Negotiations on UNCITRAL Transparency Provisions Reach Critical Juncture

Negotiations over transparency in investor-state arbitrations have reached a critical juncture heading into an October 2012 meeting in Vienna. During the last meeting in February 2012, a large number of countries, developed and developing, strongly supported options to ensure transparency in investor-state disputes that are settled under the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL) – the second most popular set of rules applied to investment disputes, after the World Bank’s rules.

However, some delegations continue to block progress on these important efforts to improve UN arbitration rules.

Transparency, four years in the making

UNCITRAL put the issue of transparency in investor-state arbitrations firmly on its agenda in 2008, at a time when the arbitration rules were undergoing a broader revision. It decided that once renovations to the “generic” UNCITRAL arbitration rules were completed, the working group responsible for updating those rules should focus on the specific issue of how to ensure transparency in investor-state arbitrations.

Since 2010 the working group has met four times to hammer out new rules that would ensure transparency in investor-state arbitrations. Significant progress has been made, but two critical issues remain unresolved. One relates to how the new transparency rules will apply to disputes arising under future treaties. The second relates to how the new rules will apply to disputes arising under existing treaties.

How these two issues are resolved will determine whether the new rules actually have any significant impact on the transparency of investor-state arbitrations.

The “opt-in/opt-out” debate

The debate on the rules’ application to disputes arising under future treaties is often labeled the “opt-in” versus “opt-out” issue. Both the “opt-in” and “opt-out” approaches allow the treaty parties to retain the discretion to decide whether to include the new transparency rules in their future treaties. However, under the “opt-in” approach, states would need to explicitly state in their future treaties that the UNCITRAL transparency rules apply. The transparency provisions would thus effectively function as a separate UNCITRAL instrument in addition to the arbitration rules. Arbitrations under the general UNCITRAL arbitration rules would be left as they currently are, with the disputing parties and the tribunal having significant freedom to close off investor-state disputes to public view.

In contrast, under the “opt-out” approach, a reference to UNCITRAL Rules, or a reference to the UNCITRAL Rules in effect at the time of the dispute, would include the new transparency rules, except where the treaty parties explicitly stated otherwise in the treaty. The default rule being transparency, this would increase transparency in practice while the treaty parties would retain their ability to exclude the new transparency rules.

Existing treaties, future disputes

A number of countries support that the new rules on transparency should apply to future disputes arising under existing treaties (treaties already in force at the time the new transparency rules are introduced). However, several delegations are opposed. Given that there are approximately 3000 existing investment treaties, this proposal would fatally undermine the relevance of the new UNCITRAL transparency rules.

Applying the new transparency rules to the majority of future disputes under existing treaties is legally feasible. Indeed, it is not uncommon for procedural rules that govern international arbitrations to change over time, and when they do change, the version of the procedural rules in force when the case is initiated will apply unless the arbitration rules, the applicable treaty or the parties to the dispute, state otherwise. The arbitration rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) and the International Chamber of Commerce, for example, both reflect that principle. The applicability of the new 2010 SCC Rules to the roughly 50 member-state Energy Charter Treaty, which refers to the SCC Arbitration Institute, has not been controversial. Thus, if provisions on transparency were incorporated as amendments to the UNCITRAL arbitration rules, those transparency provisions could apply even to disputes arising under existing treaties.

It is with this in mind that a number of delegations prefer to leave the matter of application to existing treaties open, rather than explicitly closing the door. This way, the application of new rules would depend on the applicable treaty and the case at issue, but would not be barred as a starting position.


When the working group meets again in Vienna in October 2012, it will revisit these two issues. When doing so, members should stay firm to their mandate to ensure transparency in investor-state arbitration, and adopt an approach that enables, rather than hinders, the new rules’ use in disputes under future and existing treaties.

Authors: Nathalie Bernasconi-Osterwalder is a senior international lawyer and heads the Investment Program of the International Institute on Sustainable Development (IISD). Lise Johnson is a legal consultant to the IISD working on issues relating to international investment law and policy.