“Nothing is agreed until everything is agreed”: The Code of Conduct and Reflections on the 44th Session of the UNCITRAL Working Group III
Introduction
It is difficult to believe that by the end of this year, it will have been 6 years since UNCITRAL’s Working Group III (WGIII) began its work on the highly anticipated, and equally controversial, reform of ISDS. Initially organized on a biannual basis (in Vienna during fall, in New York during spring), its physical meetings came to a screeching halt following the outbreak of COVID-19 in early 2020. As the readers of the ITN will recall,[1] after five virtual meetings, the delegates returned to Vienna International Centre in October 2022 for the first hybrid meeting in nearly 3 years. The meeting in January 2023 was similarly held in hybrid format.
During the earlier sessions of the WGIII, the progress had, quite frankly, dragged on. This could not be further from the truth this time around. This time, there was a sense of urgency—a clear determination. It was not only chairperson Shane Spelliscy who was set on advancing the debate—the delegates also seemed determined not to waste time. With a 2026 deadline on the horizon, the time, indeed, was running short, and the tension between the opposing camps in the room was manifest not only through official statements but also through body language, folded arms, stiff postures, avoided eye contact—during coffee breaks and informal consultations, easily noticeable even by the most distracted observer. There was by no means any animosity—if anything, a clear sense of familiarity among delegates after years of collegiality—but certainly a determination to hold ground. The WGIII would attempt to tackle some key yet controversial points head-on—issues that would either make or break a successful reform process. Everybody was aware of this, and the room was filled with anticipation. Double hatting. Disclosure obligations for adjudicators. Appellate mechanism. All exceedingly important and equally difficult matters to be addressed by the WGIII.[2]
In this Insight, I will delve into what came out as the most controversial item on the WGIII’s agenda in Vienna: Article 4 of the Code of Conduct on double hatting. As was subsequently noted by the UNCITRAL Secretariat, the issue will be picked up again in March.[3]
The agenda
The 5-day program was divided to address two overarching issues. The first 3 days were dedicated to the provisions of the Code of Conduct that were not addressed in the previous sessions: Articles 10 (on arbitrator assistants), 11 (disclosure obligations), 12 (compliance with the Code), and 4 (double hatting). The last 2 days were generally dedicated to the appellate mechanism. The chairperson, helming the multilateral reform effort since its inception, repeatedly emphasized that it was imperative to wrap up the negotiations, in particular on the Code of Conduct, by the time the January 2023 session concluded. Throughout the week, Spelliscy excelled in performing his duties, both through his timely and well-thought interventions and his ability to summarize, consolidate, and clarify points raised by delegates.
The Code of Conduct, Article 4
Article 4 on arbitrators’ double hatting was, as expected, the most controversial item on the WGIII agenda. The delegations were presented a draft text of Article 4, prepared by the chairperson.
This draft provision aimed at preventing four overarching multiple-role scenarios. First, it prohibited arbitrators from acting concurrently as legal counsels or expert witnesses in other cases involving the same measures, the same (or related) parties, as well as the same provisions. Second, it prohibited arbitrators from acting as legal representatives or expert witnesses in cases concerning the same measure for 3 years after the end of their tenure as arbitrators in a case. Third, they would also be barred from performing these tasks, for a year, in cases where the same provisions of the same instrument are involved. Parties are allowed to agree otherwise vis-a-vis the abovementioned limitations. Finally, concerning double hatting in cases concerning similar legal issues, arbitrators shall consult with the parties and ensure that they would not be in violation of their independence and impartiality obligations.
Along an axis of full prohibitionists on one side and those who wanted no limitation on double hatting on the other, the issue constantly swung back and forth. Among the countries who supported a full prohibition on double hatting with no time limit was Lebanon, which contended that time limits ran the risk of watering down the rule. India, likewise, argued that a full prohibition with the possibility of parties agreeing otherwise was the way to go forward. Sierra Leone noted that relaxed rules on double hatting would hinder attempts to diversify adjudicators and make it more difficult to break the glass ceiling for developing nations. Argentina, joined by Morocco, added to the string of discontent by noting that the specified cooling-off periods were too short compared to the periods initially suggested in earlier meetings.
The United States and the United Kingdom generally disagreed with the very inclusion of cooling-off periods, representing the extreme opposite side of the debate. The U.S. delegation started off by questioning the very objective of a cooling-off period, but noted that 6 months would be agreeable. Ultimately a suggestion concerning an optionality approach, whereby different time periods would apply depending on the parties, was put on the table. This position was generally echoed by the UK delegation.
At this point, several delegations, among them Zimbabwe and Argentina, reminded the Working Group that the chairperson’s text already represented a generous compromise from their initial position, which supported a full prohibition. Zimbabwe echoed remarks by Sierra Leone that short periods risk locking in the existing practice and prevent the possibility of an equitable geographical representation. Ghana, Brazil, China, and Indonesia also voiced their support for strict, if not full, prohibitions.
The “profound differences” among the delegates, as the chairperson put it, presented an impasse for the WGIII. At this point, it appeared that while some delegations were given a degree of autonomy to concede or compromise, others seemingly needed approval from their capitals to change any prescribed position they brought from home. This also significantly affected the flexibility each delegation could offer. This discrepancy in flexibility was also visible in how active some delegations were during formal plenary sessions, and how spontaneous some interventions appeared to be. From the third day onward, the informal consultations intensified, sometimes at the expense of the time allocated to formal session hours. This was certainly an interesting turn of events: time-pressed, the chairperson directed delegates to speak to one another. While formal sessions allowed the delegations to make known their positions (and no decision could officially be taken off session, as was confirmed by the chairperson during the session), the lenience toward informal consultations and deliberations proved to be relatively useful.
At first, certain delegations acted as gravitational centres for other like-minded delegates—those favouring a complete ban on double hatting on one side, and those not happy about any limitations on choosing their preferred arbitrator on the other, pockets of echo chambers quickly formed and shifted. These intermittent informal talks, on occasion interrupted by issues other than Article 4 such as the appellate mechanism, would continue for the next two and a half days. The original plan to wrap up Article 4 on day three was now impossible to achieve. As hours and days passed, different positions began confronting one another, leading to informal consultation breaks lasting sometimes up to an hour. The final day, in particular, saw intense debates.
One delegation particularly unhappy about the seemingly perfunctory durations proposed by the United States and the United Kingdom reiterated that the true extent of their compromise was being ignored. Indeed, they would note, their original position was either a full prohibition or a 10-year cooling-off period—and now the starting point for the compromise appeared to be 3 years since that is what the chairperson’s proposal noted. This, they argued, was inappropriate, as it was a misrepresentation of what a middle ground should look like. This made them seem like they were the uncompromising side, which, in their view, could not be farther from the truth. Arms folded, both sides of the debate, gathered around in irregular, crowded circles, seemed increasingly frustrated. As tensions rose, the chairperson intervened and continued his task of moderation during these informal deliberations. He noted that an agreed text, one way or another, had to be finalized and subsequently sent to the commission. He reiterated that nothing was agreed until everything was agreed, urging the parties to come to an understanding.
It was obvious that the compromise wouldn’t take the form of a single period. Alternatives were put forth, such as including “6 months to 5 years” or “1 year to 3 years” in the text. Ultimately, and to everyone’s apparent dissatisfaction, the WGIII agreed to disagree. Specific periods were removed from the text and bracketed for further negotiations. This, noted the chairperson, at least meant that the debate would not revert back to whether there would be a cooling period. Of course, whether or not this is an actual silver lining, or a creatively optimistic take on what could be considered a step forward, is yet to be seen. At the time of the writing of this Insight, the Secretariat had already informed the delegates and observers that a 2-day informal meeting would take place before the 45th session in New York “with an aim to provide an update on the progress being made with regard to the Codes.”
Conclusion
The scholarship on negotiation theory has extensively laid out the added complexities by multiparty negotiations vis-a-vis their bilateral counterparts.[4] Relevant to the ongoing process at the WGIII are, for example, the formation of coalitions and streamlined opposing views, sometimes down to two groups. Each of these coalitions, comprised of a multitude of parties with different convictions, interests, and red lines, stands its ground based on their common denominators. The 44th Session of the WGIII, adding to previous sessions, continued to serve as a stark example of how such coalitions form and play out in practice.
The debate on Article 4 also reaffirmed the importance of informal deliberations and how they can be used to resolve deadlocks. Sometimes the formal procedure does not allow the debate to advance as quickly or efficiently as needed. Therefore, the chairperson resorted extensively to informal deliberations where parties could congregate and debate, in groups, whether certain issues could be settled. Midgaard and Underdal note that the formal sessions will “turn into a discussion of some simple, clearly defined problem,” and that “the agreements concluded will confirm what has been achieved through informal (subgroup) talks.”[5] This functional relationship between informal deliberations and formal sessions was evident in the WGIII’s progress in January, and the overarching context of a mandate only a few years from expiring serves as an impetus for those running the show to make use of tools to ensure that the WGIII completes its task.
These tools, however, do not guarantee success. This is not the first time that key issues, suspended in a gridlock, were pushed forward to be decided in the future.[6] Midgaard and Underdal make a useful distinction between what they call bargaining and cooperative negotiations. They note that “as opposed to … ‘cooperative negotiations,’ [bargaining] consists of trying to get the other party or parties to make the largest possible concessions, while making the smallest possible concessions oneself.”[7] While the delegates have generously used the terms “flexibility” and “compromise” throughout the week, at times, it seemed as though the issue of double hatting was indeed bargained. As tensions rose, both camps vied to get as close as possible to their original positions and drag the other side of the discussion as far as possible from theirs. Perhaps the most impactful role played by the chairperson during this week was to remind the two camps that this was not at all the point, nor the ideal approach, to the Working Group’s task. He discouraged optionality and divergence, reminding those gathered that if the WGIII succeeds, it will do so through cooperation. After all, nothing was agreed until everything was agreed.
The WGIII reconvenes in New York at the end of March 2023. The Code of Conduct will be picked up again in addition to an already-packed agenda for this meeting. It is unclear whether the discussions will be as heated as they were in Vienna in January. However, for now, there appears to be an agreement (and assuming nobody will have a change of heart and decide to retreat to their initial positions) that double hatting will be limited pursuant to Article 4. The question, at this point, is for how long this provision will prevent arbitrators from fulfilling different roles in other proceedings.
As Roberts and St John note,[8] the process very much looks like a long-term relationship: defined by ups and downs, by confrontation and collegiality, by promises and expectations—and sometimes frustrations. It remains to be seen how far the different sides of this relationship are willing to go.
Author
Güneş Ünüvar, Senior Research Fellow, Max Planck Institute Luxembourg.
Notes
[1] Ostřanský, J., & Bernasconi-Osterwalder, N. (2022). UNCITRAL Working Group III and the assessment of compensation and damages: Thinning scope for impactful reform or an opportunity to make a difference? Investment Treaty News. https://www.IISD.org/itn/en/2022/10/07/uncitral-working-group-iii-and-the-assessment-of-compensation-and-damages-thinning-scope-for-impactful-reform-or-an-opportunity-to-make-a-difference-nathalie-bernasconi-osterwalder_josef-ostransky/
[2] A report of the 44th Session of the WGIII (A/CN.9/1130) is available at https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/acn9_1130_as_submitted_-_advance_copy_0.pdf
[3] Annotated Provisional Agenda for the 45th Session of the UNCITRAL Working Group III (A/CN.9/WG.III/WP.225), p.3 https://documents-dds-ny.un.org/doc/UNDOC/LTD/V23/003/62/PDF/V2300362.pdf?OpenElement
[4] Zartman, W. I. (1994). Two’s company and more’s a crowd. The complexity of multilateral negotiation. In Zartman, W. I. (Ed.), International multilateral negotiation. Approaches to the management of complexity, Jossey-Bass, pp. 1-10.
[5] Midgaard, I.G., & Underdal, A. (1977). Multiparty conferences. In D. Druckman (Ed.), Negotiation: Social-psychological perspectives (pps. 329–345). Sage,
[6] Starkey, B., Boyer M. A. & Wilkenfeld, J. (1999). Negotiating a complex world: An introduction to international negotiation. Rowman & Littlefield, p. 17.
[7] Midgaard and Underdal, supra note 5, p. 331.
[8] Roberts, A. & St John, T. (2022). UNCITRAL and ISDS reform (hybrid): Islands of persuasion. EJIL: Talk! https://www.ejiltalk.org/uncitral-and-isds-reform-hybrid-islands-of-persuasion/