey on investment treaty arbitration (ITA). The report arises out of a decision made by the Subcommittee in 2014 to engage with the perceived increase in criticism of ITA and consider whether or not such criticism was justified and reform required as a result.

Indeed, since 2014, the level of public criticism of certain aspects of ITA has increased, particularly in light of the ongoing negotiations regarding the Transatlantic Trade and Investment Partnership (TTIP). It is also worth noting that since the Subcommittee's survey was released in July 2016, the European Commission has proposed the use of an investment court to resolve disputes arising out of TTIP so as to address some of the concerns raised in relation to TTIP's investment chapter.

The survey scope

The Subcommittee released a survey questionnaire of 51 questions and 109 individuals from a variety of jurisdictions responded. The report recognises that a response base of 109 participants does not constitute a critical mass for statistical purposes. The largest respondent groups were counsel and academics. 80% of respondents had experience of ICSID arbitration; 70% had UNCITRAL arbitration experience.

Despite the relatively small number of respondents, the results of the survey provide an interesting insight into many of the key contemporary issues in ITA. While it is helpful to understand the percentage of respondents who expressed concerns regarding particular matters, understanding the views behind the votes would also be useful.

Overall, while concerns are expressed regarding aspects of ITA, such as substantive inconsistency and arbitrator diversity, some areas, such as the adequacy of the grounds for annulment of ICSID awards, were thought not to require reform.

 Key findings include:

  • A majority of respondents considered that substantive inconsistency in the application of treaty standards was a concern, but indicated that an appellate mechanism for ITA could address that concern
  • A majority of respondents expressed some concern about the appointment of arbitrators by institutions
  • A majority of respondents expressed some concern about challenges to arbitrators in ITA
  • The responses heavily indicated that all arbitrator appointments made by the same party or same counsel should be disclosed in the proceedings
  • A majority of respondents considered that ITA arbitrators should be permitted to also act as counsel in ITA
  • A large majority of respondents considered that arbitrators in ITA should be permitted to sit in proceedings involving issues of law that they have previously decided in other proceedings
  • Where the same issues of fact were involved, respondents were split as to whether or not arbitrators in ITA should be permitted to sit
  • A majority of respondents did not consider the use of tribunal secretaries to be of concern
  • A significant percentage of respondents expressed the view that the ICSID and ICSID Additional Facility challenge procedures were in need of reform
  • A large percentage of respondents considered arbitrator diversity to be of concern
  • A significant percentage of respondents supported a code of conduct for arbitrators in ITA
  • Availability of arbitrators was identified as an issue of significant concern for a majority of respondents
  • The time taken to render awards after the last hearing was identified as an issue of significant concern for a majority of respondents
  • In respect of costs, counsel fees were identified as of significant concern, with arbitrator fees of less concern by comparison
  • Some concerns were expressed regarding parallel court and ITA proceedings
  • Assessment of damages was identified as an area of significant concern for the majority of respondents
  • A majority of respondents expressed a level of concern about third-party funding. While the majority of respondents considered that the existence of third-party funding should not affect the way in which costs are allocated, the majority also considered that security for costs should be available to parties faced with claims funded by third parties
  • A majority of respondents did not consider that the ground for annulment of ICSID awards required reform
  • The responses regarding transparency and publication of awards seemed to reflect the status quo, ie that the present level of public transparency was sufficient, that open hearings shouldn’t be mandatory, and that the publication of final awards (but not pleadings) should be a requirement

Access the report here

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About the author:

Barry specialises in international arbitration and commercial litigation. He trained and practised at Jones Day before joining Pinsent Masons. At LexisNexis, Barry is Head of Arbitration and Head of the Lexis®PSL Dispute Resolution Group.

In practice, Barry’s work included commercial, aviation and technology arbitrations pursuant to international arbitral rules, involving UK and international clients. He also has a background in general commercial, civil fraud and IT litigation, including experience before the High Court. While in private practice, Barry worked with a broad range of clients from the private and public sectors.

At LexisNexis, when not focused on the strategic development and operational requirements of the Dispute Resolution Group, Barry’s content work focuses on the law and practice of international commercial arbitration and investment treaty arbitration. In addition to his work for Lexis®PSL, Barry contributes to the LexisNexis Dispute Resolution Blog and New Law Journal on litigation and arbitration matters