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Investment Arbitration Rules

According to the United Nations Conference on Trade and Development (UNCTAD), over 2,500 bilateral and regional investment treaties are in place today, up from 1,097 at the end of 1995. These are the primary sources of hundreds of investor-state arbitrations, with perhaps between 50 and 100 likely being initiated every year now. With a large number of law firms are now active in this area, the number of investor-state arbitrations can only continue to increase. This makes the rules governing such arbitrations a critical part of the process.

IISD has been actively engaged in processes that review and revise the main rules of arbitration. These rules, most notably ICSID and UNCITRAL and decisions under NAFTA, must now take into account the significant public interest at stake in investor-state arbitration.

IISD's work on investment arbitration rules:

• UNCITRAL
  The UN Commission on International Trade Law is revising its arbitration rules. These rules are the second most used rules in investor state arbitration. IISD has obtained observer status for this process, along with the Center for International Environment Law. Key documents are below.

  • UNCITRAL Working Group rebuffs calls for greater transparency in investor-State arbitration (PDF - 227 kb)
    The United Nations Commission on International Trade Law (UNCITRAL) Working Group on Arbitration has set back calls by many states and non-governmental organizations to discuss introducing transparency requirements into international rules governing arbitrations brought by private foreign investors against states.
    
    IISD expressed its deep disappointment at the efforts of some governments to block the inclusion of transparency provisions in the revised Rules, following the UNCITRAL Working Group's session in New York, February 4 to 8, 2008.
    
    The UNCITRAL Arbitration Rules are the second-most used rules for arbitrations by foreign investors against states. However, the Rules were drafted 30 years ago with private commercial disputes in mind and do not address the public interest implications of investor-state disputes.
    
    IISD and Center for International Environmental Law (CIEL) have issued a joint press release (PDF - 59 kb), as well as a joint paper (PDF - 227 kb) showing how the UNCITRAL Rules can be simply amended to address the needs of investor-state arbitrations.

  • Good Governance and the Rule of Law: Express Rules For Investor-State Arbitrations Required (PDF - 178 kb)
    The UNCITRAL Arbitration Rules were designed 30 years ago with disputes between private commercial parties in mind, and are now among the leading rules for commercial arbitrations. While the UNCITRAL Rules' emphasis on confidentiality and party autonomy may be suitable for arbitrations between private parties, such an emphasis is not appropriate for investor-state arbitrations, where private versus public interests are at stake.

  • Revising the UNCITRAL Arbitration Rules to Address State Arbitrations (February 2007) (PDF - 273 kb)
    IISD has prepared a joint paper with the Center for International Environmental Law (CIEL) that sets out why and how the UNCITRAL Rules should be revised to address the public interest needs of state arbitrations.

• ICSID

  • Comments on ICSID Discussion Paper, "Possible Improvements of the Framework for ICSID Arbitration" (2004)
    (PDF - 261 kb)
    IISD's Investment and Sustainable Development team responded to a call for comments by the International Centre for Settlement of Investment Disputes (ICSID) on a public discussion paper that proposed reforms to its handling of international investment treaty arbitrations, including increased transparency and an appeals mechanism. IISD's response called for a more ambitious reform agenda for ICSID, including its devolution from the World Bank, and called upon governments to address deficiencies in other international investment arbitration venues as well.

• NAFTA

  • Note on NAFTA Commission's July 31, 2001, Initiative to Clarify Chapter 11 Investment Provisions (PDF - 167 kb)
    This paper, commissioned by the Joint Public Advisory Committee of the Commission for Environmental Cooperation's Chapter 11 session (Mexico City, March 24, 2003), surveys the problems identified to date with NAFTA's Chapter 11, both in terms of provisions and process. It also looks critically at the possible solutions.

  • The Free Trade Commission Statements of October 7, 2003, on NAFTA's Chapter 11: Never-Never Land or Real Progress? (2003) (PDF - 237 kb)
    This brief analysis assesses a set of statements issued by NAFTA's Free Trade Commission October 7, 2003, related to NAFTA's Chapter 11. The statements addressed, among other things, transparency of the Chapter 11 process, and set out guidelines for tribunals' use in considering petitions for friends of the court status. To what extent do these statements represent real progress toward making the Chapter 11 process accountable, legitimate and transparent?

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